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Blockchain Network Stellar (XLM) Validators to Begin Voting on June 1, 2021 on Whether to Upgrade to Protocol 17

The Stellar Development Foundation (SDF), which supports the ongoing growth and development of Stellar (XLM), a leading blockchain platform, has noted that on Tuesday, June 1, 2021 “at 1500 UTC,” Stellar (transaction) validators will be voting on whether to upgrade the network to Protocol 17.

The SDF noted in a blog post that if the vote does happen to go through, then the update is “immediate, so everyone building on Stellar should prepare by installing up-to-date versions of any and all Stellar-related software they use.”

For additional information, you may check out the Protocol 17 Upgrade Guide.

The Stellar team also noted that a few times a year, they roll out an updated version of the Stellar Protocol which typically comes with brand new features developed to satisfy ecosystem requirements.

SDF explained that there’s usually a lot of coordination and cooperation involved in protocol upgrades — “in addition to validator assent, they require everyone building on Stellar to install new versions of Stellar Core, Horizon, and the Stellar SDKs.”

However this is all worth the effort because they help to further expand network capabilities and “empower” software engineers to create new and improved products and services on Stellar.

As noted by the SDF:

“Features introduced in recent protocol changes — fee bumps, claimable balances and sponsored reserves — allow apps and services to handle account lumen requirements, which makes it easier to design user-friendly experiences. Protocol 17 introduces a single new feature that opens up new possibilities for issuing regulated assets on the Stellar network.”

The blog post from the SDF also mentioned that the Asset clawback feature has been developed for businesses issuing regulated or compliant financial instruments, like money market funds, bonds, and equities.

In order to adhere to the applicable securities regulatory guidelines in different jurisdictions, these issuers — or their “designated transfer agents” — need to show the “ability to revoke assets in certain situations, and this new feature allows them to do that.”

SDF added:

“To enable asset clawback, Protocol 17 introduces a new account flag, new trustline and claimable balance flags, and new operations to take advantage of those flags. When the right account flags are set, an issuer can clawback a full or partial balance or a claimable balance, and can set and clear trustline flags as necessary.”

Issuers of clawback-enabled assets “can take advantage of the feature” to:

  • Recover assets that have been fraudulently obtained
  • Respond to regulatory actions
  • Enable identity-proofed persons to recover an asset in the event of loss of key custody or theft.

SDF clarified that clawback does not impact existing assets, balances, or accounts, and an issuer “clearly designates an asset as clawback-enabled when they issue it.” The Foundation also noted that asset holders are “aware of that designation when they opt in to holding the asset, and while this probably goes without saying, clawback can’t be enabled on XLM – Stellar’s native network token — because XLM doesn’t have an issuing account or require a trustline.”

SDF’s blog further noted:

“Asset clawback also can’t be retroactively applied, so it won’t impact any assets that currently exist on the network. Rather, clawback empowers a new kind of issuer to issue a new kind of asset on the network.”

Prior to Protocol 17, there were just a limited number of regulated financial instruments on Stellar because there “wasn’t a great way to comply with securities regulations that require the issuer revocation ability.”

The SDF added that there were some suggested solutions that depended on multi-sig, however, they gave the issuer “signing power” over the asset holder’s account and “compromised the custody of other assets in their wallet, and so they weren’t viable for most people.”

The blog post also noted that with the introduction of Asset Clawback, issuers are able to easily tokenize “all kinds of funds, bonds, and equities, and they can do so in a compliant manner.”

The post added:

“By connecting these new assets to the existing network of anchors — services that provide users all over the world to access the network in their local currency — Stellar allows issuers of regulated assets to extend their reach, access new markets, and increase access to the world’s financial infrastructure.”