Stellar is more than just another cryptocurrency — it’s a powerful, open-source blockchain network designed to transform how value moves across the globe. While often mentioned alongside Ripple (XRP), Stellar stands on its own with a mission focused on financial inclusion, fast cross-border transactions, and seamless asset transfers. At the heart of this ecosystem is Lumens (XLM), the native digital asset that powers the network.
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Understanding Stellar and Lumens (XLM)
It’s common to hear “Stellar Lumens,” but this phrasing can be misleading. Stellar refers to the decentralized blockchain network itself — a peer-to-peer infrastructure for moving money and assets. Lumens (XLM), on the other hand, is the cryptocurrency token that operates within and secures the network.
The core idea behind Stellar is simple yet revolutionary: enable anyone, anywhere, to send and receive any form of value — whether it’s fiat currencies like USD or EUR, cryptocurrencies like Bitcoin, or even tokenized real-world assets such as stocks or gold — quickly, securely, and at minimal cost.
By using XLM as a bridge currency, the Stellar network reduces friction in multi-currency transactions, making international payments faster and more affordable than traditional banking systems.
How Does the Stellar Network Work?
Stellar runs on a decentralized network of independent servers, each maintaining a copy of the shared ledger. These servers communicate constantly to validate transactions and maintain consensus through the Stellar Consensus Protocol (SCP).
Unlike proof-of-work blockchains like Bitcoin, which rely on energy-intensive mining, SCP is a unique consensus mechanism that allows for rapid agreement among nodes without requiring a central authority. This makes Stellar highly scalable, energy-efficient, and capable of processing transactions in about 5 seconds.
Anyone can run a validation node on the Stellar network using Stellar Core, contributing to the network’s decentralization and security. Because there’s no mining involved, all XLM tokens were pre-minted at launch.
The Role of Anchors in the Stellar Ecosystem
A key innovation in Stellar’s architecture is the concept of anchors — trusted entities that issue and redeem digital credits on the blockchain. These anchors act as bridges between traditional financial systems and the blockchain.
For example, an anchor might hold users’ USD deposits and issue equivalent digital tokens on the Stellar network. These tokens can then be sent across borders instantly and redeemed for real dollars on the other side. This system enables fast, low-cost remittances and global asset transfers while maintaining regulatory compliance.
Who Created Stellar? Meet the Founders
Stellar was co-founded in 2014 by Jed McCaleb, a prominent figure in the cryptocurrency world. McCaleb is also known for creating Mt. Gox, one of the first major Bitcoin exchanges, and previously served as Chief Technology Officer (CTO) at Ripple.
After leaving Ripple due to philosophical differences about decentralization, McCaleb launched Stellar with a more inclusive, community-driven vision. He also established the Stellar Development Foundation (SDF), a non-profit organization dedicated to supporting the growth and development of the Stellar network.
Other key contributors include:
- David Mazieres: A computer science professor at Stanford and the architect of the Stellar Consensus Protocol.
- Joyce Kim: Co-founder of Stellar and former Executive Director of SDF, instrumental in shaping its early mission.
- Denelle Dixon: Current CEO and Executive Director of SDF, leading strategic initiatives and partnerships.
Together, this team helped position Stellar as a decentralized alternative to traditional financial rails — one that prioritizes accessibility over institutional control.
What Makes Stellar Unique?
While many blockchains aim to improve payment systems, Stellar differentiates itself through several key features:
- Complete Decentralization: No single entity controls the network; consensus is achieved through SCP.
- Multi-Asset Support: Users can issue and trade various digital assets, including fiat-backed tokens and commodities.
- Near-Zero Transaction Fees: Each transaction costs only 100 stroops (0.00001 XLM), preventing spam without burdening users.
- Speed and Scalability: Transactions settle in ~5 seconds with high throughput capacity.
- Financial Inclusion Focus: Designed to serve underbanked populations through low-cost global transfers.
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What Gives XLM Its Value?
Initially, Stellar implemented a 1% annual inflation mechanism to distribute new tokens to holders. However, in late 2019, the community voted to eliminate this inflation model, shifting toward a deflationary structure.
At launch, 100 billion XLM were created, with supply growing by 1% annually until reaching 105 billion. After the inflation halt, the Stellar Development Foundation burned approximately half of its reserve — reducing the total supply to just over 50 billion XLM.
Additionally, every transaction on the network burns a tiny amount of XLM (100 stroops), gradually decreasing the circulating supply over time. This built-in deflationary pressure, combined with real-world utility in remittances, asset tokenization, and micropayments, contributes to XLM’s long-term value proposition.
How Many XLM Are in Circulation?
As of now, there are approximately 50 billion XLM in circulation. With no mining or staking rewards, all tokens were pre-created, and further reductions occur through transaction fees being permanently removed from supply.
This predictable economic model enhances scarcity and supports investor confidence in XLM’s sustainability.
How Is the Stellar Network Secured?
Security on Stellar comes from its decentralized validator network and economic design:
- Any individual or organization can run a node, increasing resilience against attacks.
- The SCP ensures agreement without relying on energy-heavy computation.
- The minimal transaction fee (100 stroops) deters spam and denial-of-service attacks by making bulk fake transactions economically unviable.
These mechanisms make Stellar both secure and efficient — ideal for high-volume financial applications.
How Can You Use Stellar?
Stellar has formed strategic partnerships with major global players, enhancing its real-world adoption:
- IBM uses Stellar for its cross-border payment solution, World Wire.
- Stripe previously integrated XLM for fast international payouts.
- Samsung included Stellar wallet support in its blockchain platform.
- Fintech firms like Wirex, SureRemit, and Smartlands leverage Stellar for remittances and asset tokenization.
These integrations demonstrate Stellar’s viability as a backbone for modern financial services.
Choosing a Wallet for XLM
To store or transact XLM, users need a compatible wallet. Options include:
- Hardware wallets (e.g., Ledger) for maximum security.
- Mobile wallets (e.g., Freewallet, Atomic Wallet) for convenience.
- Web-based wallets provided by exchanges like OKX.
When selecting a wallet, consider factors like security features, ease of use, backup options, and whether you plan to actively trade or hold long-term.
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Is It Possible to Mine or Stake XLM?
No — Stellar does not support mining or staking. All XLM tokens were issued at genesis, and no new coins are created through block rewards. Validators participate out of commitment to the network rather than financial incentive.
However, users can still earn interest on XLM holdings through select crypto platforms offering yield-bearing accounts — though these are separate from native network staking.
Frequently Asked Questions (FAQ)
Q: How is Stellar (XLM) different from Ripple (XRP)?
A: While both were co-founded by Jed McCaleb and target fast cross-border payments, Ripple focuses on banks and institutions using a more centralized model. Stellar takes a decentralized, open-access approach aimed at individuals and underserved communities.
Q: Is Stellar anonymous?
A: No — Stellar is pseudonymous, similar to Bitcoin. Transactions are recorded on a public ledger linked to wallet addresses, not personal identities. However, it does not offer privacy features like Monero or Zcash.
Q: Do I need to wait for confirmations when sending XLM?
A: No — transactions typically confirm in under 5 seconds and are considered final once validated. There’s no need to wait for multiple confirmations as with slower blockchains.
Q: Can I mine XLM?
A: No. XLM cannot be mined or staked. All tokens were pre-mined at launch, and no new supply is generated through consensus participation.
Q: What drives XLM’s price?
A: Adoption in remittances, partnerships with financial institutions, use in asset tokenization, and overall crypto market trends influence XLM’s value. Its limited supply and deflationary mechanics also play a role.
Q: Where can I buy XLM?
A: XLM is widely available on major cryptocurrency exchanges such as OKX, Binance, Kraken, and Coinbase. Always use reputable platforms with strong security practices.
Stellar continues to evolve as a critical player in decentralized finance and global payments infrastructure. With its focus on speed, affordability, and inclusion, it remains a compelling solution for bridging traditional finance with the digital economy.