Why Stellar (XLM) could see increased adoption

Level 0 of Stellar Protocol 20 went live on testnet yesterday. The Stellar Foundation has deployed the first smart contracts, which could form the basis of decentralized services and become stronger for the XLM token and challenge Ripple.

The Stellar Foundation confirmed yesterday that it released Level 0 of the Stellar Protocol 20 to expand the network's functionality.

How smart contracts are deployed

Stellar Protocol 20 Level 0 gives developers the first round of tools to start building on the network. It allows verifiers to expand their marketing capabilities. The project will later move into Phase 1 as verification capacity increases.

Read more: How to buy Stellar (XLM) and everything you need to know

After this, developers move some applications to the main network. The community will stress-test and evaluate the network before distributing decentralized applications to everyone. DeNeele Dixon, CEO of the Stellar Development Foundation, said the release of Stellar Protocol 20 is a testament to the hard work of developers.

“Protocol 20 is officially live. Modern contracts on Stellar are here! Streamlined transactions, expanded use cases, heightened security and more – it's a game changer for the network, and it's all thanks to the heart and hustle of this ecosystem. Dixon said.

The Stellar Network was founded in 2014 by Ripple co-founder Jed McCaleb. On Stellar, users can exchange currencies on the network without third parties.

The new smart contracts will power peer-to-peer financial services in developing economies. It was originally designed to digitize any currency but not completely replace them.

Ripple Labs offers similar functions but is aimed at institutions. The company released XRP as a neutral currency for cross-border payments in a 2021 white paper.

Modern contracts can create an XLM Surge.

If smart contracts attract enough users to the Stellar network, the demand for Stellar's native XLM token could rise. The Stellar Foundation requires network users to hold at least 1 XLM token to participate in the network.

Since the network does not inherently reward crypto staking, users are not encouraged to hold the token. Ultra Stellar, a third-party commodity platform allows users to exchange XLM tokens for derivatives.

However, considering the goal of Stellar Protocol 20, the value of XLM may increase, which is to expand the transaction processing capabilities of validators. While a single transaction can cost 0.00001 XLM, it can increase as the transaction volume increases. Coupled with the increase in users, the token can generate huge profits for users.

Read More: Stellar (XLM) Price Prediction 2023/2025/2030

In November, BeInCrypto predicted that the $0.1100 price area could be critical for XLM's future. A rise in this support area can lead to an increase to $0.161, a breakdown can cause the price to fall to $0.078. The price of XLM is currently $0.1146.

BeInCrypto has reached out to Ripple Labs for comment on the release of smart contracts on the Stellar Network, but has not yet heard back as of press time.