Stellar Lumens and Visa: Match Made in Heaven

Stellar Lumens Apr 09, 2021

Recently, Visa announced that they would be integrating cryptocurrency for payments.

While rumors that this would happen have been rumbling for months, the announcement, which was made by Visa on March 29th, 2021, was the first affirmation from the massive card provider that they would actually pursue this direction.

Below is a snapshot from their press release:


Getting right to the point, the press release opens up by outlining their vision comprehensively:

"When Dee Hock founded Visa, he envisioned creating the world's premier system for the exchange of value. In today's world, that means adapting the Visa network to accommodate new form factors for money. With this in mind, today we proudly shared some historic news about our digital currency efforts."
"The first transactions settled with Visa in USDC Coin, a regulated stablecoin backed by the US dollar and transacted over the Ethereum blockchain. For the crypto-enthusiasts and payment experts among us, the significance of this news may be apparent - but for everyone else, we wanted to take a moment to explain what we've done..."

You get the gist.

Let's dissect this for a second though and then map out how this applies to Stellar Lumens, specifically.

Breaking Down Motivations Behind Visa's Use of USDC

While those in the crypto space may tout the supposed benefits that come with using blockchain - most of these claims are esoteric and philosophical in nature.

In other words, many of the supposed benefits aren't actually realized in a productive manner when implemented in real-life scenarios.

Visa is Not a Crypto Idealogue

Blockchain, in its ideal form, would obsolete the need for Visa. We all know this.

So why would they foster the emergence of a burgeoning technology that many claim is virtually indestructible due to the network's collective strength that's distributed in locations all over the world?

The answer is simple.


Bitcoin and Ethereum Are Unlikely to be Used in Any Substantive Way by Visa

The reason why is simple. These networks cannot be unilaterally  controlled in a manner where Visa can ensure that its ass is covered.

Currently, Visa enjoys the benefit of being able to reverse, freeze, and identify transactions wherever they're made on their network.

However, this same privilege does not exist if they allowed individuals to use "raw" Bitcoin and Ethereum.

This is more than likely the motivation for integrating USDC before all other options. As stated in the press release, USDC exists as a 'stablecoin' that was instantiated on the Etheruem blockchain.

The currency itself is backed by Circle, which is funded by Goldman Sachs and Digital Currency Group (among others). Being a 'smart contract', the owner of the contract has the ability to freeze funds, tack fees on transactions, and delegate the minting / burning of funds to a specific address.

Addresses can also be whitelisted, contingent on some set of requirements (like KYC/AML). So this falls in line perfectly for what Visa is offering.

No Way Ethereum Will Be Used in Production by Visa

Many misinterpreted the announcement to be a 'coming out party ' for Visa. Those assumptions are bewildering.

Visa may have piloted their idea on Ethereum (in the best case scenario), but iterating this structure on top of Ethereum is simply too impractical.

Sole Reason Why Ethereum is a No-Go = Gas Fees

They're outrageous at the time of writing, and based on what we're seeing over time, in terms of on-chain data as well as community governance, it does not appear as though the situation will be getting better anytime soon (despite enthusiastic promises otherwise).

Below is a look at the average gas price (at the time of writing):


While today's rate (128 GWEI), may seem relatively low for a fast transaction when comparing to the average GWEI on other days in this month / year, this is not the case, if we take a look at what they were historically (just one year ago).

Below is a statistical readout from 'ycharts', showing how much gas costs have increased in the past year alone (not in USD, but pure GWEI).

To make matters worse, the current GWEI rate that we're seeing (for a 'fast' transaction) more than likely isn't indicative of what its been at over the past few days.

A chart below shows what the average GWEI rate was (for a fast transaction) was on various days over the past month or so.

In the chart above, we can see that the GWEI rate, on average, has floated at values (daily averages) in excess of what we can see, even now.

What would it be if Visa were to come aboard the platform?

Biggest Hint That Visa isn't Going to Use Ethereum

This can be found in the quote provided by 'Diogo Mónica, Co-Founder and President of Anchorage'.

Specifically he stated:

'Visa came to us in 2019 with an idea — make secure, efficient, and seamless settlement payments possible in digital currency, by linking Visa’s treasury with Anchorage’s custody platform'
'This would give the next generation of crypto native issuers the option to directly settle with Visa in a digital currency over a public blockchain'

By insisting on the use of the word 'public blockchains' instead of stating the "Etheruem blockchain" speaks volumes to the direction that Visa plans on going here.

Visa's Stipulated Requirements Tell Us All

Under the subheading, 'The Journey to USDC', in the Visa press release, Visa is explicitly clear about the stipulated characteristics that its preferable blockchain must have.

Those are:

  1. "Demand: What assets are our clients interested in settling and receiving? Is there a vibrant ecosystem and development community to support this asset?"
  2. "Stability: Does the price fluctuate? Is there sufficient liquidity to convert to and from the digital asset? How long would transfers in and out of this digital asset take and how does that impact the settlement process?"
  3. "Security: Does the asset have a clear set of compliance and regulatory protocols supporting it? Are there trustworthy infrastructure players and partners that support it? Is there a clear governance or scheme supporting the asset? Are there any major vulnerabilities or risks?"

Going further, they specifically mention that there are an 'emergence of new use cases forming arouned USDC', which include "border B2B payments, trade settlement, and remittances".

Are there any blockchains out there that are suitable for this purpose?

Stellar Lumens' Big Break

Stellar Lumens announced support for USDC (live) circa December 7th, 2020.

Below is a screenshot from Stellar's website detailing the ecosystem integration.

Remember those three facets of USDC that Visa was mentioning?

To reiterate, they were:

A) B2B Payments

B) Trade Settlement

C) Remittances

Stellar Lumens Claims That its USDC Integration Will Facilitate SME Payments

For those that don't know, SME stands for 'Small and Medium Enterprises'. In other words, this covers the B2B aspect of things.

Stellar Lumens Literally Advertises 'Remittanaces' as a Use Case for their USDC Integration Right On Their Site

Stellar Lumens Facilitates Currency Swapping With USDC


Stellar Lumens' Blockchain Construction Facilitates Visa's Use Case

Despite what they may state publicly in their press releases, Visa isn't really looking too embrace the revolution of blockchain in the form of Bitcoin.

Instead, they're opting for a network that is upheld by players that can be trusted (apart from themselves), so that they can offload resources to said network in exchange for paying back some of the fees that are charged (but not so much in fees to where the cost of paying those fees would exceed other means of settling transactions).

Stellar Lumens Quorom Slices: Perfect Design For Visa

The thing about Stellar Lumens that many may not realize, is that they're designed for major centralized entities to leverage their technology.

When they mention a 'distributed architecture', they're referring to a distribution of miniature leaders (Byzantine Generals), whom other nodes on the newtork rely upon to dictate a version of the blockchain.

In a write-up by the Stellar Lumens, they elaborate by stating:

"In FBA, there's no gatekeeper and no centralized authority, so individual nodes decide which other participants they trust for information. Nodes can have multiple slices, and these individual node choices may be base don extrinsic criteria."
"For example, a particular bank might be viewed as reputable, causing other nodes to require its acknowledgment of all transactions; a company might already have a financial relationship with a credit union and want to make sure it and the bank both sign off on all transactions."

This essentially creates a structure where Stellar Lumens is likely to funciton best if they have a network upheld by reliable clients nodes that would not attempt to usurp or undermine consensus by developing 'disjoint quoroms', as the team describes.

Below is an illustration showing how a 'disjoint quorom' can manifest:

Stellar Lumens' remedy to this is to create a multi-layered voting process that involves federated federations interacting with one another via intersections, with the goal of allowing nodes to still 'have a say', whilst allowing for that say to be trumped by the majority with thei intentions of ensuring that, if this does happen, the alternative is still among the universe of affirmative preferences a node may have.

In the way that Stellar attempts to map it out in their whitepaper, the quorom slices almost remind one of BLS round-based signatures (cryptography).

See below:


Shaky News For Stellar Lumens

While the information stated above may seem extremely positive for Stellar Lumens, there are still some potential setbacks that could significantly inhibit the project's current opportunity to become "home" for Visa as it pertains to blockchain integration.

Stellar Lumens Blockchain Went Offline Recently

A couple of day  ago (April 7th, 2021), it was reported that Stellar Lumens' blockchain was brought to a halt due to the outage of 'several validators'


According to CoinDesk, more than half of Stellar's nodes had went down at some point in time, due to the failure of their "public Horizon API instance".

This Issue Must Be Fixed if Stellar Lumens is to Capitalize on its Present Opportunity

With XRP all but an after thought at this point in time, Stellar Lumens is in prime position to take advantage of the gap their absence (as a functionally relevant) project has created in this space.

However, their success in doing so will be contingent on ensuring that their architecture can be more reliable than what we've seen from it thus far.

The issue described above does not represent the first time that Stellar has had troubles with the nodes on its blockchain / validation.

Burden That BFT-based Blockchains Face

While there are many  that will create laundry lists full of issues that Bitcoin and other Proof of Work protocols purportedly face, continuity is not one of them.

And, given the 24/7, globalized on-demand world that we're living in, such a feature is a huge boost for any system / product that's meant to be used.


Stellar Lumens feels like a project with strong potential.

Might not be a bad idea to throw this in the portfolio (not financial advice ; just opinion).



Happy to serve and help wherever I'm needed in the blockchain space. #Education #EthicalContent #BringingLibretotheForefront

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