Macauley Peterson

Validators of the Stellar network voted Tuesday to upgrade the Stellar mainnet to “Protocol 20,” which introduces the Soroban smart contract platform.



The addition of smart contracts follows years of planning for Stellar — which has been known primarily for payments — as it seeks to compete with a plethora of smart contract ecosystems.



The Stellar community aims to differentiate Soroban by emphasizing a combination of its efficiency, focused use cases, and integration with Stellar&#8217;s existing infrastructure.



Soroban is expected to extend Stellar’s current strengths on cross-border transactions and interoperability between various fiat currencies and cryptocurrencies, with support for compliance and regulatory requirements directly within the smart contract layer, making it more appealing for institutional adoption.



Originally launched in 2014, <a href="https://blockworks.co/tag/stellar">Stellar</a> made a name for itself through its native stablecoins, including USDC, and partnership with Moneygram in 2021.



The platform was always more than a currency, with many basic building blocks for the payments focus built in, said Tomer Weller, vice president of product at the Stellar Development Foundation (SDF).



“You have things like payments, a decentralized exchange, all the technical minutia — things like multisig, time locks, issuing assets as a first class primitive,” Weller told Blockworks. “One thing that&#8217;s kind of been absent is this idea of writing fully custom trust-minimized code.”



That’s where smart contracts come in.



<h2 class="wp-block-heading">Playing catch-up or catching narratives?</h2>



The past year has seen numerous examples of chains that previously launched as their own layer-1 networks, shifting to an Ethereum L2 — think <a href="https://blockworks.co/news/celo-return-home-ethereum">Celo</a>, and more recently <a href="https://lisk.com/blog/posts/announcing-lisk-move-to-ethereum-ecosystem">Lisk</a> — or of chains adopting the Ethereum Virtual Machine (<a href="https://blockworks.co/tag/evm">EVM</a>) after once eschewing it, such as <a href="https://xtz.news/en/adoption/introducing-osiris-the-first-decentralized-evm-optimistic-rollup-on-tezos/">Tezos</a>, <a href="https://eosnetwork.com/eos-evm/">EOS</a>, <a href="https://opensource.ripple.com/docs/evm-sidechain/intro-to-evm-sidechain/">XRP</a> and <a href="https://wiki.iota.org/wasp-evm/introduction/">IOTA</a>.



With Soroban, Stellar is charting its own course, not jumping on prevailing narratives — it’s neither a layer-2, nor is it using the EVM.



“We want to ensure that this doesn&#8217;t affect the existing stakeholders, so we&#8217;re taking a very progressive approach to opening up the floodgates,” Weller explained. “We&#8217;re launching with very minimal capabilities and slowly opening it up.”



It took some time to get full buy-in from all Stellar’s stakeholders, but with the emergence of successful decentralized apps (dapps) like <a href="https://blockworks.co/tag/uniswap">Uniswap</a> on Ethereum — which iterate quickly thanks to their smart contract platforms —&nbsp;the SDF realized that having to coordinate a chain upgrade with validators to deploy a dapp like an AMM-based DEX wasn’t the ideal strategy.



“If we actually want to have, like, a good pace of innovation on the protocol layer, we probably need to detach it from the core protocol,” Weller said, recounting deliberations from mid-2021.



Then the question turned to how, exactly, to go about implementing smart contracts without disrupting the financial institutions that already rely on the network.



“We started this journey [trying] to be extremely un-opinionated in the beginning,” Weller said. “We talked with pretty much anyone who would talk to us.”



Eventually, the team settled on a WebAssembly (WASM) runtime written in the Rust programming language. That sets it up to stand out from the EVM crowd, but it still prepares for a multichain future.



“WebAssembly is a very widely used technology, not only in the space of blockchains, but also in the web,” Weller said. “There&#8217;s a lot of transferable tools and transferable knowledge, both in terms of WebAssembly [and] in terms of Rust.”



Deian Stefan, co-founder and chief scientist at Cubist —&nbsp;which is “largely a Rust shop” and focuses on building tooling for cross-chain interoperability solutions — was impressed by Stellar’s approach.



“There are a bunch of really good verification tools that would help you get that code right, and the semantics of these contracts I would say are much simpler than something like Solidity,” the language of Ethereum smart contracts, Stefan told Blockworks. “A bunch of bugs should just go away or not even exist if you are targeting Soroban.”



Read more: <a href="https://blockworks.co/news/solving-web3s-developer-problem-web2">Solving Web3’s Developer Problem: Web2 Remains Hesitant</a>



There’s less “lower level plumbing” to be done by developers writing smart contract code in Rust, Defan said, which is one reason why some are attracted to <a href="https://blockworks.co/tag/solana">Solana</a>.



“I like the targeting of WASM because it also makes it possible to really support a bunch of languages and dovetail [with] work that&#8217;s done on the WASM side of things,” he said, adding: “They have the benefit of hindsight from seeing what Solana has done.”



Cubist aims to connect Soroban to EVM-based chains using its cross-chain software development kit (SDK). That should allow developers to build things like cross-chain tokens on top of generic messaging systems such as LayerZero in order to, for example, write cross-chain token swaps that work like they would on a single chain.



Solang, a Solidity compiler <a href="https://solang.readthedocs.io/en/v0.3.3/">developed</a> under the umbrella of the Hyperledger Foundation, will allow EVM dapp builders to port over their code to Soroban, with a bit of effort.



Weller said that Stellar took greater inspiration from Solana.



“The transactions come with an access list which [means] each transaction contains an indicator for ‘what state I&#8217;m going to read and what state I&#8217;m going to write,’ and then the validator can actually make an intelligent decision on how to divide the transaction sets in a way that they don&#8217;t have any dependencies internally.”



This should be useful in the future as the platform scales. The next version of Soroban will include concurrency — also known as parallel execution — one of the core requirements in the architecture.



The initial 10 transactions per second (TPS) looks low at first blush. But Weller pointed out that’s on top of the existing Stellar chain’s 200 TPS, and will rise over time.



“We are taking a very slow and safe approach to scalability here,” he said.



What cross-chain applications developers will come up with —&nbsp;and where demand from users will take the platform — remains to be seen, according to Stefan.



“I think there’s a little bit of a chicken and egg — it’s so hard to build anything that spans multiple chains right now,” he said. “If the tools sucked less, we can potentially make it easier for people to build, and then what people build will be interesting to see.”



The plan is to target not only users unfamiliar with Stellar, but those unfamiliar with DeFi generally. For example, an integration between a Stellar wallet, Beans, Moneygram and DeFi protocol Blend.



“They demonstrated this very tight experience in which you can deposit cash into USDC and directly into a yield protocol all in the same wallet and the same experience,” Weller said.



“We&#8217;re not going for the ‘degen’ ecosystem,” he added. “We&#8217;re really trying to use the existing stellar infrastructure in order to bring more innovative financial instruments to people that don&#8217;t necessarily have access to them right now.”



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Stellar sparks smart contract upgrade — and it’s not an EVM

James Cirrone

MoneyGram, a company primarily known for its cash transfer services, has plans to offer a noncustodial cryptocurrency wallet by the first quarter of 2024.



The wallet will be built on the Stellar network, which is unsurprising given MoneyGram’s longstanding partnership with the Stellar Development Foundation (SDF). <a href="https://blockworks.co/news/moneygram-customers-can-now-convert-cash-to-usdc">MoneyGram first integrated with Stellar back in October 2021</a> so customers could convert USDC into cash and vice versa.&nbsp;



Software design company Cheesecake Labs designed the wallet, which will be offered as a zero-fee service until June 2024. The wallet will also have access to MoneyGram’s existing fiat on- and off-ramps on Stellar.&nbsp;



<a href="https://blockworks.co/tag/moneygram">MoneyGram</a>’s digital wallet will benefit from a significant network of physical ATMs and payment centers which will allow users to easily off-ramp. There are 350,000 money transfer locations globally, according to the company. 



“Through the services we provide in partnership with SDF, MoneyGram has made strides to create equitable access to the global financial system,” MoneyGram CEO Alex Holmes said in a <a href="https://www.prnewswire.com/news-releases/moneygram-announces-plans-to-launch-non-custodial-digital-wallet-301938171.html">statement</a>.



Right now, MoneyGram customers can cash out their digital assets in over 180 countries and buy digital assets with cash in over 30 countries, the company said.&nbsp;



Beyond the widespread ATM access, MoneyGram’s wallet users will also be able to send USDC to other wallet users.&nbsp;



Once the wallet rolls out next year, MoneyGram said it would “expand” its capabilities and introduce new features. There was no mention of what capabilities or features would be added, and a MoneyGram representative didn’t immediately return a request for comment.



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Payments giant MoneyGram plots noncustodial wallet launch

Michael Bodley

Ukraine, already receptive to crypto, has one more reason to be bullish on blockchain — thanks to Stellar.



A Thursday report unpacking a two-year study on the feasibility of tapping the Stellar crypto ecosystem to move money around the war-torn country detailed a number of reasons for optimism when it comes to digital assets.



One of Ukraine’s oldest and largest banks, TASCOMBANK, led the pilot behind the study. It came about at the 2021 bequest of several of the eastern European nation&#8217;s top financial regulators and legislators. 



The TASCOMBANK study, commissioned in part by Ukraine’s influential Ministry of Digital Transformation, found a number of use cases (versus its TradFi banking system) for moving around “electronic money” via Stellar — the blockchain launched by Ripple co-founder Jed McCaleb in 2014 following his exit from Ripple Labs.



The study found Stellar improved security and confidentiality of customer data, boasted far quicker and far cheaper transactions with “high throughput.”



And it’s especially relevant now, given Ukraine’s national bank has blocked local commercial banks from rolling out new forms of “electronic money” — crypto, basically — since “the first days” of Russia’s “full-scale invasion of Ukraine.”&nbsp;



<h3 class="wp-block-heading">Ukraine sees real crypto use-cases via Stellar blockchain</h3>



Ukraine’s national legislature rolled out a number of significant changes to its regulations around digital assets in 2021, around the same time the study started.&nbsp;



The study — parsing payments between individuals and businesses, as well as their payrolls —&nbsp;appears to validate a number of the cryptocurrency initiatives that were introduced at the time.&nbsp;&nbsp;



Deputy Minister of Digital Transformation Oleksandr Bornyakov said the Stellar study highlighted a number of Ukraine-specific “key advantages” of the real world use cases for blockchain tech. Ukraine regulators are considering the possibility, according to Bornyakov, of introducing additional permissions for digital assets as a result



“The results of the [pilot] proved the key advantages of blockchain,” Bornyakov said in a statement. “In particular, fast processing and cost-effectiveness of transactions, accountability and transparency of the system, and also simplified access to financial services.”&nbsp;



But <a href="https://sites.google.com/view/stellar-analysis?pli=1" target="_blank" rel="noreferrer noopener">debate</a> over <a href="http://www.scs.stanford.edu/~dm/blog/safety-vs-liveness.html" target="_blank" rel="noreferrer noopener">whether</a> Stellar is sufficiently decentralized has persisted since the network went <a href="https://cointelegraph.com/news/stellars-blockchain-briefly-goes-offline-confirming-the-project-lacks-decentralization" target="_blank" rel="noreferrer noopener">down for two hours</a> in 2019. Then, in 2021, a string of crypto exchanges halted withdrawals after <a href="https://www.coindesk.com/markets/2021/04/06/several-stellar-nodes-go-offline-team-says-network-still-functioning-though-some-transactions-fail/" target="_blank" rel="noreferrer noopener">transactions</a> began failing during a node outage.



<a href="https://dashboard.stellar.org/" target="_blank" rel="noreferrer noopener">Stellarbeat</a> currently shows the blockchain is maintained by only 36 fully validating nodes with 13 lesser validator nodes in support — Stellar’s main rival (and McCaleb’s previous project) Ripple is <a href="https://xrpscan.com/validators" target="_blank" rel="noreferrer noopener">supported</a> by around 150 while Ethereum <a href="https://beaconscan.com/statistics" target="_blank" rel="noreferrer noopener">boasts</a> hundreds of thousands <a href="https://www.nodewatch.io/" target="_blank" rel="noreferrer noopener">anchored</a> by almost 11,500 physical nodes.



A lower validator count puts pressure on a small group of machines to keep the network running smoothly, while higher counts allow more of the network to go offline before service is interrupted.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/12420082/embed#?secret=UIDiPl5uvN" data-secret="UIDiPl5uvN" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Stellar’s native token XLM has underperformed against bitcoin and ether, on par with XRP</figcaption></figure>



Still, Stellar’s showing in the study is good news for the developing crypto dealings of TASCOMBANK. With the blessing of regulators, the bank has opened up a number of new units focused on emerging TradFi applications for distributed ledger technology (DLT).&nbsp;



“[The research] confirmed the readiness of the bank&#8217;s infrastructure to integrate with blockchain solutions and provide an appropriate level of financial services using virtual assets, taking into account all regulatory requirements,” the study said.&nbsp;



An executive for the Ukrainian financial entity went as far as to dub the resulting use cases as “drivers of the transformation of the financial landscape in Ukraine.”



It’s set to provide a new, core means for disseminating state-supplied financial assistance to Ukraine citizens.&nbsp;



The resulting digital payments outlook isn’t all rosy, though. There are scores of outstanding questions to tackle for both regulators and financial facilitators, both said.&nbsp;



One prominent one pertains to CBDCs: Who would be responsible for overseeing onboarding for its users, including know your customer (KYC) measures?



Oleksii Shaban, deputy chairman of the National Bank of Ukraine, said in TASCOMBANK’s research that the “question remains unanswered today and is closely related to another:&nbsp;“Whether the demand for CBDCs in a wallet opened in a commercial bank (the so-called two-level model) will be sufficient compared to that envisaged in the concept of &#8220;digital cash&#8221; — digital money as a direct claim to a central bank (the one-level model).”



The outcome demonstrates the proven potential of “real world” use cases built on the consensus-driven blockchain and “sets the foundation for greater adoption of virtual assets in Ukraine,” according to Denelle Dixon, chief executive of the Stellar Development Foundation.&nbsp;



Largely positive in its assessment of the current role and future potential of cryptocurrencies countrywise, the results ought to bolster a growing number of developing digital asset initiatives pioneered by Ukrainians.&nbsp;



Plus up-and-coming related pushes pioneered by outside players, such as the UN’s significant move to <a href="https://blockworks.co/news/un-stablecoins-revolutionize-foreign-aid">utilize the stablecoin USDC</a> to act as the rails for disseminating humanitarian aid packages to those in need of money fast: Ukrainian refugees.&nbsp;



Crypto exchange Binance earlier this month struck a deal with a prominent pharmacy in the country to enable crypto-driven payments for medical products, including medicine. The rationale is to bolster <a href="https://blockworks.co/tag/ukraine">Ukraine’s</a> battered infrastructure via digital assets



David Canellis contributed reporting.



Updated Jan. 13, 2022 at 4:18 am ET: Added context about nodes.



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Ukraine Bank Finds Stellar Blockchain Brings ‘Key Advantages’

Jacquelyn Melinek

<div id="highlights-block_615f2f4413ddc" class="highlights">
 <ul>
 <li>“We were very excited to partner with them because there’s a lot of opportunities in the German market,” Michael Shaulov, CEO of Fireblocks said to Blockworks</li>
 <li>While Bankhaus von der Heydt is Fireblocks’ latest client, it said it has supported a handful of traditional banks in the past including BNY Mellon, Signature Bank and Siam Commercial Bank</li>
 </ul>
 
</div>



One of the oldest banks in Germany, Bankhaus von der Heydt, is using digital asset custody provider Fireblocks to expand its offerings of digital asset banking, securitization and fund services. 



Fireblocks will be supporting the traditional and privately-owned Bankhaus von der Heydt to leverage its custody services alongside the Fireblocks Network to expand digital asset and crypto products to its customers, the company said Thursday.&nbsp;



Bankhaus von der Heydt was founded in 1754 and is 267 years old, making it one of the oldest banks in Germany to offer crypto custody and trading services. In December 2020, Bankhaus von der Heydt partnered with Bitbond to <a href="https://www.financemagnates.com/cryptocurrency/news/german-bank-introduces-first-euro-stablecoin/" target="_blank" rel="noreferrer noopener">issue</a> the first euro stablecoin (EURB) on the Stellar network. 



“Although the crypto assets are held in trust by Bankhaus von der Heydt, they are not subject to any explicit insurance. In particular, there is no protection by the deposit insurance,” the bank said on their <a href="https://www.1754.eu/faq" target="_blank" rel="noreferrer noopener">website</a>.



Since launching in June 2020, the Fireblocks Network has amassed over 500 liquidity partners who actively move assets across 30 of the world’s largest digital asset exchanges, such as Binance, Bitfinex, Coinbase, FTX and more, Blockworks <a href="https://cms.blockworks.co/former-sec-chairman-jay-clayton-joins-crypto-platform-fireblocks/" target="_blank" rel="noreferrer noopener">reported</a>. 



“We were very excited to partner with [Bankhaus von der Heydt] because there’s a lot of opportunities in the German market,” Michael Shaulov, CEO of Fireblocks, told Blockworks.&nbsp;



Fireblocks has seen strong demand and fast growth in Europe and operates with people in the United Kingdom, Nordics, France, Germany and Switzerland, Shaulov said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It&#8217;s a pretty important market for us. The European market is quite dynamic, you have a lot of challenger banks that we had the opportunity to partner with and FinTechs over there are very active, so it allows us to find very interesting clients that have meaningful activity that extend our reach and services to a large population of consumers,” Shaulov said. </blockquote>



While Bankhaus von der Heydt is Fireblocks’ latest client, it said it has supported a handful of traditional banks in the past including BNY Mellon, Signature Bank and Siam Commercial Bank. Siam Commercial Bank, BNY Mellon and SVB Capital have all invested in Fireblocks previously. With that said, Shaulov said banks are realizing they need to be a part of the transformation of digital assets.&nbsp;



“At the end of the day [banks] weren’t as prepared as they thought they were and at this moment in time, people always say change happens very slowly then suddenly and that’s what happened there,” Shaulov said. “It moved from no one will ever touch [crypto], it’ll die, to this,” he said.&nbsp;



In August, former US Securities and Exchange Commissioner Chairman Jay Clayton joined Fireblocks’ advisory board to help guide Fireblocks “on navigating requirements for the support, development and deployment of solutions for the emerging digital asset infrastructure,” the company <a href="https://cms.blockworks.co/former-sec-chairman-jay-clayton-joins-crypto-platform-fireblocks/" target="_blank" rel="noreferrer noopener">said</a> at the time.



In late July, Fireblocks <a href="https://cms.blockworks.co/funding-news-fireblocks-eco-and-saber-labs-all-raise-millions/" target="_blank" rel="noreferrer noopener">raised $310 million</a> in Series D funding, just four months after its last $133 million Series C round, the company said in a statement. Sequoia Capital, Stripes, Spark Capital, Coatue, DRW VC and SCB 10X co-led the round alongside Siam Commercial Bank, Thailand’s oldest bank. 



Going forward, Fireblocks plans to expand its client base and focus on DeFi, Shaulov said.



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Bankhaus von der Heydt Will Custody Crypto with Fireblocks

<div id="highlights-block_615e020884506" class="highlights">
 <ul>
 <li>As of Wednesday, USDC has a market capitalization of $32.4 billion, up 1110% from $2.68 billion on the year-ago date, according to CoinMarketCap data</li>
 <li>The partnership is expected to roll out in select markets in 2021 and hit international markets for 2022</li>
 </ul>
 
</div>



Financial payments service company MoneyGram is partnering with the Stellar Development Foundation (SDF) to integrate its network with the Stellar blockchain and Circle’s USD Coin (USDC), the company said.&nbsp;



The partnership will provide customers with the ability to convert cash to USDC and vice versa. Additionally, the conversion of cash into Circle’s USDC will increase utility and liquidity of digital assets while helping more consumers participate in the digital economy, the company said.&nbsp;



&#8220;[This partnership] highlights how much more opportunity there is to improve interoperability between traditional and digital financial rails. We believe blockchain on and off ramps offer the right solution,” said Denelle Dixon, CEO and executive director of SDF in an email to Blockworks. “Together, we&#8217;re showing how blockchain and innovations like stablecoins can connect to traditional rails to provide new economic opportunities for previously underserved groups,” she added.&nbsp;



The USDC is a digital dollar stablecoin issued by regulated financial institutions, backed by fully reserved assets and redeemable at a ratio of 1:1 for US dollars, according to Circle’s <a href="https://www.circle.com/en/usdc" target="_blank" rel="noreferrer noopener">website</a>. 



As of Wednesday, USDC has a market capitalization of $32.4 billion, up 1110% from $2.68 billion on the year-ago date, according to CoinMarketCap <a href="https://coinmarketcap.com/currencies/usd-coin/" target="_blank" rel="noreferrer noopener">data</a>.



MoneyGram has helped around 150 million people transfer money to others in the past five years across over 400,000 locations. Stellar’s network has increased to over 5 million accounts since it launched in 2014, according to its website.



In regards to the partnership, Dallas-based United Texas Bank will serve as a settlement bank between Circle and MoneyGram, it said. The partnership is expected to roll out in select markets in 2021 and hit international markets for 2022, the company said.&nbsp;



Businesses like MoneyGram and Western Union are <a href="https://cms.blockworks.co/el-salvador-bitcoin-wallet-could-disrupt-traditional-remittance-markets/" target="_blank" rel="noreferrer noopener">facing</a> competition from Bitcoin technology-based payment services like Strike, which offers instant payments globally at close to no cost. While MoneyGram’s transfers start at no cost, or $0, a transfer fee and currency exchange rate can apply, according to its website. 



This partnership is the latest effort by a traditional financial service company to adapt to the ever-changing world of digital assets. But, some think that these money transfer companies should stick to their traditional industries, rather than competing in new digital asset spaces.



“If I was the CEO of those companies I would stay focused on doing what they do well and try to optimize it. Crypto is an entirely new industry and they will have difficulty adapting,” said Charlie Silver, CEO of Permission.io.&nbsp;



In general, there are many industries that have little to no growth but are still successful like book stores, print magazines, network and cable TV and so on, Silver said. “Although they have a shrinking market, they can still be successful,” Silver added.&nbsp;



Separately, in mid-July, Asia-based cryptocurrency exchange platform Liquid Group, Inc. also announced a joint venture with SDF to provide USDC with Stellar’s network, Blockworks previously <a href="https://cms.blockworks.co/asias-liquid-exchange-adds-usdc-on-stellar-as-global-stablecoin-demand-jumps/" target="_blank" rel="noreferrer noopener">reported</a>. Similar to MoneyGram, Liquid Group said that providing USDC would give users faster and cheaper transactions.



Stablecoin usage is especially high in East Asia due to the Chinese government’s ban in 2017 of direct exchanges of Chinese yuan for cryptocurrency. About 33% of trading activity in 2020 was attributed to stablecoin transactions, according to a <a href="https://cms.blockworks.co/asias-liquid-exchange-adds-usdc-on-stellar-as-global-stablecoin-demand-jumps/" target="_blank" rel="noreferrer noopener">report</a> by Chainalysis.



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