Stellar Smart Contracts Bring DeFi to the “Real World”

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In the growing world of Web3 and digital finance, the adoption of cryptocurrency and the use cases for smart contract technology is constantly evolving. Building on the foundation set in place by Satoshi Nakamoto, the use cases for this technology have transcended from a “peer-to-peer electronic cash system” to tools for human coordination, memes, institutional-grade financial products, yacht clubs and so much more.

However complex or seemingly simple these use cases can be, many have been developed as a way to follow one of the most foundational principles in crypto: the democratization of finance. Crypto has long been hailed as a revolutionary force with the potential of banking the unbanked and creating a borderless system of financial services through innovations in areas such as decentralized finance (DeFi) and stablecoins.

For crypto to truly create an open, inclusive and equitable financial system for all, we need to create clear pathways for all users to access DeFi and remove the barriers that block access to an otherwise boardless, decentralized financial system. In the Stellar ecosystem, projects and developers have long worked to make this mission a reality.

The Stellar ecosystem is creating an equitable financial system, solving real world issues and connecting the digital world of cryptocurrency to the real world of everyday individuals. With the recent launch of Smart Contracts, Stellar is taking the next step and bringing DeFi into the real world.

Even in a growing period of rapid evolution and adoption, the crypto ecosystem remains an intricate maze of technologies and social systems, often only accessible to those who already possess a high degree of financial literacy and are already connected to systems within traditional finance. Underserved and underrepresented communities are often used to validate crypto innovations, but rarely have the means to access them.

Existing services built on DeFi are not broadly accessible, particularly to the underbanked, unbanked and people living in the developing world. Transaction costs on some chains, such as Ethereum, and CEX fees, are not economically tenable to these users, and the necessary infrastructure to bring fiat into DeFi may not exist at all.

Roughly 2 billion workers around the world fall within the informal cash-based economy, or over 60% of the world’s adult labor force. This majority of the adult labor force lacks access to financial services required to easily use these digital assets, often because cash is their preferred method of value.

Despite this population being a key demographic of the digital asset market, most existing methods of onboarding these users require the very things they don’t have access to. CEXs and other popular onboarding tools require bank cards, accounts and other financial services that are both unnecessary and unused by this population.

The Stellar ecosystem stands as a pioneering force in integrating seamless on- and off-ramps to the network, laying significant groundwork for future developments. With the introduction of Soroban, there is an immediate and effortless connection to the network’s existing high-quality assets, along with its well-established on- and off-ramps. This capability positions Stellar uniquely, enabling low-cost transactions in local currencies within markets that other networks find unreachable.

Consequently, this innovation opens up the doors to DeFi opportunities within underserved markets. The advantage of having accessible on- and off-ramps available from the outset means that developers can direct their focus towards creating applications that address the most pressing needs, without the delay of waiting for the necessary infrastructure to gradually expand. This strategic approach accelerates the path towards realizing impactful use cases, enhancing the financial inclusivity and reach of the Stellar ecosystem.

The Stellar network currently is the second-largest blockchain network in terms of on-ramp locations, and the largest on-ramp provider of USDC, with over 81,000 different locations. For context, Stellar’s USDC on-ramps nearly double that of Ethereum, and increases accessibility through a 99% reduction in transaction fees.

Related: Bigger is Better: Why Stellar Is the Leader in Cash-to-Crypto On and Off-Ramps

While some lower-cost alternatives exist – such as Solana, Near and others – Stellar outperforms the competition in terms of transaction costs while also offering a wide breadth of available distribution of on- and off-ramp channels to service underbanked and unbanked users. Combined with its reputation for reliability and uptime, Stellar is an ecosystem for the next generation of finance that can be seamlessly integrated into both cash economies and traditional financial systems.

Focusing on accessibility and the specific needs of the many is how Stellar and Soroban Smart Contracts have truly moved the needle on democratizing finance. In recognizing that there is a world of user needs to be filled, Soroban represents DeFi for everyone. Users can now access DeFi services and applications via a network of global fiat on- and off-ramps, without a bank account required.

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