- Pi Network has launched the testnet for its smart contracts.
- In theory, these smart contracts should boost its utility.
- The main risk is that the industry is highly competitive.
Pi Network price made a bullish breakout on Friday, reaching its highest level since March 26 after the developers launched the first smart contract on the testnet. It was up by over 14% from its lowest level this month. Still, while the Pi Coin price may rebound, the move to smart contracts faces a major risk.
Pi Network to Launch Smart Contracts
In a social media post on Friday, the Pi Core Team announced that it had launched the first smart contract on its testnet. This announcement came a few days after the developers unveiled the first RPC server.
Most notably, it happened as the team and the community continued the core upgrade to v23 of the Stellar Consensus Protocol. This upgrade is what has made it possible for the network to start smart contracts.
For starters, smart contracts are self-executing digital agreements stored on the blockchain. They are designed to self-execute as long as key conditions are met, eliminating the need for intermediaries.
The introduction of smart contracts is a major milestone for Pi Network as it will now make it a direct competitor to Ethereum, Solana, Tron, and Hyperliquid.
READ MORE: Tom Lee’s BitMine Stock May Catapult Soon: Here’s Why
If it works out well, Pi Network will become a major player in key industries like decentralized finance (DeFi), non-fungible tokens (NFT), stablecoins, and gaming.
As a result, these applications will help to boost the value of Pi by giving it more utility. A good example of this is Ethereum, which generates millions of dollars in fees each month from its decentralized applications like Aave, Uniswap, and Compound.
The smart contracts will also help Pi Network to achieve more goals, including the upcoming launch of KYC as a service, which will help it compete better with Worldcoin.
Smart Contracts Rollout Face Major Headwinds
The upcoming launch of smart contracts faces major headwinds in the near term. In the first place, the industry is highly competitive, with Ethereum having a large market share in key areas like DeFi, stablecoins, gaming, and real-world asset tokenization.
Second, history shows that most new players in the smart contract industry rarely do well. A good example of this is IOTA, which launched its smart contracts after the Rebased upgrade. Since then, the network has attracted just 5 developers and a total value locked of just $6.6 million. The network had a 24-hour chain fee of just $4.
Many other smart contract chains have struggled to attract developers. For example, Cardano has continued struggling despite incorporating Pyth Network as an oracle and Dune for analytics. Other top chains that have struggled to gain traction are Hedera, X Layer, Scroll, and Taiko.
For Pi Network to succeed, it will need to attract some of the biggest developers in the crypto industry, like Aave and Uniswap, which is not easy to implement.
READ MORE: XRP Price Prediction: Bullish Pattern Emerges as Ripple ETF Inflows Surge
