Stellar has introduced the first smart contract on its network shortly after upgrading to Protocol 20, advancing ahead of the XRP Ledger (XRPL) in integrating smart contract functionalities. This update marks a transition for Stellar, evolving from its original role as a payment protocol to now supporting Decentralized Applications (DApps), broadening its utility within the decentralized finance (DeFi) sector.
The upgrade to Protocol 20 was completed on February 20th, signifying a strategic pivot for Stellar towards accommodating a wider range of applications. Originally established to facilitate payments, Stellar now positions itself to attract a diverse user base within the DeFi community by offering a platform for DApps.
The initial smart contract activation on Stellar’s mainnet is the beginning of a phased roll-out of its Soroban smart contracts platform, starting with Phase 0 focused on testing code stability. Following phases will progressively enable the deployment of applications and ultimately, make them accessible to the wider public.
The deployment of Soroban smart contracts marks a big step for Stellar, as it ventures into a domain previously dominated by other blockchain networks. While the XRPL has also pursued the introduction of smart contract capabilities through its Hooks protocol, it has encountered delays due to potential risks identified.
The introduction of Soroban smart contracts allows developers to create more complex and functional DApps on the Stellar network. These contracts enable automated, self-executing agreements that run when predefined conditions are met, opening up new possibilities for finance, logistics, and beyond within the decentralized space.
Soroban aims to provide developers with the tools necessary to build efficient, scalable, and secure applications, leveraging the speed and low transaction costs for which Stellar is known.
Despite the anticipation surrounding the Soroban rollout and its potential to expand Stellar’s use cases in DeFi, the immediate impact on Stellar’s native token, XLM, has been modest. Following the upgrade, XLM’s price experienced a 3.3% decrease to $0.115, though trading volume saw a 17% increase to $118,648,540, indicating sustained interest in the token.
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