SatoshiPay, a blockchain-powered payment solution built on Stellar, announced that it has received a research and development grant from the Stellar Development Foundation to start the production of the Pendulum network; a new second-layer blockchain that connects Stellar to the wider DeFi ecosystem by adding smart contract support and bridges to Ethereum and Polkadot.
Connecting Stellar to the DeFi Ecosystem
Stellar is an open-source network that makes it possible to easily create, send and trade digital representations of all forms of crypto and fiat currencies.
Launched in 2015, the Stellar network now processes over 6 million transactions daily. Users experience near-instant settlement, and transaction fees are fractions of a cent.
With a focus on fiat token payments; Stellar would benefit from having support for custom smart contract capabilities; the basis for advanced DeFi apps. Moreover, Stellar needs but currently lacks bridges that connect it to other blockchains. This is exactly what SatoshiPay’s new project Pendulum will provide.
Complex Features Without Sacrificing Efficiency
To achieve advanced features on Stellar without sacrificing efficiency, Pendulum was proposed by the SatoshiPay team. Pendulum is a suite of open, decentralized protocols on which smart contracts can be developed and executed. The Pendulum chain acts as a second layer on top of Stellar. It additionally includes bridges to two of the most popular smart contract platforms, Ethereum and Polkadot.
“SatoshiPay has a proven track record as a key Stellar network and ecosystem participant; and we couldn’t be more excited that they are exploring an opportunity to connect Stellar to the thriving DeFi ecosystem. Pendulum has the potential to build bridges that increase Stellar’s interoperability with other networks; which could enable new use cases and help unlock the world’s economic potential by making money more fluid, markets more open, and people more empowered.”
– Justin Rice, VP of Ecosystem at Stellar Development Foundation
After completing the initial proof of concept, Pendulum will be developed into a full-fledged decentralized layer-2 blockchain that will be accessible for everyone.
“With Pendulum, SatoshiPay is entering the protocol space, which is an exciting opportunity for us to drive forward permissionless innovation and to increase our impact on the blockchain ecosystem. We’ve been discussing options to execute arbitrary smart contracts with the Stellar team for quite some time; and we are delighted to receive their technical input and financial support for this. We aim to bring together the best of two worlds; DeFi applications as we know them from Ethereum with Stellar’s compliant fiat tokens. It will be exciting to see liquidity enclosed in Stellar’s $9 billion market cap and the $7 trillion foreign exchange market interact with the booming DeFi economy via Pendulum.”
– Meinhard Benn, CEO at SatoshiPay
Unlimited Opportunities for Stellar Users
The combination of the existing Stellar ecosystem around compliant payments, remittance, and asset tokenization with new smart contract capabilities; opens up a multitude of new opportunities.
Leveraging Pendulum, Stellar-based services will be able to utilize all the different types of DeFi protocols with a focus on fiat tokens. This includes automated market makers (AMMs) that enable foreign exchange without middlemen or lending protocols for instant on-demand liquidity in different currencies.
Fiat token holders on Stellar, such as individuals, institutions as well as services, will be able to put their funds to work; use-cases suggest depositing them into lending pools or providing liquidity to AMMs. Further, the proposed bridges to the Ethereum and Polkadot ecosystems will allow fiat tokens and liquidity to freely circulate between Stellar, Pendulum; and the wider DeFi economy.
Pendulum for DTransfer
SatoshiPay’s cross-border money transfer service DTransfer relies on efficient foreign currency exchange, as source currency must be transparently exchanged to destination currency during the process.
This is technically possible via SDEX, Stellar’s decentralized exchange; but requires active currency traders for each transfer as market makers. This can cause issues such as delays and outdated exchange rates. The arrival of automated market-making via decentralized smart contracts solves this issue.
Pendulum is under development with services like DTransfer in mind. When Pendulum is live and AMM smart contracts deployed; DTransfer will benefit from instant currency exchange at optimal rates.