Steller’s Smart Contract Updgrade Faces Delay, XLM Looks to Bounce From -12% Monthly Performance

 Key takeaways:

• Stellar’s major Protocol 20 upgrade was delayed beyond its January 30 target date after a minor bug was found in the new software.
• The bug poses little risk but the Stellar Development Foundation decided to postpone the validator upgrade vote to allow time for fixes and coordination.
• The upgrade aims to add smart contract functionality to Stellar for the first time, which could reinvigorate the network and its XLM token.
• XLM has declined 12% in January amid broader crypto weakness, currently priced at $0.11498

Stellar’s highly anticipated upgrade to enable smart contract functionality on its blockchain is facing a delay beyond the initial January 30 target. The postponement comes after the discovery of a minor bug in the upgraded software.

The Stellar Development Foundation (SDF), the non-profit organization behind Stellar, announced uncovering the bug on January 25 in the Stellar Core v20.1.0 software. While the bug was considered low risk, the SDF received substantial feedback from developers recommending a delay to ensure proper fixes.

Based on ecosystem feedback, we’ve decided to disarm our validators in support of postponing the Protocol 20 vote on Jan. 30 until after a bug fix – which is already in the works – is available.

Read more about our decision below. https://t.co/b0hXJqlqem

— Stellar (@StellarOrg) January 27, 2024

The news came amid a 12% monthly decline for Stellar’s XLM token, as investors hope the upgrade will revitalize the blockchain.

Consequently, the SDF has decided to “disarm” its validators, preventing them from voting for the upgrade on January 30. This should effectively delay the upgrade, pending bug fixes and further coordination on a new date.

The bug relates to “pre-authorization” of transactions, a feature enabling users to pre-sign transactions for later execution. If triggered, it could cause certain transactions to fail or face rejection on the upgraded Stellar network.

Why Does This Upgrade Matter?

The upgrade, known as Protocol 20, aims to introduce smart contract capabilities to Stellar for the first time. Smart contracts are self-executing programs that enable decentralized applications, tokenization, DeFi, and more. 

As one of the earliest blockchain projects, launched in 2014, Stellar was designed for cross-border payments. However, increasing competition from smart contract platforms like Ethereum has prompted innovation efforts.

Moreover, Protocol 20 specifically incorporates a new smart contract language called Soroban. Developed by SDF and the University of Sydney, Soroban offers advantages in simplicity, efficiency, and security compared to alternatives.

The upgrade is a major milestone for Stellar, expanding utility and attractiveness of its network. It could also boost adoption of Steller’s XLM token in the long run.

Delay Impact on Stellar’s XLM

The XLM token has declined 12% in January amid broader crypto market weakness. Some attributed the slump to lack of fresh momentum for Stellar. The token is currently priced at $0.114980, a 0.92 decline in the last 24 hours.

Investors hope Protocol 20 will re-energize XLM by boosting Stellar’s prospects and visibility, which could increase demand for the native asset.

In the short-term, the delay’s impact on XLM price is expected to be limited. But a successful upgrade later could catalyze a recovery from current lows.

XLM previously rallied 300% in 2020 and hit an all-time high of $0.93 in January 2018. The asset has shown potential but needs a catalyst like Protocol 20.

What’s Next After The Delay? 

The SDF aims to release a bug fix within two weeks. It will then coordinate with validators on a new upgrade date.

Other validators can still choose to vote for the upgrade, if they achieve quorum. However, most major validators are aligned with SDF on delaying.

The SDF maintains that the bug poses minimal risk to Stellar’s current network and services. The delay is primarily to ensure smooth transition and community readiness for such a significant upgrade.

While disappointing for some community members, the delay highlights the project’s commitment to delivering a robust and secure smart contract solution. The temporary setback is unlikely to derail Stellar’s roadmap significantly.

As fixes progress, Stellar now faces the task of maintaining engagement and excitement around Protocol 20. If successfully implemented later this year, the upgrade could prove to be a windfall for the veteran blockchain network.