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Stellar Lumens (XLM)

Updated: Nov 11, 2022

Powering Global Payment Solutions

Stellar, which was originally created as a fork of Ripple, is an open-source, distributed payments infrastructure connecting people, payment systems and banks. <1>

The Stellar network is:

  • Extremely fast, with a median processing time of 5 seconds;

  • Affordable, processing 600,000 transactions for only $0.01;

  • Scaleable, with the ability to handle 1000 transactions per second; and

  • Global, meaning it can handle cross-border payments and process transactions both in XLM (the native currency of the Stellar network) and in fiat, while automatically converting transactions to the desired output.

Stellar Highlights

Stellar Lumens Logo

Started: July 2014

Market cap: $1,711,507,264 <2>

Price per token: $0.096

Reddit subscribers: 10,217

Twitter followers: 51,400

Facebook likes: 8,205

Circulating supply: 17,763,050,978

Max supply: 103,471,840,067

Consensus method: Stellar Consensus Protocol


Where to Buy: Binance

Stellar Development Foundation

The Stellar network was developed by the Stellar Development Foundation (SDF) as part of their objective to "promote global financial access, literacy, and inclusion." In order to accomplish this the SDF is working to: <3>

  • Develop and maintain a secure and low cost global transaction network (“Stellar Network”) and protocol (“Stellar Protocol”) that is high quality, open-source, and publicly accessible to everyone;

  • Develop and maintain publicly accessible tools and services to support the Stellar Network and its users;

  • Provide guidance and direction for the Stellar ecosystem;

  • Promote adoption of Stellar as a worldwide payment standard;

  • Distribute the native currency of the Stellar ecosystem, Lumens, to the world to expand the reach of the network and create a more inclusive digital economy; and

  • Create and support technical and non-technical partnerships and educational initiatives to boost digital financial literacy and development efforts at the institutional and community level.

The Stellar Consensus Protocol (SCP)

The Stellar network makes use of the Stellar Consensus Protocol (SCP) which is an adaptation of a federated Byzantine agreement (FBA). In short, FBA works by creating consensus between a pre-defined set of nodes or members which are typically granted membership by a central authority. Ripple, which Stellar forked from, made use of this model with one key change - the list of members could be edited by any one of the members. However, in order to maintain the safety of the network and achieve consensus, any added members would have to be trusted by all the existing participants, therefore raising the barrier to participation and maintaining the control of original members. <4>

In an effort to promote organic growth of the network and open participation to all organizations regardless of financial status, Stellar does not make use of a centralized member list. Rather, each participant in the network is given the freedom to choose which other participants they trust rather than having a defined list of members who determine consensus. Thus:

Each participant knows of others it considers important. It waits for the vast majority of those others to agree on any transaction before considering the transaction settled. In turn, those important participants do not agree to the transaction until the participants they consider important agree as well, and so on. Eventually, enough of the network accepts a transaction that it becomes infeasible for an attacker to roll it back. Only then do any participants consider the transaction settled. <5>

The Stellar Consensus Protocol further builds on this through a process called federated voting. Nodes first vote on a transaction (as described above) and if successful, the nodes then repeat the process in order to come to agreement that the initial vote succeeded; ultimately the transaction will progress from unknown to accepted and lastly confirmed. The Stellar-adapted FBA model has a number of advantages over other consensus methods including: <6>

  • Decentralized control in which anyone is able to participate and no central authority determines consensus;

  • Nodes are able to reach consensus quickly - the entire process described above takes 2-5 seconds;

  • Users are able to trust any combination of parties, decoupling the relationship between trust and resource ownership, therefore preventing large institutions from controlling consensus; and

  • Asymptotic security via digital signatures and hash families.

How Stellar works

Once the above consensus process is complete, the blockchain records a credit for the transaction which is then issued to an online account by anchors, a bridge between the Stellar Network and the currency of the transaction (a real world example of an anchor would be a bank or a payment processor like PayPal). This credit can be sent or received and the network will automatically convert any foreign currencies to the desired output at the lowest exchange rate via the Stellar Network's built-in distributed exchange. For example John wants to send Nancy USD, using his EUR balance. Stellar automatically submits an offer to the distributed exchange selling EUR to USD. The network finds the best exchange rate for the transactions. <7> This can happen in a few different ways:

  • Conversion through an offer - Stellar finds an offer on the internal EUR/USD exchange for someone wanting to buy EUR for USD and automatically makes the exchange;

  • Using Lumens (XLM) as an intermediary currency - Stellar looks for offers on the network asking for EUR in exchange for XLM while also looking for an offer asking for XLM in exchange for USD; the network makes those exchanges and sends Nancy the resulting USD; or

  • Chain of conversions - If there are no explicit relationships between buy/sell offers, Stellar tries to find offers from the network that will ultimately result in the conversion of EUR to USD such as EUR to CAD, CAD to BTC, BTC to XLM, XLM to USD.

As seen above, Lumens (XLM) are a key facilitator for multi-currency transactions, however Lumens also act as a security feature for the network. All accounts on the Stellar Network must hold at least 20 XLM in order to ensure that accounts are real. All transactions also result in a small fee, the equivalent of .00001 XLM, which is charged to the sender. This fee is rather insignificant to the parties involved, however it acts as a deterrent against malicious users flooding the network.

This fee does not go to the SDF; rather it is collected by the network and eventually distributed during inflation. Inflation occurs at a rate of 1% per year and Lumens are distributed to all accounts with more than 0.05% of the total votes on the network.

Stellar Use Cases

Stellar is a fast, decentralized payment network which has a large range of applications such as:

  • Automatic currency exchange via the built-in exchange, making cross-border transactions and remittances easy;

  • Day-to-day use and micropayments due to low fees and transaction speed;

  • Large scale payment processing up to 1,000 transactions per second; and

  • Providing services for those who can't afford or are unable to access traditional banking systems.

One other use case that has come up more recently is Stellar as a platform for initial coin offerings (ICOs). Mobius was the first of what should be many ICO's to launch on Stellar and for good reason. First of all, Stellar's decentralized exchange allows any token to be traded instantly - no need to wait on a 3rd party exchange. There is also a built in token issuance system and ICO features including multi-signature authorizations, whitelists and KYC. The platform only requires simple programming, and although it is not as flexible as Ethereum in that regard, it makes it easy to use and secure. Lastly, the Stellar Network is inherently cheaper and faster to use than Ethereum.

Partnerships and funding

Stellar has a huge list of partners with a lot of major names including: <8>

  • Tempo - a remittance provider servicing 43 countries with over 3000 network partners;

  • - a Southeast Asian mobile financial services provider;

  • Parkway - financial technology provider in africa

  • Ripplefox - a payment facilitator for any bank or Alibaba account in China;

  • ICICI bank - India's largest private sector bank;

  • Flutterwave - a digital payment infrastructure company in Africa;

  • KlickEx - a regional cross-border payments system;

  • Remitr - a global platform for cross-border payments in 63 countries;

  • Deloitte - a leading global finance and technology consulting firm;

  • Stripe - payment processing API's;

  • IBM - a multinational technology company; and

  • SatoshiPay - cryptocurrency micropayments.

Stellar is also partly funded by major companies including Google, Black Rock and Stripe. <9>

The Stellar team

The Stellar team, which consists of 12 team members, 4 board members and 8 advisors, is nothing less than stellar (pardon the pun).

Jed McCaleb, the co-founder and lead developer, was one of the founders of Ripple and the founder of Mt. Gox, eDonkey, and kdrive. The other co-founder, Joyce Kim, is a venture capitalist and advisor for Freestyle Capital. Heading up the technical side of things is the CTO, Nicolas Barry, who was the VP principal software architect for Salesforce and worked at Microsoft for over 8 years in roles such as principal software engineering manager. David Mazieres, the chief scientist, has been a professor of computer science at Stanford more than 12 years and is the founder and engineer of Intrinsic. Heading up partnerships is Boris Reznikov who was previously a senior consultant for Deloitte. Lastly, although there are several other notable members, Greg Brockman was the former CTO of Stripe.

The advisors for Stellar are amongst the best of any project out there and include Patrick Collison the CEO of Stripe, Greg Stein the director of Apache, Matt Mullenwegg the founder of Wordpress, Sam Altman the president of YCombinator, and Naval Ravikant the founder of AngelList and co-founder of Epinions.

What sets Stellar apart

  • Speed, low fees and scalability make it one of, if not the best cryptocurrencies out there for processing payments both large and small;

  • Incredibly strong team and all-star advisors;

  • Not only do they have a working product, but it's a product that is being adopted worldwide by world leading organizations;

  • Unique and effective consensus method which enables participation regardless of resource ownership;

  • Untapped potential in the ICO space;

  • Active development as evidenced by GitHub;

  • Automatic currency exchange makes cross-border transactions simple; and

  • It enables financial services for those without access to traditional banking;

Concerns about Stellar

  • The biggest concern is whether these partnerships will make use of the native currency (XLM) to facilitate transactions long-term or if they will just replicate the Stellar model;

  • The supply is huge and inflates over time which may limit the value of XLM; and

  • Despite being one of the leading crypto payment processors the maximum transactions that can be processed per second still falls short of traditional equivalents such as VISA, which may limit the main use case of Stellar to be for cross-border payments.


Ripple. Both are built off an FBA consensus method and both are payment processors which aim to increase transaction speed while simultaneously lowering transaction fees. However, both have targeted different markets for their platform. Ripple has been working with major banks on reducing costs and thus increasing profits while Stellar has been working more with international companies on cross-border banking and improving access to financial services. I like the technology and mission behind Stellar far more than Ripple but ultimately who knows which will be more successful - so far Ripple has lead the way but Stellar is definitely giving it a run for it's money. That being said, unless either decides to move into a new space, there's no reason they can't coexist.

International payment processors. On the traditional end of the spectrum, there are organizations like Western Union. Getting right to the point, if Stellar can increase penetration in developing countries then there's not much that Western Union can offer. On the more modern end are companies like PayPal which have achieved mass adoption. Like Ripple, I wouldn't consider them a direct competitor but Stellar offers far lower fees which is especially important for those who aren't financially well off.


Stellar is a fast, affordable and scaleable payment network with global reach and a fantastic team. The network is built off a unique FBA consensus method and has been adopted by major organizations around the world. It has already established itself as one of the leading crypto payment processors and has room to grow in that space and as a platform for ICO's.

It currently sits 14th on with a market cap of $1.7B and a price of $0.096 per token. However, the circulating supply (which market cap is based on) is only a small portion of the total supply of 103,491,574,319 XLM with a fixed inflation rate of 1% per year. The SDF will give out a total of 50B XLM via the direct sign-up program and a further 25B XLM via the partnership program over a 10 year period, so keep in mind that after inflation there will be around 110B lumens. At the current price of $0.096 that would mean a market cap of $10.6B which is important context looking at the overall picture.

That being said, I think that Stellar will at least threaten Ripple ($9.6B) in the not so distant future and in the long-term (and I mean 5+ years) Stellar has the technology and the partnerships be entrenched as one of the top cryptocurrencies. However, there's also the consideration that you are relying on it's partners to continue to use the native currency rather than re-purposing the Stellar model which is by far the biggest concern for XLM. If IBM and other major partners continue to make use of XLM, I see no reason why Stellar shouldn't surpass Ripple and establish itself as one of the most valuable cryptocurrencies.

It's definitely in my long term portfolio and I think there are some short term opportunities with the upcoming SatoshiPay launch as well.

Stellar (XLM) can be bought at

References and Notes

<1> Taken from

<2> Logo, as well as all stats are from with the exception of social following which is taken directly from the social pages

<3> Direct quotes taken from

<4> Adapted from page 3 of the whitepaper

<5> Taken from page 1 of the whitepaper

<6> Taken from page 2 of the whitepaper

<7> Example adapted from

<8> Most partners taken from or elsewhere on the site


All other information is either adapted from the whitepaper and other research or is personal opinion.

Crypto Advocate has holdings in XLM at the time of writing.

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