The magic of payments on Stellar

We believe Stellar is the best open network for payments.

4 min readMar 16, 2020

And here’s why.

Have you ever made a payment on Stellar?
If so, you know how fast it is. The ability to send money to anyone in the world without any third parties in less than 5 seconds is quite impressive.

Transactions fees are low and predictable. And transactions are always final and non-reversible. If you received a payment, you can be sure it won’t be rolled back. There’s no need to worry about miners, unstable block times or count a certain number of confirmations before accepting payments.

This helps Stellar provide a better user experience compared to other decentralized systems like Bitcoin or Ethereum.

Lumens are native currency of the protocol, and a small amount of lumens is needed to use the network. But Stellar is a platform for all forms of money. The real power of Stellar is that it provides a single interface to move and exchange all kinds of value.

Anyone can issue any type of assets on Stellar. Those can be fiat tokens, company stocks, bonds, tokens anchored to other cryptocurrencies or to objects in the real world (like real estate or precious metals).

With all these forms of value available on the network, there needs to be a way to exchange them. And this is where Stellar shines again.

Typically, asset exchange is done with a help of a third party organization. That company would connect buyers and sellers together, and act as a centralized custodial for the assets that are being exchanged.

Aside from the fees charged by these companies, this approach also comes with additional security risks. Exchanges have been a target for hacker attacks since the early days of cryptocurrency, and users have been guilty for using exchanges as a long-term storage solution for their digital holdings.

Stellar offers a better approach. It allows users to trade tokens peer-to-peer.

The whole network has a unified exchange layer built-in. Stellar Decentralized Exchange (or SDEX) allows users to trade any token with any other token on the network, and still be in control of the funds.

Users don’t need to move their funds to exchanges, don’t need to provide personal details to make those trades, and don’t risk having their funds locked or stolen while being held on exchanges. And since all applications utilizing the power of SDEX share the same order book, they all have access and can contribute to the shared liquidity pool of the network.

There’s more. Stellar allows to combine payments together with asset exchange. The core protocol supports cross-asset payments (or “path-payments”), enabling you to send and convert currency in a single transaction.

So you can send USD, but have the recipient get equivalent amount in other token, for instance, EUR. The currency conversion will happen automatically, through SDEX, finding the best rate available.

The features mentioned above make Stellar network ideally suited to handle cross-border payments. And this has been recognized by many companies around the globe launching fiat-backed stablecoins on Stellar.

There’s also a standard protocol that allows wallets to interact with asset issuers, which is called SEP-0024. It allows users to seamlessly transition between digital assets issued on Stellar and their underlying real assets.

SEP-24 essentially enables anchors to integrate their on- and off-ramps into other products. So if you want to purchase some stablecoin tokens, you can use your Stellar wallet to make a regular bank transfer to the anchor, and the anchor will send you digital tokens directly to your Stellar wallet. And similarly, a receiver of your payment can use their local anchors to withdraw digital tokens on Stellar to a fiat currency directly from their wallet.

Stellar is not limited to cross-border payments though.
With the ability to handle over 1000 transactions per second, we believe that some day you will actually use Stellar to pay for your coffee and that it’ll be as easy as paying with VISA or Mastercard.

Considering that we’ve been building on Stellar for over 5 years, it should come as no surprise that we believe in the future of Stellar Network and see great potential for this technology.

Our mission as a Stellar wallet and decentralized trading platform is to provide our users with the simple and secure interface, so they can use the full power of the Stellar network. For sending money throughout the globe, for trading stocks, for buying coffee and for discovering new interesting assets.

In the upcoming articles we will be take a deeper look at the specific features of Stellar protocol and highlight their use in LOBSTR wallet, such as:

  • the power of federations;
  • sending assets to users without a trustline or even without a Stellar account;
  • path-payments;
  • on-ramps and off-ramps for anchored assets using SEP-0024;
  • asset discovery;
  • delegated signing;
  • multi-signature;

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