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How To Create Stellar Smart Contract

What Are Smart Contracts?

A computer protocol that is intended to verify, facilitate, or enforce the performance of a transaction or negotiation is known as a smart contract. Transactions can be carried out via smart contracts without the need for the participation of any third parties.

The use of smart contracts enables the conflict-free and transparent exchange of money, shares, property, or anything else of value without the need for an intermediary. The best way to understand smart contracts is to think of them as digital versions of traditional vending machines.

In most cases, you will need to see a notary public or a lawyer, make the appropriate payment, and then wait to obtain the paperwork. However, if you use smart contracts, you must place a crypto token, such as bitcoin, into a vending machine, and everything you want—your escrow funds, your social identity, etc.—will be transferred into your account.

In addition, smart contracts set penalties and restrictions like a conventional contract automatically enforces duties. This post will describe how to establish smart contracts on the Stellar Blockchain, one of the most influential blockchain platforms available to carry out decentralized financial activities.

Before discussing how to develop Stellar Smart Contracts, we will describe the Stellar platform and how it is used to generate smart contracts.

Stellar Smart Contracts Explained

Stellar lacks a built-in smart contract language or virtual machine like Ethereum to write smart contract code or optimize contract logic to enable functionalities. However, a Stellar smart contract combines transactions and numerous limitations to produce the desired outcome.

Important Stellar Smart Contract Constraint

A Stellar Smart Contract (SSC) consists of structured and connected transactions representing various constraints and possibilities. The following are some SSC limitations that can be implemented:


What are the individual steps that will fail if not taken together? What exactly needs to take place for something to succeed or fail? Combining several different tasks into a single transaction is known as batching. Atomicity assures that if one operation in a particular set of actions fails, the other operations in the transaction will also fail when the transaction is sent to the network.


Which credentials must be shown to carry out a particular action? Who are the participants who need to agree on the conditions before steps can be taken? The term "multisignature" refers to requiring the signatures of multiple individuals or organizations on any transaction initiated from within an account.


Which orders should be used while processing a sequence of transactions? Where do we stand with the dependencies, and what are the limitations? The Stellar Network represents the sequence conceptually by a sequence number. Using sequence numbers in transaction manipulation makes it possible to guarantee that certain transactions will not be carried out if an alternative transaction is provided.

Time Bounds

When is it possible to carry out a transaction? Time constraints limit the amount of time a transaction can remain legitimate. Including time boundaries in an SSC makes it possible to represent periods.

Example Stellar Smart Contracts: 2-Party Multisig Escrow Account with Time Recovery

Ben purchases fifty CODE tokens from John, understanding that Ben won't resell them for at least a year after purchasing them. Because John does not put his whole faith in Ben, he has decided to keep Ben's tokens in his possession for an entire year.

On the other hand, Ben objects by asking how he can be sure that John will have all those tokens once a year has passed. How can Ben put his faith in John to keep his tokens safe and eventually hand them over?

In addition to this, Ben tends to forget things, so there is a possibility that he will fail to collect his tokens at the end of the year. John wants to create a recovery mechanism so that tokens can be retrieved if Ben forgets to claim them. This is because John is concerned that Ben might lose them. Using this strategy, it is impossible to lose tokens completely.

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An escrow agreement is established between the target (the entity receiving the monies at the end of the contract) and the origin (the entity funding the agreement).

To execute a time-locked escrow contract between two parties, three accounts are required: a source account, a destination account, and an escrow account. The source account is the initial account that funds and initiates the escrow agreement. The destination account is the account that will have access to the escrowed monies. During the lock-up period, the origin opens the escrow account and keeps the escrowed funds.

An escrow account requires five transactions, shown below in the established order.

  • N, M – An escrow account's sequence number and a source account; N+1 represents the following sequence number.
  • D – The start date of the lock-up period.
  • R – Recovery Time
  • T – Lock-up time

Transaction 1: Making the Account for Escrow

Account: The Source of the Escrow Account

Sequence Number: M


Create an account: Set up an escrow account in the system with a beginning balance= of the transaction charge + the minimum balance.

Signers: Source Account

The origin network submits transaction 1 to the network using the source account. It then creates the escrow account, funds it with the current minimum reserve, and grants the origin access to the private and public keys of the escrow account. After the escrow agreement, the origin gets additional funds to manage the transfer fee of shifting assets. When creating new accounts, it is recommended to fund the account with a more significant value than the calculated starting balance.

Transaction 2: Enable multi-signature

Account: The Escrow Account

Sequence Number: N


Set Option – Signer: Input the destination account to the escrow account's list of signatories and set 1 as the transaction weight.

Set Option – Thresholds & Weights: Define the master key weight and threshold for requiring all signatures.

Master Weight: 0

Low, Medium, and High Threshold: 1

Time Bounds:

Minimum time: Unlock date

Maximum time: 0

Eventual Signer: Destination Account

Immediate Signer: Escrow Account

Transaction 3: Recovery

Account: Escrow Account

Sequence Number: N+1


Set Option – Signer: Take out the destination account as a signer and set the Weight to 0.

Set Option – Thresholds & Weights: Give weight to the master key and modify the threshold weights so that only one signature is required.

Low, medium, and high threshold: 1

Time Bounds:

Minimum time: Recovery Date

Maximum time: 0

Immediate Signer: Escrow Account

Eventual Signer: Destination Account

Transactions 3 and 4 are generated and signed by the escrow account on the origin's behalf. The target is then sent transactions 3 and 4 in XDR format by the head so that it can be signed with the account used to reach the destination. The origin then reviews them and stores them in a secure area once the target has published them. Once both parties have signed the documents, they cannot be altered. Transactions must be saved in XDR format, and either the target or the origin must hold a copy of the transaction. Transactions can be saved in a publicly accessible area without worrying about tampering.

The third and fourth transactions share the same number because they are both produced and signed before the escrow account is funded. It is done to verify that both parties are on the same page. If circumstances change needed to occur before submitting either of these two transactions, the target and the origin must permit to conduct of transactions using the escrow account.

Transactions 3 and 4 are generated and signed by the escrow account on the origin's behalf. The target is then sent transactions 3 and 4 in XDR format by the head so that it can be signed with the account used to reach the destination. The origin then reviews them and stores them in a secure area once the target has published them. Once both parties have signed the documents, they cannot be altered. Transactions must be saved in XDR format, and either the target or the origin must hold a copy of the transaction. You can save transactions in a publicly accessible area without worrying about tampering.

The third and fourth transactions share the same number because they are both produced and signed before the escrow account is funded. It is done to verify that both parties are on the same page. If circumstances change needed to occur before submitting either of these two transactions, the target and the origin must permit to conduct of transactions using the escrow account.

The third transaction removes the escrow account as a signer for transactions that are generated from the escrow account itself, and it also gives the target full control over the escrow account. After the lock-up time has concluded, the destination account is the only account required to sign for transactions originating from the escrow account. The first date the unlock transaction can be submitted is the unlock date, often known as D+T. If the submission of transaction 3 occurs before the date on which the lock will be removed, the transaction will not be considered genuine. Because there is no maximum time specified, it is implied that the transaction is valid indefinitely.

If the target does not complete the unlock transaction, Transaction 4 can be used to recover the account. The destination account is removed as a signer, and the weights for signing transactions are reset to need its signature. This gives the origination entity complete control over the escrow account once again. Transaction 4 has no expiration date and can only be processed once the recovery date (D+T+R) has passed.

During the duration of the recovery period, R, Transaction 3 can be submitted at any moment. After the recovery date, transaction 4 will be submitted by the origin if transaction 3 has not been submitted by the target to provide access to the monies in the escrow account. If the source is obliged to sign transactions for escrow, they can regain their locked-up assets. After the recovery date, transactions 3 and 4 can both be considered genuine and can be sent into the network for processing. Nevertheless, the network will only acknowledge a single transaction at a time.

Therefore, it is possible to conclude that the origin will submit transaction 4 following the conclusion of the recovery period if the target does not submit transaction 3.

Transaction 5: Funding

Account: Source Account

Sequence Number: M+1


Payment: Pay the escrow account the required asset amount.

Signer: Source Account.

Transaction 5 transfers the suitable quantity of assets from the source account to the escrow account to be held in trust. After the destination account has signed transactions 3 and 4 and published them back to the source account, they should be submitted.

Summary of the Stellar Blockchain Core For Developers

Stellar is a peer-to-peer network comprised of nodes or computers that maintain a shared distributed ledger and communicate to validate and add transactions. Stellar Core, an implementation of the Stellar Consensus Protocol, is used by nodes to keep in sync as they agree on the validity of transaction sets and apply them to the distributed ledger. Every 3-5 seconds, nodes typically attain consensus, apply a transaction set, and update the ledger.

Nodes are not a prerequisite in Stellar Developments. So you can start developing on Stellar with your preferred SDK and utilize the Horizon's public instances to query the ledger and submit transactions immediately.

The Stellar Development Foundation provides two public instances of Horizon, one for the public network and one for the testnet. Visit the API reference documentation to learn more. Also offering public Horizon instances are Lobstr, Public Node, and Coinqvest.

Even if you want to run your instance of Horizon, it comes with its version of Core and handles its whole lifecycle, so you do not need to operate a solo instance.

If you're serious about working on Stellar, have a production-level product or service that requires a high-availability access network, or want to contribute to network health and decentralization, you'll likely want to host a node or three (more on that in the Tier 1 section). You can either pay a service provider, such as Blockdaemon, to set up and operate your node, or you can do it yourself.

This manual portion is for you if you use the DIY approach. It describes the technical and operational elements of installing, configuring, and maintaining a Stellar Core node and should assist you in determining the optimal Stellar integration configuration.

The fundamental flow, which you can browse using the menu on the left, is as follows:

  • Choose the type of node you wish to operate
  • Prepare Your Environment
  • Install Stellar Core
  • Configure Stellar Core
  • Join the group
  • Maintain and observe your node
  • Join the validator’s channels to be current on crucial improvements and network votes

There are multiple ways to install Stellar and run a node. After it has been installed, it can be configured to participate in the network on various levels. Depending on your preferences, it can either be a Basic Validator or a Full Validator. You are required to configure your Stellar Core node to connect to the peer-to-peer network and to save the current state of the ledger in a SQL database, regardless of the method by which you install Stellar Core or the type of node that you operate.

There are a number of companies with professional smart contract development services that offer Stellar smart contract development services, which can include helping clients to design and create smart contracts on the Stellar platform, as well as providing support and maintenance for those contracts. Fast transactions, lower fees and scalability are one of them.

Let's build together on Stellar Blockchain


The Stellar development processes and steps explained here may need to be clarified. Still, you may only understand them clearly once you speak with a blockchain development expert at our blockchain development company. Our blockchain consultants have years of experience working with Stellar, and we believe that it is one of the blockchains poised to gain significant global adoption in the coming years.

When building and composing Stellar Smart Contracts, all parties must collaborate and precisely define the contract's objective. Ensure that, while developing smart contracts, the conditions and outcomes are analyzed and agreed upon. In addition, the written smart contracts must be converted using the code into a sequence of operations and transactions. Bug-ridden code may not perform as expected. Therefore, it is vital to design and construct smart contracts carefully.

If you lack the technical knowledge and wish to build and create Stellar Smart Contracts, contact our Stellar Blockchain developers’ team and get started.

Next Article

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