San Francisco — November 3, 2021 — Today at 15:00 UTC, Stellar validators voted to upgrade the network to Protocol 18, which adds Automated Market Maker (AMM) functionality to the Stellar protocol. This makes Stellar one of the earliest Layer 1 blockchains with a protocol-native feature for AMMs. Liquidity pools can be created on Stellar without requiring smart contracts — the most common AMM implementation to date — and without the high gas fees transactions require on other networks.
Users can now access products and interfaces created by ecosystem developers to deposit into liquidity pools, helping to create liquidity for cross-asset conversion. Cross-border payments leveraging AMMs will utilize liquidity pools if the rate is better than what is available through Stellar’s decentralized exchange. Trades executed against a liquidity pool will get the best available rate on Stellar, to the benefit of both those making cross-border payments and the liquidity providers. The liquidity pools retain a 0.3% fee on transactions that is distributed to liquidity providers.
The Stellar Development Foundation prioritized improving liquidity in our 2021 Roadmap. Stellar is optimized for cross-border payments and asset issuance, so market liquidity to enable quick and efficient asset conversation is fundamental to the network’s success. Enabling AMM functionality has the potential to help the network thrive and grow by making liquidity provision an accessible, simple, and inclusive process. It is one approach SDF has prioritized to democratize liquidity provision and make asset conversion more efficient.
SDF took a novel approach to this network upgrade, sharing technical documentation and access with developers early on. SDF development teams coded AMM functionality with input from the Stellar ecosystem and put together documentation and tools that developers could use to build their AMM products and interfaces at the same time. Ecosystem developers were able to start building user interfaces that became accessible at the same time the protocol upgrade was approved.
Justin Rice, VP of Ecosystem at SDF, said, “The introduction of AMM functionality may prove to be a defining moment for Stellar. For the first time, a range of independent participants from across the ecosystem worked hand-in-hand with protocol and API developers to implement a new feature in advance of a network upgrade. We're excited at the potential their products and services have to boost network liquidity, make liquidity provision more inclusive, and further Stellar's ability to improve equitable access to the world's financial infrastructure.”
Select interfaces built by ecosystem developers are already available and in use.
Stellar is a decentralized, fast, scalable, and uniquely sustainable network for financial products and services. It is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world’s financial infrastructure. Financial institutions worldwide issue assets and settle payments on the Stellar network, which has grown to over 5 million accounts.
About Stellar Development Foundation
The Stellar Development Foundation (SDF) is a non-profit organization that supports the development and growth of Stellar, an open-source network that connects the world’s financial infrastructure. Founded in 2014, the Foundation helps maintain Stellar’s codebase, supports the technical and business communities building on the network, and serves as a voice to regulators and institutions. The Foundation seeks to create equitable access to the global financial system, using the Stellar network to unlock the world’s economic potential through blockchain technology.