Stellar Cryptocurrency Overview – Blockchain Features

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Stellar (stock ticker XLM) is an open, decentralized financial platform using blockchain technology.

The capitalization of XLM, the internal cryptocurrency of the Stellar network, is $4.4 billion at the middle of Q1 2022, and the rate of one XLM coin is $0.18.

The coin is ranked 31th by Coinmarketcap. The total number of XLM coins (lumens) is: 50 billion, with only 50% of the coins in circulation.

Originally 100 billion Stellar coins were issued, which were distributed as follows:

  • 5% to the developers for project development and operating expenses;
  • 50% – distribution among community members by subscription (in practice, only 10,66% – 5,33 billion coins were realized);
  • 25% – for non-profit organizations under partnership programs (4.5% – 1.126 billion coins were actually allocated);
  • 20% – to bitcoin and Ripple owners in proportion to their wallet balances (100% realized – 2.037 billion coins allocated).

Already in 2019, the management decided to burn 50 billion coins to increase the efficiency of the system.

Stellar (XLM) cryptocurrency rate chart for the whole time of its existence:

Stellar cryptocurrency history

The project was founded on April 1, 2014 as an offshoot of the Ripple platform in order to improve access to the financial services market on a global level. The reason for the creation of the alternative project was a disagreement between Jed Mac Caleb (the founder of Stellar, who at the time was a member of the Ripple board of directors) and Chris Larsen, the head of the Ripple project.

The project is being developed by Stellar Development Foundation (SDF), an American non-profit corporation headquartered in Delaware.

The project leaders are:

  • Jed McCaleb – co-founder, CEO, creator of the file-sharing network eDonkey, cryptocurrency exchange MtGox, co-founder of the Ripple platform (left the project in July 2013);
  • Keith Rabois – investor, co-founder, has experience in LinkedIn, Square, PayPal, Slide;
  • Patrick Collison – advisor, co-founder of Stellar and Stripe;
  • David Mazieres – director of science;
  • Nicolas Barry – chief technology officer;

No ICO of the project has been conducted. The developers are paid from the following sources:

  1. Sales of 5% (5 billion coins) of the originally created lumens, some of which are periodically sold on various cryptocurrency exchanges.
  2. Donations from companies and individuals.
  3. Contributions from members of the Stellar Development Foundation.

In 2014, SDF received a loan of $3 million from the processing company Stripe, which was paid with 2 billion lumens from the funds left to develop the project.

How to store XLM coins

Storage of Lumens (Stellar cryptocurrency) can be performed on several dozens of wallets of the following types:

Online wallets, e.g.: Stellar Wallet, Saza, Stellar Portal.

Hardware wallets, for example: Trezor, Ledger Nano.

Wallets for mobile platforms, such as the open source application Centaurus, Luuun, Lobstr and others.

As with the Ripple system (minimum 20 coins), each Stellar account must have a minimum amount of lumens that cannot be spent. This amount is determined by the formula (2 + # of entries) ×base reserve, where base reserve equals 0.5 coins and # of entries is determined as the sum of the following values:

  • Trustlines;
  • Offers;
  • Signers;
  • Data entries.

Thus, a wallet must have a minimum of (2+0) ×0.5=1 lumens for transactions. Also there is a possibility to merge accounts, which allows you to transfer even the minimum amount of 1 Lumen. In this case there will be only one account from plenty of accounts to which all funds will be transferred.

How to buy or get Stellar Coins

There is no lumens mining, but it is possible to buy XLM on most cryptocurrency exchanges around the world. According to Coinmarketcap, Stellar cryptocurrency is listed in 301 listings and trades mostly for Bitcoin, Ether, Euros, Dollars, Tether and other coins.

The daily trading volume of this asset is nearly $0.5 billion, most of which is traded on the following cryptocurrency trading platforms:

  1. Bithumb;
  2. Coinbase;
  3. Binance;
  4. KuCoin;
  5. Gate.io;

In 2018, the decentralized exchange StellarX was created and since then it is possible to make transactions with various cryptocurrency assets without fees.

Technical features of the Stellar blockchain

Stellar has the following technical features:

  • Stellar’s software code was first based on the development of the Ripple project, and since November 2015, it switched to its decentralized open-source protocol;

Stellar is a competitor to Ripple.

  • Stellar’s database is decentralized and open to all users, each of whom can run their own network node;
  • transaction cost is about 0.00001 XLM;
  • transaction confirmation time – 3-5 seconds;
  • transaction speed – several thousands per second;
  • the platform can be used as an intermediary for the transfer of any assets;

Stellar payment platform

  • it uses the SCP consensus protocol of its own design;
  • there is support of simple smart contracts (Stellar Smart Contrac, SSC), which can be used for ICOs;
  • it supports transactions with multiple signatures.

Overview of advantages and disadvantages

Stellar has the following advantages:

  • low cost (micropayments can be made) and high transaction speed;
  • high energy efficiency and reliability of the decentralized network;
  • a greater number of different technical features than Ripple;
  • a professional team of developers and the long existence of the project;
  • support of a large number of cryptocurrency exchanges and the existence of its own trading floor;
  • a good marketing campaign and high media activity.

Due to the large number of advantages of the platform, it is already used by a large number of large companies, including IBM, Deloitte, Tempo, Parkway.

The disadvantages of the project are as follows:

  • The availability of competitive payment systems (Ripple and others) and more advanced blockchain platforms for decentralized applications and smart contracts;
  • large initial issue of coins, due to which they have relatively little value;
  • limited functionality of smart contracts.

Conclusion

The project has a large number of supporters, is supported by most cryptocurrency exchanges, and has good technical indicators. In addition, the Stellar platform is transparent, not expensive to use and has been around for many years. All these indicators determine its high attractiveness and demand, including for investment.

Articles reflect the author's own opinion.

In any circumstances can CCG be responsible for potential losses regarding investments or services, either referenced by the author in the article itself or by any links provided.

This platform is intended to share educational knowledge, open for several external author's and in no way represents any financial advisement.

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