Stellar is an open, interoperable payment and currency system. Below, we explain a few powerful unique-to-Stellar financial features—asset issuance, the network’s distributed order books, and the path-payments system—that will enhance and simplify any fintech product.
Stellar allows a user to create a redeemable, tradable representation of any asset. Such representations are called tokens. Tokens are most useful when tied to currencies (representing dollars or yuan or euros digitally makes payments borderless and instant) but in theory, on Stellar, you could issue a token for corn bushels or gold or shares of a REIT or an hour of your time as a consultant. In a sense, Stellar offers a generalized toolkit for anyone to do what Tether did for the Dollar with their USDT, or what Coinbase is doing with their USDC. Stellar lets you digitize value and then issue and redeem claims on it; the platform was designed for stablecoins before stablecoin was even a word.
By default, Stellar tokens can be seen, held, and traded by any user, but they are highly configurable. If you have specific compliance needs you can, for example:
require that any holder of your token pass your KYC program
enforce Reg D ownership requirements for your token
control access to your tokens via multi-signature accounts
create time-locked escrows for any account or asset
This functionality is built in at the protocol level; tokenization is a fundamental part of the network, so the supporting code is reliable, vetted, and fast. The ability to issue and redeem assets is one of Stellar’s most powerful features. It means that all asset types can take advantage of Stellar’s global reach, near instant transaction times, and ultra-low costs. You can get started in just a few simple steps; read the docs for complete technical details.
On Stellar, you can trade tokens peer-to-peer
Every token on Stellar is exchangeable with any other token on the network, and the Stellar protocol itself connects buyers and sellers. Users can submit their bids or asks to the public network via a single, simple operation, and every few seconds compatible trades will automatically resolve. No middleman arranges settlement and no entity acts as an intermediate custodian. In short, there is a decentralized exchange (a.k.a. a DEX) built into Stellar’s ledger system.
Among the top blockchains, Stellar is unique in this regard. The base Stellar protocol not only tracks balances (as Bitcoin or Ethereum do) but also tracks and settles trades between balances in a decentralized, ownerless way.
For example, open orders for NGN versus XLM would look like this:
As you can see, Stellar looks and acts like traditional trading platforms—you can view open orders, trade history, and market depth—but all these offers tie back directly to on-chain Stellar accounts. You’re not trusting an exchange to hold your assets, or relying on them to settle your trades. You hold your own assets. You’re in control. And the network guarantees settlement.
On Stellar, you can transform currency as you send it
Like any payments system, Stellar allows one user to send currency to another. User A can send User B dollars or lumens or whatever. But Stellar also allows a user to send one currency and have the recipient receive another. Essentially, you can send and exchange money in a single atomic transaction.
This is called a path payment. It’s a powerful innovation for international payments; for example, an American company can pay an invoice in Mexico by spending dollars, while the vendor receives pesos. Neither side incurs exchange risk or delays. Both sides get only the currency they want.
Here’s how it works:
The sender in the U.S. holds dollars and signals to the network they want to send pesos to the vendor.
The network searches through the decentralized exchange described above and finds the best dollars-to-pesos price for the sender.
The network locks in the prices and amounts.
The sender confirms the transaction and the dollars leave their account.
The transaction executes and the recipient gets the pesos. The payment is atomic and submitted to the network as a single transaction. Neither side can get “caught in the middle” and hold currency they don’t want.
The sender doesn’t have to hold pesos. The recipient never holds dollars. Neither side has to manually convert; Stellar automatically finds the best conversion rate. Path payments are the fulfillment of Stellar’s interoperability promise: value flows seamlessly from account to account taking whatever form the holder requires.