What is Stellar (XLM)?
Stellar (XLM) is an open-source, decentralized payment protocol enabling fast cross-border transactions between any currency pair. Founded in 2014 by Jed McCaleb (Ripple co-founder) and Joyce Kim, Stellar connects financial institutions, payment systems, and individuals globally. Its native currency, Lumen (XLM), acts as a bridge in transactions and prevents network spam.
Unlike cryptocurrencies focusing solely as traditional money alternatives, Stellar aims to expand financial access—especially for underbanked populations. The network facilitates exchanges between fiat, cryptocurrencies, and other value forms with minimal fees.
How Does Stellar (XLM) Work?
Stellar operates on the Stellar Consensus Protocol (SCP), a federated Byzantine agreement model distinct from Proof-of-Work (PoW) or Proof-of-Stake (PoS).
Key Features:
Stellar Consensus Protocol (SCP):
- Nodes reach consensus via trusted "quorum slices," enabling transactions in 3-5 seconds with scalability for thousands per second.
Anchors and Bridges:
- Trusted entities (e.g., banks) issue credits into Stellar, bridging currencies. XLM facilitates conversions when direct markets don’t exist.
Decentralized Exchange:
- Built-in exchange allows seamless trading of any asset pair, eliminating reliance on traditional forex markets.
👉 Discover how Stellar revolutionizes payments
Staking, Mining, and Supply
- No Mining: XLM was pre-mined; no new coins are created.
- No Traditional Staking: SCP doesn’t use PoS, though some platforms offer interest-bearing XLM holdings.
- Supply Reduction: In 2019, 55 billion XLM were burned, reducing total supply to 50 billion.
Use Cases for Stellar (XLM)
- Cross-Border Payments: Low-cost international transfers via XLM as a bridge currency.
- Tokenization: Supports custom tokens for assets like fiat or loyalty points.
- Financial Inclusion: Provides banking access to underbanked populations.
Distribution and Partnerships
- Initial Supply: 100 billion XLM (2014), redistributed via sign-up programs and partnerships.
- Current Supply: 50 billion XLM (20 billion circulating; 30 billion held by SDF).
- Notable Partners: IBM (World Wire), financial institutions for remittances.
Future Developments
- Soroban (2023): Smart contract platform enhancing Stellar’s financial capabilities.
- Non-Profit Model: Stellar Development Foundation prioritizes ecosystem growth over profits.
FAQs
Q: Can I stake XLM?
A: No—Stellar lacks native staking, but some platforms offer interest programs.
Q: How fast are Stellar transactions?
A: Confirmations in 3-5 seconds with high throughput.
Q: What’s XLM’s total supply?
A: 50 billion post-burn (2019), with ~50% in circulation.
Q: Is Stellar eco-friendly?
A: Yes—no energy-intensive mining.
Q: Does Stellar support smart contracts?
A: Limited functionality (e.g., multi-sig); Soroban expands this capability.
Stellar (XLM) merges speed, low costs, and financial inclusivity, positioning it as a leader in decentralized payment solutions.