Stellar is revolutionizing DeFi accessibility for underbanked communities through an extensive ramp network integrated with smart contracts via Soroban.
The concept of Decentralized Finance (DeFi) has promised greater inclusivity and accessibility in the financial sector. However, the reality often disappoints, especially for underbanked and unbanked populations in developing regions.
The high transaction costs associated with chains like Ethereum and centralized exchanges (CEXs) make DeFi services economically unfeasible for many users. While there are more affordable alternatives available, they lack the necessary distribution channels for on and off-ramp services, crucial for reaching underbanked communities. On and off-ramps are services that facilitate the transition between fiat currencies and cryptocurrencies.
To bridge this gap in global finance, Stellar, an open-source blockchain designed for payments and asset tokenization, offers a promising solution. Stellar supports a wide range of in-demand assets, such as USD Coin (USDC), on its platform, enabling these assets to be utilized in smart contracts.
The integration of smart contracts allows users to participate in complex financial activities like staking, borrowing, lending, and yield farming. Soroban, the network’s smart contracts platform, further enhances these capabilities by leveraging its robust features.
Soroban benefits from an established network of ramps, assets, and market services, including partnerships with entities like MGI and its agent network, new and existing ramps, various fiat-denominated assets, and innovative products like the Anchor Platform that offer compatibility benefits through Stellar Ecosystem Proposals (SEPs).
The on and off-ramp services provide immediate accessibility to existing infrastructure, eliminating the need to build new systems from scratch. They also enable expansion into new geographical markets, especially reaching underserved individuals in developing countries who may not have access to traditional banking services. Stellar ranks second only to Bitcoin in physical on-ramp locations globally.
Stellar’s infrastructure is crucial for reaching new users and addressing unmet needs within the global financial ecosystem. Soroban democratizes access to DeFi, enabling users to engage with DeFi services globally without the need for a bank account. This opportunity is particularly beneficial for individuals in regions where financial services are either too expensive or physically inaccessible.
From a development standpoint, Stellar offers builders and entrepreneurs the opportunity to access underserved markets. The network’s coverage allows for targeted solutions, such as providing affordable financing options to small business owners in countries with high borrowing costs. Additionally, the reliability and uptime of the Stellar network ensure that services remain uninterrupted, preserving user trust and retention.
Soroban’s scalability ensures that the ledger can handle increased activity as transaction volumes grow without compromising service quality. This scalability aspect is crucial for developers and businesses considering significant investments in blockchain integration, ensuring long-term sustainability.
Stellar has invested over $15 million in Soroban projects through the Stellar Community Fund and allocated a $100 million adoption fund to support and accelerate the growth of the Soroban platform. This substantial investment aims to foster innovation and development, encouraging a wide range of decentralized applications (DApps) to leverage Stellar’s smart contract capabilities, promoting greater financial inclusivity and accessibility.
Currently, 249 projects are actively developing on Soroban, with 21 already launched on the mainnet, including the lending and borrowing protocol Blend, the automated market maker Phoenix, and the oracle service Band Protocol. This growing ecosystem showcases the robust development and adoption within the Stellar network, highlighting a variety of innovative financial applications.
Platforms like the Stellar network, supported by Soroban, offer robust, scalable, and inclusive pathways to DeFi, capable of reaching global audiences and meeting the diverse needs of various user groups. Stellar’s infrastructure enhances financial inclusivity while supporting the development of a more equitable and efficient global financial ecosystem, demonstrating the transformative potential of blockchain technology in bridging financial divides and empowering economic participation worldwide.
To learn more about Stellar and the new smart contract platform, visit their website. Please note that Cointelegraph does not endorse any content or product on this page, and readers should conduct their own research before making any decisions related to the company. This article is for informational purposes only and should not be considered investment advice.