Stellar (XLM): how it became one of the leading blockchain platforms in the RWA sector
Protocol update
On January 30, 2024, the Stellar Development Foundation (SDF), the organization behind the development of the Stellar blockchain, planned to vote on a Protocol 20 protocol update. However, just three days before the scheduled date, a bug discovered on the blockchain network postponed the vote.
The SDF organization did not publicly disclose the details of the bug so that attackers could not exploit it, but it said the vulnerability posed a "small risk" to the ecosystem. SDF engaged all the developers involved in the discussion so that everyone could voice their opinions and propose their solution to fix the vulnerability.
The Stellar core network (main net) upgrade to Protocol 20 took place on February 17, 2024. Protocol 20's main feature was the support of Soroban functionality, a developer platform that the entire Stellar team had been working on since 2022. Soroban was the platform that added smart contract functionality to Stellar's core network, like Ethereum or Solana.
This made Stellar a full-fledged blockchain platform in February 2024. It allowed developers to build complete DeFi applications for its ecosystem, such as decentralized exchanges, credit protocols, and cross-chain bridges for asset transfers between different networks.
In the second quarter of 2024, the Stellar team released a report stating that the total number of addresses registered on the blockchain network had surpassed 8.4 million, with 400 000 more addresses registered in the last quarter.
Other positive news for Stellar was the partnership with WisdomTree, which has chosen Stellar as its leading blockchain platform for issuing tokenized assets. Wisdom Tree announced the expansion of access to tokenized assets in 41 US states through Stellar's blockchain platform. WisdomTree is also famous for being one of the companies that launched its own Bitcoin-ETF.
Stellar's market performance
Despite the updates and other positive news, the Stellar exchange rate is 90% below its all-time high (ATH) of $0.092 as of October 2024. Since the beginning of the year, XLM's price has fallen 19%, while other major altcoins have shown growth.
The most rapid period of XLM growth was recorded in February 2024 — just ahead of the launch of the Protocol 20 update on the leading Stellar network. At that time, the price of XLM cryptocurrency increased 1.5 times in just one month — from $0.1 to $0.15. However, then the XLM rate began to decline amid the general decline of the crypto market, caused by several factors:
- natural correction;
- bitcoin sales by government agencies;
- distribution of funds to affected investors Mt Gox and Genesis Global;
- the lack of a Fed rate cut.
Despite the correction, Stellar managed to consolidate itself in the top 40 cryptocurrencies in terms of capitalization, which, as of October 2024, is $2.72 billion, although a year ago, this figure reached $3.07 billion. However, directly in the RWA sector, Stellar is among the three largest blockchain platforms, behind only Avalanche and Chainlink.
Stellar's prospects
Despite a disappointing past few months, Stellar clearly has the potential to remain one of the most sought-after blockchain platforms, as indicated by partnerships with major investment firms such as WisdomTree and Franklin Templeton.
In addition, Stellar's blockchain platform has begun to target the RWA (real-world assets) sector, which has become one of the leading trends in the crypto industry in 2024. All of this provides Stellar with good prospects in the future.
One of Stellar's main disadvantages is its underdeveloped DeFi ecosystem, whose TVL (total number of assets blocked in decentralized protocols) was only $11 million as of October 2024. For example, only the Franklin Templeton platform in the Stellar network has a TVL of $413 million.