Stellar price in euros

Stellar is an open-source blockchain for payments, currency exchange and the digital representation of assets. Jed McCaleb and Joyce Kim created it in 2014 to make it easier to move money between countries and across different currencies.

Its native cryptocurrency is called the lumen (XLM), and the network’s development is supported by the nonprofit Stellar Development Foundation (SDF). Validator nodes agree on transactions through the Stellar Consensus Protocol, without mining.

What it’s used for

XLM covers transaction fees and the minimum reserves that accounts require. It can also act as a bridge currency in a conversion, but payments on Stellar don’t all have to be made in XLM.

Other digital assets, such as USDC, also move on the network. A real-world example is the aid distributed in Ukraine by the UN Refugee Agency (UNHCR), which recipients could cash out through MoneyGram: the recipient doesn’t necessarily need to hold crypto to benefit from the transfer.

How many XLM are there

Initially, 100 billion XLM were created, and a 1% annual inflation rate was then applied. In 2019, validators ended this mechanism and the SDF burned about 55 billion XLM, leaving about 50 billion in total.

Under the current rules, no new XLM are issued through mining or staking. However, the circulating supply can grow when existing SDF reserves are distributed, and the supply rules could change through a future protocol amendment.

What to watch out for

The SDF’s influence and reserves, along with the concentration among validators, create concerns about dependence on a few participants. In addition, fiat on/off-ramp services and stablecoins depend on providers and regulatory rules.

Apps built on Stellar have their own technical risks, separate from the network’s security. Also, more payments don’t imply proportionally more demand for XLM, since they can use other assets, and the competition includes both other blockchains and conventional payment networks.

We find Stellar’s focus on real-world money transfers useful, while keeping reservations about concentration and dependence on intermediary providers.