Stellar (XLM)'s Meridian Pay Wallet Ditches Seed Phrases for 1,000 Users

The Stellar (XLM) Development Foundation shipped a working smart wallet at its Meridian 2025 conference that processed over 1,000 user transactions without seed phrases, private keys, or gas fees paid by users. Meridian Pay ran on Stellar's Soroban smart contract platform, demonstrating what seedless wallet infrastructure looks like in practice.

XLM trades at $0.18 with a $5.89 billion market cap as of February 6, up 1.8% in 24 hours despite broader altcoin weakness that pushed the token to $0.17 support earlier this week.

How the Passkey System Works

Traditional Stellar accounts require ed25519 keypairs for transaction signing. Meridian Pay replaced this with WebAuthn credentials—the same passkey tech you use for fingerprint or Face ID login on your phone.

Each wallet runs as an Account Contract with a custom __check_auth function that validates WebAuthn signatures instead of checking static keys. When users set up their wallet, their device's passkey public key gets registered on-chain. Every subsequent transaction authenticates through biometrics or device PIN.

Lost your phone? The recovery mechanism uses a two-server multi-sig setup. Both servers must sign jointly to restore access. The team notes that smart wallets can implement whatever recovery logic developers want—passphrases, hardware wallets, distributed key services.

Bundling Transactions Through Multicall

Soroban limits contracts to single invocations per transaction, which would normally mean multiple passkey prompts for complex actions. The team built a Multicall Contract (based on Creit Tech's Stellar Router Contract) that bundles multiple operations atomically.

Users authenticated once to redeem multiple swag items or transfer batches of NFTs. One signature, one blockchain interaction, multiple actions executed.

The 500 XLM Airdrop Trick

Here's the clever part. During CEO Denelle Dixon's keynote, attendees received 500 XLM each—but the engineering team hadn't collected wallet addresses beforehand.

Stellar contract addresses aren't random. They're deterministically derived from the deployer address plus a salt value. Meridian Pay used registered email addresses as the salt, meaning the team calculated every attendee's future wallet address before those wallets existed.

They pre-loaded a Merkle Distributor Contract with this address list. Attendees opened their phones, created wallets, and claimed tokens by submitting a Merkle proof—a cryptographic receipt proving they were on the eligible list. The contract verified proofs and released funds without the team monitoring individual transactions.

Unclaimed tokens remain in the contract for potential clawback, preventing funds from getting stuck in inactive addresses.

Why This Matters for Stellar

Stellar's Protocol 20 upgrade in 2024 enabled Soroban smart contracts, but adoption metrics remain the question. This deployment proves the infrastructure handles real user load—1,000+ concurrent wallet creations and claims without incident.

The Merkle distribution pattern has applications beyond conference swag. Aid organizations, loyalty programs, and token launches could use similar architecture for mass distributions without pre-collecting recipient data.

With CME reportedly adding Stellar support alongside Cardano and Chainlink, institutional attention on XLM infrastructure may increase. Whether Meridian Pay's architecture becomes a template for Stellar wallet development depends on whether other teams adopt these contract patterns.