Stellar is an open-source blockchain that connects digital institutions and people worldwide. It is more affordable and efficient than other blockchain-based financial systems. Stellar blockchain solutions offer a wide range of use cases that are increasing fast. It provides security, decentralization, efficiency, and more to various blockchain projects. This article takes a look at the use cases of this emerging blockchain.
Understanding Stellar Blockchain
Stellar is an open-source network for issuing assets and making payments. You may generate, transfer, and trade digital representations of all currencies on Stellar.
Stellar provides unrestricted communication between every financial system around the globe through a single network.
The blockchain uses an eco-friendly syncing mechanism, proof-of-agreement. It completes the transaction within a few seconds.
Additionally, the platform charges minimal fees for transactions. Users require lumen, the native currency of Stellar, for money transfers.
Also, Read: Stellar Blockchain App Development | A Comprehensive Guide
Stellar Use Cases
From multi-currency transactions to FinTech solutions, we have listed the top Stellar use cases below:
Multi-currency Transactions
The processing of multi-currency transactions using Lumen is one of the top use cases of the Stellar blockchain.
Lumens acts as a bridge between two currencies by allowing exchanges between two currencies if there isn't a direct market for them.
It is crucial in enabling international trade.
Cross-border Payments
Stellar blends the strength of a seamless, blockchain-based payment channel with the ability to live on- and off-ramps to many foreign currencies. It is possible with the help of local collaborators. These collaborators, known as Anchors, receive and disburse local fiat currencies while moving their values over the Stellar network.
The service operator and the customer can do their business in their respective local currencies without any intermediary bank.
In essence, Stellar substitutes a single conduit for both the currency conversion and international wire processes.
Also, Read: Is Stellar Blockchain a Right Fit for Cross-Border Payment Solutions
Decentralized Exchange
Stellar assists exchanges in enabling compliant on/off ramps, including cash-in and cash-out points. Thus, it gives exchanges access to regional currencies in neglected regions, such as those lacking bank accounts.
Stellar uses Anchors to enable collaboration between conventional and digital financial institutions under one roof. Anchors are natively interoperable on/off-ramps within the Stellar network. They provide standardized services for changing local cash into Stellar-based assets and vice versa.
Remittances
Middlemen lead to lengthy settlement periods and higher operational expenses. Thus, it is challenging to grow remittance services to those who require them the most.
Stellar uses two effective payment protocols to track the transfer of digital representations of different currencies. Thus, it assists companies in facilitating international trade without middlemen like correspondent banks.
Businesses employing Stellar have direct access to an anchor network of partners to distribute and accept fiat (conventional currency).
FinTech
Stellar is a tested blockchain network designed for interoperability between different international payment systems. It also sets the bar for compliance. Stellar enables fintech businesses to provide underbanked customers access to more financial products and global accessibility to USDC and other stablecoins.
Related Post: Building Next-Gen Fintech Solutions with Stellar Blockchain
Asset Issuance
Businesses can use Stellar to virtually represent financial items and physical assets, such as stablecoins, Central Bank Digital Currencies (CBDCs), and more. It enables clients to access their assets instantly, affordably, and timely.
Central Bank Digital Currencies (CBDCs)
Lumens is most appropriate for CBDCs owing to its trust system. There are two assumptions for Stellar's security.
First, each issuer is motivated to protect their asset and can be relied upon to tell the facts about that asset.
Second, while issuers desire to cooperate with other nations, they won't "cheat" or unilaterally violate the regulations if doing so would isolate them from the rest of the world.
The valuation of the assets in the blockchain and users' desire to maintain synchronicity with the parties issuing and redeeming those assets are the sources of governance authority. Since there is no central point of control, the system can ensure the interoperability, privacy, and safety of these assets.
Also, Read: Stellar Based Real-World Blockchain Solutions | Scanning the Stellar World
Conclusion
Stellar is promoting financial inclusion to individuals around the globe by utilizing blockchain technology. The network offers services similar to a traditional bank with a few significant variations. Stellar connects individuals worldwide to affordable financial services.
If you require a partner to build solutions on Stellar blockchain, then Oodles Blockchain can help you. Contact our Stellar developers if you want to develop and integrate Stellar applications from scratch. Our blockchain specialists will consult with you to determine your needs and what you'll require for your organization.