{"id":37759,"date":"2022-09-07T17:15:55","date_gmt":"2022-09-07T14:15:55","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37759"},"modified":"2025-08-29T21:06:56","modified_gmt":"2025-08-29T18:06:56","slug":"what-are-the-stellar-blockchain-and-the-xlm-cryptocurrency","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-are-the-stellar-blockchain-and-the-xlm-cryptocurrency\/","title":{"rendered":"What are the Stellar blockchain and the XLM cryptocurrency?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Stellar is a blockchain built for cheap, secure and high-speed cross-border payments between individuals and organisations. As of September 2022, the network had more than 5 million addresses.<\/li>\n<li>The project\u2019s native coin is Stellar Lumens (XLM), issued in 2014. It currently ranks among the top 50 cryptocurrencies by market capitalisation.<\/li>\n<li>The Stellar blockchain is used by MoneyGram, IBM World Wire and many local money-transfer operators worldwide.<\/li>\n<li>According to the roadmap, by the end of 2022 Stellar planned to introduce a virtual machine, enabling smart contracts and decentralised applications.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Who founded Stellar?<\/h2>\n<p>The <a href=\"https:\/\/stellar.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">Stellar<\/a> project was founded in 2014 by the American programmer and entrepreneur Jed McCaleb. He was known as a co-founder of the file-sharing service eDonkey2000 and the ill-fated exchange Mt.Gox, and later as co-founder and CTO of <a href=\"https:\/\/forklog.com\/en\/news\/what-are-ripple-and-the-cryptocurrency-xrp\">Ripple<\/a>. Disappointed by what he saw as the project\u2019s high degree of centralisation and its focus on financial institutions, he set out to launch a decentralised alternative geared towards consumer electronic payments.<\/p>\n<p>In July 2014, in San Francisco, McCaleb and Stanford professor David Mazi\u00e8res registered the non-profit Stellar Development Foundation (SDF). Soon after, it received $3 million in funding from the US tech firm Stripe, which develops electronic transfer and payments software.<\/p>\n<p>The Stellar blockchain went live in autumn 2014. It began as a clone of Ripple with the same codebase. In spring 2015, however, SDF launched an updated Stellar blockchain on its own Stellar Consensus Protocol, designed by David Mazi\u00e8res.<\/p>\n<p>In May 2017 Stellar\u2019s commercial arm, Lightyear.io, began operating. In September 2018 it was acquired by Chain, and the combined company was renamed <a href=\"https:\/\/interstellar.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Interstellar<\/a>. It builds and integrates solutions that use Stellar to make cross-border payments more efficient.<\/p>\n<p>In 2019 Denelle Dixon, formerly COO of the Mozilla Foundation, replaced Jed McCaleb as SDF\u2019s CEO.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How does Stellar work?<\/h2>\n<p>At the core of the network is the Stellar Consensus Protocol (SCP), which its creator David Mazi\u00e8res described as the first provably safe consensus mechanism. It uses a \u201cfederated Byzantine agreement system\u201d: many equal peers participate in block production and transaction validation.<\/p>\n<p>The SCP process for reaching consensus and adding approved transactions to new blocks has<em> <\/em>three stages:<\/p>\n<ul class=\"wp-block-list\">\n<li><strong>Nomination<\/strong> \u2014 nodes propose candidate blocks for approval;<\/li>\n<li><strong>Voting<\/strong> \u2014 nodes vote for their own and others\u2019 candidates; once a quorum is found, a \u201cballot\u201d is formed that authorises inclusion of a new block in the chain;<\/li>\n<li><strong>Timeout<\/strong> \u2014 a mechanism by which nodes drop candidates that cannot reach quorum and retry the vote.<\/li>\n<\/ul>\n<p>Stellar has three types of nodes:<\/p>\n<ul class=\"wp-block-list\">\n<li><strong>Observer<\/strong> \u2014 submits transactions to the network;<\/li>\n<li><strong>Validator<\/strong> \u2014<strong> <\/strong>participates in SCP voting and confirms new blocks;<\/li>\n<li><strong>Archiver<\/strong> \u2014 stores and continuously updates Stellar\u2019s ledger.<\/li>\n<\/ul>\n<p>As of September 2022, the Stellar blockchain had <a href=\"https:\/\/stellarbeat.io\/nodes\" target=\"_blank\" rel=\"noreferrer noopener\">about 40 active validator nodes<\/a>. Three belong to SDF; the rest are run by some two dozen organisations, including cryptocurrency exchanges where XLM is traded. This underpins the network\u2019s decentralisation and security.<\/p>\n<p>Thanks to this architecture, Stellar can process more than 1,000 transactions per second, with an average confirmation time of under five seconds.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Stellar\u2019s tokenomics<\/h2>\n<p>At launch in 2014, roughly 100 billion XLM were created and inflation was set at 1% per year. <\/p>\n<p>SDF initially planned to distribute over 50% of the XLM supply over the next ten years among partners and retail users. To that end, it designed an extensive programme of <a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-cryptocurrency-airdrop\">airdrops<\/a> for bitcoin holders, XRP holders and users of various blockchain services. <\/p>\n<p>In 2018\u20132019, for example, any verified user of the Blockchain.com wallet, as well as the Poloniex and Coinbase exchanges, could receive Stellar Lumens worth about $20\u201330 after taking a quiz about the project.<\/p>\n<p>Generous XLM giveaways weighed on the asset\u2019s market price.<em> <\/em>So in November 2019<em> <\/em>Stellar\u2019s tokenomics were revised: SDF decided to burn more than 55% of the XLM supply and scrapped inflationary issuance.<\/p>\n<p>As of September 2022, total supply stands at 50 billion XLM, with over half already in circulation.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What is XLM for, and what are its features?<\/h2>\n<p>Within the Stellar ecosystem, XLM serves several core functions:<\/p>\n<ul class=\"wp-block-list\">\n<li>paying transaction fees on the blockchain (0.00001 XLM per operation);<\/li>\n<li>account management on the Stellar network (to enable transfers, a Stellar wallet must hold at least 1 XLM);\u00a0<\/li>\n<li>a unit of exchange on Stellar;<\/li>\n<li>an intermediate currency used to provide liquidity for any tokens issued on Stellar.<\/li>\n<\/ul>\n<p>Stellar Lumens trade on major centralised cryptocurrency exchanges, both spot and futures. All popular multi-asset wallets support its storage.<\/p>\n<p>For everyday users, XLM transfers are very fast and cheap, but not always convenient. When sending cryptocurrency to addresses of centralised exchanges and other custodial services, you must specify a Memo in addition to the address. This is an extra numeric or alphanumeric code generated in the wallet. You can send a transfer without a Memo, but exchanges will not be able to credit the funds to the intended account.<\/p>\n<p>In early 2019, the crypto-focused investment firm Grayscale Investments launched a trust with Stellar Lumens as the underlying asset. It has not proved popular: as of September 2022 the trust\u2019s capitalisation is <a href=\"https:\/\/grayscale.com\/products\/grayscale-stellar-lumens-trust\/\" target=\"_blank\" rel=\"noreferrer noopener\">only $7.7m<\/a>.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What cryptoassets are issued on Stellar?<\/h2>\n<p>The Stellar blockchain lets anyone quickly and cheaply, in just a few simple steps, <a href=\"https:\/\/developers.stellar.org\/docs\/issuing-assets\/how-to-issue-an-asset\" target=\"_blank\" rel=\"noreferrer noopener\">issue custom tokens<\/a> with preset properties. Thanks to this, in 2018 the platform ranked second after Ethereum by number of ICOs.<\/p>\n<p>Another important consequence of easy token issuance is the ability to tokenise real-world assets\u2014for example, issuing stablecoins pegged to various <a href=\"https:\/\/forklog.com\/en\/news\/what-are-fiat-currencies\">national currencies<\/a>. Their free convertibility is enabled by <a href=\"https:\/\/www.stellar.org\/learn\/anchor-basics\" target=\"_blank\" rel=\"noreferrer noopener\">\u201canchors\u201d<\/a>\u2014trusted financial organisations that handle the exchange of fiat currencies into tokens and XLM, and back. They can be viewed as bridges between the traditional economy and the Stellar network.<\/p>\n<p>One of the first to use this was the French payment blockchain service Tempo, which in 2017 began issuing the euro-pegged Euro Tempo Token (EURT).<\/p>\n<p>In April 2019, the British online bank Wirex issued 26 stablecoins on Stellar pegged to various national currencies, with instant conversion.<\/p>\n<p>In February 2021, Circle <a href=\"https:\/\/forklog.com\/en\/news\/usdc-stablecoin-launches-on-the-stellar-blockchain\">began issuing the USDC stablecoin<\/a> on Stellar. Many major crypto exchanges announced support for USDC transfers on this network.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How is Stellar evolving?<\/h2>\n<p>Unlike Ripple, Stellar was positioned from the outset as a scalable, fast and secure cryptocurrency for person-to-person payments. To bring XLM closer to consumers and bridge crypto and fiat, the Stellar Development Foundation forged numerous partnerships with payment systems worldwide, with a focus on Africa, Asia and South America.<\/p>\n<p>A few of the more notable partnerships:<\/p>\n<ol class=\"wp-block-list\">\n<li>In April 2015 SDF partnered with Oradian, a provider of cloud banking software, to integrate Stellar into Oradian\u2019s platform for serving microfinance institutions in Nigeria.<\/li>\n<li>In 2016 Deloitte announced an integration of Stellar to build a cross-border payments app for Deloitte Digital Bank.<\/li>\n<li>In autumn 2017 Stellar signed a partnership with IBM. Later it unveiled IBM Blockchain World Wire, which allows financial institutions to make international payments in seconds.<\/li>\n<li>In late 2017 Stellar was adopted by SureRemit, a Nigeria-based cashless remittance platform.<\/li>\n<li>In October 2021 the payments company Flutterwave launched two new remittance corridors between Europe and Africa using the Stellar network.<\/li>\n<\/ol>\n<p>One of Stellar\u2019s key partners is MoneyGram, a global remittance service with 350,000 locations in 200 countries. In autumn 2021 the company began using Stellar to process transactions in <a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-usdc-stablecoin\">USDC stablecoins<\/a>. <\/p>\n<p>Thanks to the Stellar\u2013MoneyGram collaboration, in June 2022 users of the Vibrant and Lobstr digital wallets in several countries, including Kenya, Canada, the United States and the Philippines, <a href=\"https:\/\/www.prnewswire.com\/news-releases\/moneygram-launches-pioneering-global-crypto-to-cash-service-on-the-stellar-network-301565706.html\" target=\"_blank\" rel=\"noreferrer noopener\">gained<\/a> the ability to convert local currencies into cryptocurrencies and back without a bank account or card.<\/p>\n<p>According to the <a href=\"https:\/\/www.stellar.org\/roadmap\" target=\"_blank\" rel=\"noreferrer noopener\">Stellar roadmap<\/a> published in early 2022, the integration of a virtual machine and support for smart contracts was due by year-end. This significant upgrade could reshape the Stellar ecosystem and spur the development of DeFi services familiar to users of other blockchain platforms.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Further reading<\/h2>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-tron-trx\">What is the TRON (TRX) cryptocurrency?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-elrond-egld\">What is Elrond (EGLD)?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-staking-and-how-to-make-money-from-it\">What is staking and how to profit from it?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/how-to-buy-bitcoin-a-step-by-step-guide-for-beginners\">How to buy bitcoin: a step-by-step guide for beginners<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-algorand-algo\">What is Algorand (ALGO)?<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What sets the Stellar blockchain apart? What are the functions of its native cryptocurrency, Stellar Lumens (XLM)? How is the Stellar network used? We explain in brief.<\/p>\n","protected":false},"author":1,"featured_media":37760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"1","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2117,243],"class_list":["post-37759","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-altcoins","tag-stellar"],"aioseo_notices":[],"amp_enabled":true,"views":"117","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37759","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37759"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37759\/revisions"}],"predecessor-version":[{"id":37761,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37759\/revisions\/37761"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37760"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}