While the noise surrounding blockchain has hushed significantly throughout 2018, big moves are being made behind the scenes. Stellar is a top 10 cryptocurrency with a $3.8 billion market cap at the time of writing, and they’re looking to make strides while the market corrects.
Stellar Acquires Chain
On September 10, 2018, Chain announced they’ve been purchased by Lightyear, the for-profit subsidiary of the Stellar Development Foundation.
Based out of San Francisco, Chain was founded in 2014 to enable organizations to “build better financial services from the ground up,” and scaled thereafter with an investment fund of $40 million. While there’s certainly more to it than that, what’s particularly interesting about Chain is that their funding came from massive financial companies like Visa, Nasdaq, and Citigroup.
According to Chain co-founder Adam Ludwin, all 3 of these giants will see a return on their investment. While the cost of the investment hasn’t been released, Ludwin stated that it was “significantly more than $40 million.”
He also mentioned that Chain didn’t need to sell the company, and only did so after thorough deliberation, concluding that “Chain and Stellar had equal and opposite problems” that would be best solved as partners.
Many investors and speculators are pining for a mass adoption event, and this merger seems to point in a promising direction. The deal is an illustration of the moment when the line between public and private blockchain solutions begin to blur.
Ludwin stated in a conversation with Bitcoin Magazine:
All of the clients that we have now have effectively shifted from using a traditional database model to using a tokens model, issuing assets on a local environment. By partnering with Stellar you can fire an asset to another institution.
This highlights one of the major growing pains of crypto being alleviated by the Chain acquisition. In 2017, Ludwin mentioned that Chain needed a public network in order to bring new customers together, and that they had even considered building their own public blockchain.
It wasn’t until Lightyear was launched as a means to incentivize partners to build on Stellar that the team considered a wider array of options. The conclusions they’ve come to, and acted upon, suggest potential solutions for the problem of interoperability between private and public blockchains within the entire cryptocurrency market.
Lightyear, Stellar’s for-profit subsidiary, will officially make the acquisition. Once the deal is done, both Chain and Lightyear will cease to exist, forming a new entity—Interstellar.
The new venture will launch with 60 employees working out of New York and San Francisco. Ludwin will take the role of CEO, and Stellar’s creator Jed McCaleb will take over as the Chief Technical Officer of Interstellar. McCaleb is most known within the blockchain community as the founder of the infamous Mt. Gox, and also as a co-founder of Stellar’s competitor, Ripple.
The Chain Core software for permissioned blockchains, as well as existing users like Visa, Nasdaq, and Citigroup, will now be served by Interstellar. It’s also worth noting that Fintech customers using Chain’s Sequence cloud storage service will move to Interstellar as well, providing the new company with a stable on-ramp into their new chapter.
The existing permissioned blockchain infrastructure will run on top of the Stellar public blockchain, which is powered by their native token, Lumens (XLM). StellarX, a crypto-asset trading platform built on the Stellar blockchain, will also be under the direction of the Interstellar team.
Other Large Corporate Adoptions
Stellar has had success incorporating other major businesses into their business model. International Business Machines Corporation (IBM) recently announced the launch of a blockchain-based payment gateway called Blockchain World Wire, which will utilize Stellar’s blockchain network.
McCaleb’s expertise will certainly shine in this department, because the Blockchain World Wire system will operate in the same fashion as Ripple by allowing cross-border transactions of large sums of money, with zero fees.
IBM describes the system as such:
IBM Blockchain World Wire, the new financial rail that can simultaneously clear and settle cross-border payments in near real-time. Integrating with your existing payment systems, you can replace costly opacity with affordable transparency – and that can bring greater financial opportunity to all.
As a clarification, future partners interested in using IBM’s World Wire will not have to use Stellar Lumens. They are free to use any cryptocurrency they wish, allowing the use of stable coins to assist market stability. Furthermore, World Wire users don’t even have to use cryptocurrency, as any “central bank digital currency or other digital asset” can be used as a “bridge asset between any two fiat currencies.”