About Stellar (XLM)

What is Stellar?

The Stellar network is an open-source, public blockchain powered by the Stellar Consensus Protocol (SCP), a proof-of-agreement consensus mechanism.Stellar's design enables easy creation and issuance of digital assets for rapid, low-cost global payments. One can create their own tokenized currency or asset on Stellar and distribute it at scale. The network allows creating, sending and trading digital representations of value like fiat currencies, commodities, real estate.Stellar acts as a bridge connecting financial systems for seamless global interoperability. On Stellar one can make redeemable, tradable tokens representing almost anything of value. Tokens tied to fiat currencies enable borderless, instant payments. One can also tokenize commodities, services, real estate and more. Stellar's tools aid compliance.

What is XLM?

XLM, also known as Stellar Lumens, is a cryptocurrency that operates on the Stellar blockchain. It was created to facilitate fast and low-cost cross-border transactions, with the goal of making financial services more accessible to individuals and businesses worldwide. One key feature of XLM is its ability to enable quick and efficient transactions. More information about XLM could be found in Token Economics section.

History of of Stellar (XLM)

Early Development (2013-2014)In 2013, Jed McCaleb , founder of Mt. Gox and co-founder of Ripple, started working on Stellar as a fork of the Ripple protocol after leaving Ripple due to differences in vision. The goal was to create an open, decentralized payment network that could enable affordable cross-border transactions.

In 2014, McCaleb officially launched Stellar along with Joyce Kim. The Stellar Development Foundation (SDF) was established as a non-profit to develop and promote Stellar. The SDF received $3 million in seed funding from Stripe and 2 billion lumens in exchange for the investment.

Launch and Growth (2014-2016)

Stellar was launched in 2014 with 100 billion lumens. 25% of the lumens were allocated to non-profits for financial inclusion. In 2014, Mercado Bitcoin became the first exchange to use Stellar.

By 2015, Stellar had 3 million registered accounts. In the same year, SDF upgraded the consensus protocol to Stellar Consensus Protocol (SCP) developed by Stanford professor David Mazières. This improved security and efficiency.

Partnerships and Expansion (2016-2019)

In 2016, Stellar announced partnerships with Deloitte, Coins.ph, ICICI Bank and others to facilitate cross-border transfers.

In 2017, Stellar partnered with IBM for cross-border payments in the South Pacific using lumens.In 2017, Lightyear was launched as the for-profit arm of Stellar.

In 2018, Lightyear acquired Chain to form Interstellar.

Recent Developments (2019-Present)

In 2019, SDF burned 55 billion lumens, reducing supply by 55%. This aimed to increase scarcity and value of lumens.

In 2021, Franklin Templeton launched the first tokenized US mutual fund on Stellar. Stellar continues to focus on enabling affordable, cross-border transactions.

As of the current year(2023), Stellar continues to focus on its mission of facilitating low-cost, cross-border transactions and financial inclusion. The network has been making technological advancements, such as the introduction of the overlay protocol, to enhance scalability and efficiency.

How Does Stellar (XLM) Work?

How does Stellar Consensus Protocol ensure secure transactions?

Stellar uses the Stellar Consensus Protocol (SCP) which is based on Federated Byzantine Agreement (FBA). In SCP, each node chooses trusted nodes to form a quorum set. Nodes vote and accept or reject statements about transaction sets. Statements go through federated voting with vote, accept and confirm stages before agreement is reached. SCP prioritizes fault tolerance and safety over liveness, so blocks may get stuck before agreement. The protocol has nomination and ballot stages to select and commit transaction sets.

How Dose Stellar Stack functions?

The Stellar stack consists of four main components :

• Stellar Core is the distributed ledger software run by validator nodes to process transactions and maintain consensus using the Stellar Consensus Protocol.
• Horizon is the API server that provides the interface for applications to submit transactions and query network data.
• SDKs are client libraries for different programming languages that simplify interacting with Horizon.
• The testnet and pubnet provide testing and live environments.

Overall, Stellar Core provides the distributed ledger, Horizon enables access, SDKs simplify app development, and the testnet/pubnet support deployment. Together, these components allow anyone to build fast, inexpensive, failure-resistant financial products on Stellar.

How to Issue Stellar Assets?

Any Stellar account can issue assets by paying them to another account. Assets represent value like fiat currencies, cryptocurrencies, commodities, and more.Issuing assets only takes a few operations:

1. Create issuing and distribution accounts with keypairs

2. The distribution account establishes a trustline with the issuing account

3. The issuing account sends a payment to the distribution account, minting the asset

4. (Optional) Lock down the issuing account to permanently limit supply

How to Anchor Assets on Stallar?

Anchors are on-ramps and off-ramps between the Stellar network and traditional finance. They accept fiat currency deposits and issue equivalent digital tokens on Stellar. Anchors can issue their own assets or honor existing ones. Token holders can redeem tokens for the underlying assets through anchors.

Anchors implement Stellar Ecosystem Proposals (SEPs) to enable interoperability. The main SEPs for anchors are SEP-24 for deposit and withdrawal, SEP-31 for cross border payments, SEP-10 for authentication, SEP-12 for KYC, and SEP-38 for RFQ APIs. Anchors allow moving between fiat currencies and digital assets on Stellar.

Token Economics

What is XLM used for?

Lumens (XLM) are the native asset of the Stellar network. They serve essential functions:

• Transaction Fees: Every transaction requires a small XLM fee.
• Minimum Balance: Accounts need a base XLM reserve to exist on-chain. This minimum balance increases with each trustline, offer, and other subentry. Currently the base reserve is 0.5 XLM.
• Anti-Spam: By requiring transaction fees and minimum balances in XLM, the network prevents abuse and prioritizes useful activity.
• Universal Liquidity: As the native asset, XLM facilitates seamless movement between all assets on Stellar. All accounts already hold XLM. This makes it a convenient universal medium of exchange.
• Governance: Validators can vote to adjust the base reserve and fees. This tuning ensures efficiency over time.

Token Distribution

Upon Stellar network's launch, 100 billion Lumens(XLM) were generated. The initial 5-year period saw a 1% annual supply increase through inflation, totaling 5.4 billion lumens. In 2019, inflation ceased.

In November 2019, the Stellar Development Foundation burned 55 billion lumens, reducing the overall supply to 50 billion. This comprises 20 billion in circulation, 5 billion for network development, 25 billion burned, and less than 1 billion in the fee pool and upgrade reserve. The supply won't increase, and the Foundation will progressively release its remaining lumens to the public markets, fostering network growth and adoption in the years ahead.

Why Is Stellar (XLM) Valuable?

Stellar's Interconnected Global Network

Stellar (XLM) derives its value from a robust network, fostering global interoperability through anchors like wallets, exchanges, and fintech entities. This extensive network facilitates seamless value transfers between fiat and digital assets on and off the Stellar platform.

USDC Integration and Enhanced Utility

The addition of USDC on the Stellar network amplifies its value proposition. Serving as a significant on/off ramp to USDC, this integration streamlines fund storage and transfers, enabling faster and cost-effective transactions, with completion times as brief as five seconds.

Stellar's Commitment to Financial Inclusion

Stellar's technology empowers worldwide token trading, particularly benefiting developing nations with limited financial infrastructure. Additionally, its support for token issuance and decentralized applications (dApps) fosters financial inclusion and humanitarian efforts.

In conclusion, Stellar (XLM) is valuable due to its strong network, global reach, and interoperability with USDC. Its focus on financial inclusion and humanitarian aid further enhances its value.