The Stellar Development Foundation has announced the successful deployment of “Protocol 20” on the Stellar blockchain, heralding the eagerly anticipated introduction of Soroban smart contracts to the mainnet. The absence of smart contracts has garnered significant criticism for Stellar, making this upgrade a notable milestone.

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Founded in July 2014 by Jed McCaleb, David Mazières, and Joyce Kim, Stellar aimed to establish a decentralized protocol for sending and receiving money in any pair of currencies. Its primary objective is to facilitate the exchange of a wide array of currencies, encompassing both fiat and crypto, via its native digital currency, Lumens (XLM). 

In the early days of crypto, projects vied with Bitcoin, primarily on cost, where lower transaction fees and improved scalability were key attractions for the burgeoning market of crypto enthusiasts. However, the emergence of Ethereum in 2015, and the ICO boom of 2017, underscored the limitations of blockchains devoid of smart contract functionality, and they were increasingly seen as inferior. 

Smart contracts don't just enhance a blockchain’s functionality, they also enable the development of ecosystems around projects—a critical goal for many.

It took Stellar a decade to introduce smart contracts. After two years of testing, the mainnet phase 2 of Soroban went live, facilitating the creation of decentralized applications ready for end-users. As the saying goes, better late than never. 

On the technical front, Stellar's smart contracts utilize the Rust programming language, making it akin to Solana in this respect. As per the announcement, Stellar opted for Rust because it is a versatile programming language widely used by developers globally. Another choice could have been Solidity, the language employed by Ethereum and its numerous Layer 2 solutions, however, Stellar chose not to pursue this route.

Yet, the pool of available Rust developers for blockchain work is smaller compared to Solidity developers, and Rust is considered more complex. Furthermore, Stellar is competing for Rust talent in an ecosystem where Solana already has a significant presence. Given these circumstances, it could certainly be difficult for Stellar to attract developers.

Notably, Stellar announced a $100 million fund to promote development on Soroban, supporting over 160 projects thus far. With substantial funds to foster ecosystem growth and incentivize developers, the foundation appears well-equipped.

Despite the delays in its development timeline, the introduction of smart contracts is undeniably a positive step for Stellar. However, given its history of slow progress, it remains to be seen whether Stellar can successfully kickstart its ecosystem to achieve meaningful impact. We continue to Observe.

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