In the rapidly evolving world of Web3 and digital finance, the adoption of cryptocurrency and the use cases for smart contracts have gone beyond Satoshi Nakamoto’s initial vision of “peer-to-peer electronic cash.” These technologies now serve various purposes, including facilitating human coordination, memes, institutional-grade financial products, and yacht clubs, among others. While these use cases might seem complex or straightforward, they all share a common goal of promoting the democratization of finance. Cryptocurrency has been touted as a potential game-changer with the potential to bank the unbanked and establish a borderless financial system through innovations like decentralized finance (DeFi) and stablecoins. However, the crypto ecosystem still presents challenges, with accessibility being a significant barrier for many, particularly underserved and underrepresented communities. Existing DeFi services are not widely accessible, especially to the unbanked, underbanked, and people living in developing countries. Some blockchains, such as Ethereum, charge exorbitant fees that are unaffordable for these populations. Moreover, the necessary infrastructure to bring fiat into DeFi might not exist at all.
Despite the challenges, the Stellar ecosystem has been working tirelessly to promote financial inclusion. Projects and developers within the Stellar ecosystem have played a pivotal role in achieving this objective. The ecosystem has created an equitable financial system that addresses real-world issues and connects the digital world of cryptocurrency to the real world of everyday individuals. Recently, Stellar launched Smart Contracts, which bring DeFi into the real world. This development brings DeFi opportunities closer to underserved populations.
Roughly two billion workers worldwide operate in the informal cash-based economy, representing over 60% of the world’s adult labor force. Most of these people lack access to basic financial services essential for using digital assets, primarily because they prefer cash. Many of these populations are crucial players in the crypto market but lack access to the necessary tools to get started. Most existing methods of onboarding require bank cards, bank accounts, and other financial services that these populations do not have.
The Stellar ecosystem stands out in addressing this challenge. It offers seamless on- and off-ramps to the network, making it unique compared to other blockchain networks. With the introduction of Soroban, there is an immediate and effortless connection to the network’s existing high-quality assets, alongside its well-established on- and off-ramps. This capability places Stellar uniquely, allowing low-cost transactions in local currencies in markets that other networks consider unreachable. Consequently, this innovation opens up DeFi opportunities within underserved markets. Developers can concentrate their efforts on addressing the most pressing needs rather than waiting for the necessary infrastructure to gradually expand. This strategic approach speeds up the realization of impactful use cases, enhancing the financial inclusivity and reach of the Stellar ecosystem.
Currently, the Stellar network boasts over 81,000 different locations for on-ramps, making it the second-largest blockchain network regarding on-ramp locations. Compared to Ethereum, Stellar’s USDC on-ramps almost double those of Ethereum, reducing transaction fees by 99%. Furthermore, Stellar’s reputation for reliability and uptime makes it 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 meeting the requirements of the many is how Stellar and Soroban Smart Contracts have advanced financial democracy. With Soroban, anyone can access DeFi services and applications via a vast network of global fiat on- and off-ramps without requiring a bank account.
More: The Stellar Network: Use Cases Addressing Global Issues
In summary, while the crypto ecosystem still presents significant challenges, the Stellar ecosystem is leading the way in addressing them. By creating viable solutions that cater to underserved populations, Stellar is advancing financial democratization, promoting financial inclusion, and facilitating access to DeFi services and applications.
Leave a Reply