Why Pixie & Why Stellar is a front runner
A breakdown of how Stellar and Pixie could work together
What does Pixie do?
Pixie, a world where millions of people can seamlessly discover, pay and get rewarded across a global community of independent businesses.
Pixie is part of a new wave of FinTech solutions aiming to be not only a payment enabler but a local currency itself. Moving beyond the existing e-money providers, utilising the trustless world of blockchain technology to build a new global cryptocurrency with local connections.
From a simplistic angle the main activities involved in creating this world are things like collecting points, making payments, issuing incentives and rewards. All of these at some point boils down to issuing transactions between 2 or more parties in the form of either a fiat payment or a cryptocurrency transfer of “Pixie Tokens”.
Cryptocurrencies have been slowly maturing since the revolutionary release of Bitcoin back in 2008. Nearly 10 years on and we continue to see innovative developments and uses for cryptocurrencies and blockchain technology.
What we need from a platform
Back in 2017 Pixie started to look into the idea of utilising cryptocurrency to compliment and hopefully replace the already existing e-money solution which was being trialed and refined around the UK.
During this process we began looking into several of the big players in the cryptocurrency worlds such as Stellar Lumens, Ethereum, NEM, Ripple, Bitcoin & Litecoin.
We defined some loose criteria to assess the options covering things such as:
- Transaction throughput, speed & costs
- Project maturity & developer friendliness
- The ability to deploy fungible assets or tokens
- Fiat on and off ramps along with asset tradability
Some of our findings
Using the above along with other criteria we set about researching, prototyping and assessing the options and feasibility. As mentioned above, at the core of Pixie’s world are micropayments or simply put, sending money or tokens between two or more parties.
At present we have found many of the big players in blockchain, although maturing nicely and having the ability to issue tokens, are falling short in transaction throughput and costs. Possibly ruling these platforms out if we are to realise the full vision of what Pixie can and will become in the coming years.
Pixie do not want to maintain the status quo of existing payment and reward platforms with high fees for the payee or the merchant or both in some scenarios.
We needed a platform to scale now which is mature enough to handle hundreds of thousands transactions a day now and millions of transactions in the future, this is why we started to notice the potential of Stellar. Stellar was born from a fork of another technology called Ripple in 2014 and it has many great things going for it.
Firstly it’s fast, on-chain transactions are confirmed with in 2–5 seconds, therefore quick enough to be applied to real world use cases of issuing payments, especially whilst on the move. These times fall within our threshold for how long payments need to be confirmed in for end-users in the physical world. Waiting 10 minutes or 15 seconds for a confirmation is simply unacceptable from a users perspective.
Secondly its very cheap, Stellar’s currency Lumens, or XLM for short, has a flat cost for each operation which is issued on the network, a cost of 100 stroops (0.00001 XLM). At todays prices this equates to $0.000002 per transaction. If we reached 10 million transactions a day it would cost approximately $20, operationally this is perfect. Fees can theoretically increase in the future but even at the extreme case we see a 2–3 times increase in costs this still represents a significantly lower than traditional transaction processing.
Along with this, the Stellar protocol has an inbuilt feature which we see as a powerful tool, something we term “receiver payees fee” or “fee absorption”. This means that the network fees of 100 Stroops incurred when sending transactions around the network can in theory be reduced to zero for the users and merchants of the Pixie system. Pixie can in theory absorb these fees and make the platform free to use for the users and the merchants. Something which puts it at a perceived level playing field with existing payments providers to your average user.
Thirdly Stellar’s transaction throughput is high, with at least 1000 transactions per second at present and with further developments in the pipeline to increase flow. Pixie requires a network with high throughput like this, the more it grows and expands globally the more transactions it will need to process. Combine this batching and channel streaming techniques along with layer 2 technologies such as the lightening protocol which is being developed on Stellar.
In terms of project maturity we believe the project has matured a lot since its early days and not only has an active community of users and developers but also has the potential and roadmap to build on this further. It also has changed a huge amount from Ripple, introducing the Stellar Consensus Protocol, providing enhanced tooling and software development kits (SDKs) and maintains an open participation model which we believe aligns perfectly with Pixie.
Developer friendliness is more opinionated than some of the other criterion but in general we need a platform that is easy to work with, and does not shoe-horn you in to a specific languages, provides robust tools and SDKs along with good documentation and an active developer community to lean on and grow with. Stellar has all these things and from the prototypes we have produced internally it is an ideal fit for the problems we know about right now.
The Pixie Token could eventually become a Stellar asset, post token raise, and assets are one of the things Stellar is designed for. We found that the protocol level functionality which Stellar provides such as trustlines and asset limits and the inbuilt path finding capabilities between assets provided a great platform to then build upon. We also have other great ideas on how we can use various tokenisation schemes to provide functionality beyond payments and rewards.
Next it’s worth mentioning the Stellar Decentralised Exchange or the SDEX for short. We found this to not only work, but to work first time and with a minimal amount of effort. The SDEX is a game changer for cryptocurrencies, no 3rd parties are needed to provided exchange functionality, a decentralised order book exists where assets can be traded. Trades happen in near real time like any transaction on the network as long as a path can be found between two or more assets.
Stellar is set for great things in our opinion, it has a simple but powerful set of features, has tokenisation at its core, is cheap and fast, and is incredibly developer friendly. All of these things in our eyes mean its a front runner to host the Pixie Token when looking at the known problems we need to solve at present. In 2018 the first version of lightening will come to fruition on Stellar and we are confident that more and more enterprises and organisations look to use the Stellar network to provided new and innovative services.
Above are some of the reason we are looking to Stellar to the build the Pixie ecosystem. We will be publishing updates over the coming months as things progress. Read more about the Pixie token sale at https://pixietoken.co/
We will be prototyping other blockchains as well but we think Stellar ticks a lot of boxes at present. A major enhancement in competing blockchains or a major problem would be the only thing stopping us at present from using Stellar to build Pixie’s future.
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