A smart contracts platform allows developers to write code to a blockchain, but that alone is not sufficient to build full-fledged products and services that support real, sustainable smart contract use cases that execute safely and efficiently.
A smart contracts platform allows developers to write code to a blockchain, but that alone is not sufficient to build full-fledged products and services that support real, sustainable smart contract use cases that execute safely and efficiently. Building out those end-to-end use cases requires interlocking building blocks that work in combination to effectively control and respond to actions and events. Even a technically powerful smart contract platform like Soroban doesn’t really function without them: it’s like a house wired for electricity without sockets, light bulbs, or appliances plugged in. The importance of smart contract building blocks is fundamentally about turning on the platform: adding in the sockets, screwing in the light bulbs, and plugging in the appliances until the whole house is glowing and humming.
But not only that: blockchain is unique in that applications share state, or a single database, which presents challenges but also enables previously unseen levels of compatibility and interoperability. The interrelatedness of components in the ecosystem means that builders can be massively productive by utilizing the work of others. Soroban's architecture and integration with the Stellar network will enhance this interoperability, allowing developers to create more complex and interconnected applications.
Essential building blocks that power a smart contract ecosystem include:
As a core use case of smart contracts, decentralized finance (DeFi) leverages blockchain and smart contract technology to provide financial services to users around the world without the need for banks or traditional financial institutions. Yet for smart contracts to enable these DeFi capabilities, they need to offer end consumers the ability to do something with the assets once they’re on-chain. As rules and standards that govern decentralized finance applications, DeFi protocols are crucial to the ecosystem because they enhance access, increase trustlessness, and remove mediating parties, giving users immediate control over their own funds. Essential financial building blocks that offer these DeFi capabilities include:
Soroban's support for decentralized finance (DeFi) and its compatibility with various DeFi protocols will make it a powerful platform for building financial applications that leverage these essential building blocks.
While the above protocols and financial building blocks provide the functionality for different types of financial actions and events, they often rely on real-world conditions to execute. Lending and borrowing protocols might need up-to-date exchange or interest rates in order for the smart contracts that leverage them to run. AMMs might need price information to stay updated on market conditions in order to stabilize their liquidity pools and keep them adaptable. To solve these challenges, real-world data access tools are essential, including:
Soroban's robust data access tools, including support for oracles and indexers, will provide developers with the necessary resources to connect smart contracts with real-world data and ensure accurate execution.
Beyond DeFi protocols that enable the code of a smart contract to run, and the data access tools that connect the smart contract to the real world, end users and developers need tools to interact with and interpret what is happening on-chain. An end user may want to know their account balance or whether or not their last transaction went through. They may also wish to know how liquid the market is or how many other people are participating in an AMM’s liquidity pool. Likewise, end users need a user-friendly way to manage and interact with their assets. Essential user interfacing tools include:
Finally, in order for developers to trust using a smart contract as part of their application they need to be able to trust the underlying implementation. A thriving smart contracts ecosystem needs mechanisms in place to ensure this trust and security for its contracts. These essential mechanisms include:
To illustrate the interlocking nature of these ecosystem building blocks, we might imagine a DeFi end user without access to a traditional financial institution. This user is looking to lend digital assets to earn yield, without the fees, intermediaries, and inefficiencies associated with centralized lending markets. Once they download a smart wallet onto their phone, the wallet lets them deposit local currency cash through Moneygram and gives them USDC in return. Via the wallet, the user is then able to deposit a portion of their assets into an integrated lending market. As needed, the user can use a block explorer to check the status of their transactions. Without access to a traditional financial institution, this user could not deploy their capital to make a loan. Smart wallets and their DeFi capabilities make this possible for consumers globally, providing financial access and opportunities that would otherwise remain unavailable.
Behind the scenes, the app that enables the digital lending in this example leverages the many smart contract building blocks that power these DeFi capabilities. While the smart wallet interface is obviously central to the consumer experience, the app also leverages a DeFi lending protocol, which in turn uses an oracle to fetch prices in order to inform the consumer’s lending and exchange actions. Since these tools have already been built and integrated into the platform’s ecosystem, the app developer does not need to establish their own unique partnership with USDC to enable the user’s Moneygram deposit and exchange. They likewise do not need to create from scratch the functionality for the block explorer integration. Instead, all of these smart contract building blocks have already been wrapped in the platform’s standards and are ready for use by the ecosystem.
Soroban's comprehensive ecosystem and integration with the Stellar network will make it an ideal platform for building and deploying DeFi applications, providing users with financial access and opportunities that would otherwise remain unavailable.