Stellar (XLM) is a payment-focused digital currency that operates on the open, decentralized blockchain network known as Stellar. Often described as a hybrid of Bitcoin and Ripple (XRP), Stellar combines the best qualities of both: decentralization like Bitcoin and fast, low-cost, energy-efficient transactions like XRP.
Designed to revolutionize how money and assets are transferred, Stellar aims to create a distributed network capable of supporting everything from global payments to decentralized exchanges. Unlike traditional financial systems, Stellar enables users to send funds and digital assets across borders quickly and affordably—without relying on centralized intermediaries.
Instead, the network leverages a decentralized network of computers running open-source software to verify and settle transactions. This allows users to convert fiat currencies into digital tokens, trade them seamlessly, and use XLM—the native cryptocurrency—as a bridge asset to reduce friction in cross-asset exchanges.
Stellar shares similarities with the XRP Ledger, especially in its focus on financial institutions and payment providers. However, Stellar goes a step further by incorporating built-in exchange functionality through an on-chain order book, enabling users to trade various issued assets directly on the ledger.
5 Key Facts About Stellar You Should Know
- Founded by a Crypto Visionary
Stellar was launched in 2014 by Jed McCaleb, co-founder of Ripple and former creator of Mt. Gox—the first major Bitcoin exchange. He partnered with Joyce Kim, a legal expert and advocate for open financial systems. - Backed by Industry Giants
Major institutions like IBM and Deloitte have collaborated with Stellar to develop real-world financial solutions. IBM’s World Wire, a cross-border payment system, was built on the Stellar network. - Near-Zero Transaction Fees
One of Stellar’s standout features is its minimal cost—transactions cost just 0.00001 XLM (100 stroops), making it ideal for micropayments and international transfers. - Regulatory-Friendly Approach
Unlike many decentralized projects, Stellar actively works with regulators to ensure compliance, aiming to become a trusted infrastructure for mainstream financial services. - Nonprofit-Driven Mission
The Stellar Development Foundation (SDF) is a nonprofit organization focused on expanding financial access globally. While there is a for-profit arm (Interstellar), the core mission remains inclusive and socially driven.
Why Does Stellar Need Lumens (XLM)?
The XLM token—officially called "lumens"—plays a crucial role in maintaining network integrity. Each account must hold a minimum balance of 1 XLM, and every transaction incurs a tiny fee of 0.00001 XLM.
These small barriers serve two purposes:
- Prevent spam attacks by making it costly to flood the network with fake transactions.
- Ensure long-term usability by discouraging inactive or redundant accounts.
While fees could theoretically be paid in any currency, using XLM ensures neutrality—no single fiat currency dominates the network. This design supports Stellar’s vision of an open, borderless financial system.
Additionally, XLM acts as a universal bridge asset, enhancing liquidity between different tokenized currencies on the network. If someone wants to trade USD tokens for EUR tokens, XLM can serve as the intermediary for a seamless swap.
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XLM Supply and Inflation Model
When Stellar launched, 100 billion lumens were created. For the first five years, the supply increased by 1% annually through an inflation mechanism designed to reward network participants.
However, in October 2019, the community voted to disable the inflation protocol due to low participation rates and concerns about dilution. Since then, the total supply has been reduced through strategic burns.
Today, the circulating supply is approximately 50 billion XLM, with no new tokens being minted. Around 20 billion are actively traded, while the Stellar Development Foundation holds over 30 billion—allocated for ecosystem development, partnerships, and grants.
This capped supply model enhances scarcity and long-term value potential, distinguishing XLM from inflationary cryptocurrencies.
How to Buy and Store XLM
Purchasing XLM is straightforward through major cryptocurrency exchanges:
- Kraken and Coinbase are popular choices in the U.S., offering direct fiat-to-XLM trading pairs.
- Binance provides high liquidity with active XLM/USDT trading pairs, reporting over $437 million in 24-hour volume.
- Platforms like Bitget and Bybit also support XLM trading with competitive fees.
Step-by-Step Guide to Buying XLM
- Create an Account
Sign up on a trusted exchange like Binance. Complete identity verification (KYC) for enhanced access. - Deposit Funds
Add funds via bank transfer, credit card, or cryptocurrency. - Buy XLM
Search for “Stellar” or “XLM” and place your order based on desired amount or market price. - Confirm Transaction
Review fees and exchange rate before finalizing. - Secure Your Assets
While exchanges offer built-in wallets, storing XLM in a private wallet is safer. Hardware wallets like Ledger or Trezor provide top-tier security by keeping private keys offline.
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The Stellar Consensus Protocol (SCP)
Unlike Bitcoin’s energy-intensive proof-of-work, Stellar uses the Stellar Consensus Protocol (SCP)—a unique consensus mechanism based on the Federated Byzantine Agreement.
SCP allows nodes to reach agreement quickly without requiring all participants to validate every transaction. Instead, each node chooses a set of trusted validators (quorum slices), enabling faster finality—typically within 3–5 seconds—while maintaining decentralization and security.
This makes Stellar ideal for high-throughput applications such as real-time remittances and mobile micropayments.
Running a Node on Stellar
Users can contribute to network security by running a Stellar Core node. Depending on technical capacity, nodes can be configured as:
- Observer: Submits transactions but doesn’t participate in consensus.
- Basic Validator: Participates in voting but doesn’t archive data.
- Full Validator: Fully participates in SCP and maintains historical records.
Becoming a validator strengthens the network’s resilience and decentralization.
Issuing Assets on Stellar
A key feature of Stellar is its ability to tokenize real-world assets through entities called anchors (formerly gateways). Anchors issue credit representing fiat currencies (e.g., USD, EUR) or commodities on the blockchain.
These digital representations—known as Stellar assets—can be traded peer-to-peer with minimal fees and instant settlement. Anchors maintain reserves and control access, ensuring trust and compliance.
Developers increasingly use this functionality to launch stablecoins, loyalty points, or even equity tokens—making Stellar a powerful platform for asset issuance.
Who Created Stellar (XLM)?
Jed McCaleb founded Stellar after leaving Ripple in 2013. His goal was to create a more inclusive financial infrastructure accessible to underserved populations worldwide.
Notable contributors include:
- David Mazieres, computer science professor and architect of SCP.
- Denelle Dixon, CEO of the Stellar Development Foundation.
- Joyce Kim, co-founder and former executive director of SDF.
Their combined expertise has helped position Stellar as both technically robust and socially impactful.
Is XLM a Good Investment?
Whether XLM is a good investment depends on multiple factors:
- Use Case Strength: With partnerships from IBM and growing adoption in remittance corridors, Stellar has real-world utility.
- Scarcity Model: The reduced total supply increases scarcity compared to other large-cap cryptos.
- Market Competition: Faces strong competition from Ripple (XRP), though it differentiates through decentralization and nonprofit governance.
- Volatility Risk: Like all cryptocurrencies, XLM prices can swing dramatically based on market sentiment.
While past performance isn’t indicative of future results, analysts project potential growth if adoption expands—particularly in emerging markets where low-cost transfers are most needed.
Frequently Asked Questions (FAQ)
Is Stellar (XLM) worth investing in?
Stellar offers strong fundamentals with real-world use cases in cross-border payments and asset tokenization. Its partnerships with major institutions add credibility, making it a compelling option for long-term investors seeking exposure to blockchain-based finance.
Will XLM’s price go up?
Price movements depend on adoption, market trends, regulatory developments, and technological upgrades. Increased integration with banking systems or fintech platforms could drive demand for XLM.
What is the 2025 price prediction for XLM?
Some analysts predict XLM could reach $1.31 by late 2025 if bullish momentum continues. However, these forecasts are speculative and subject to change based on macroeconomic conditions.
What is the 2030 outlook for XLM?
Long-term projections suggest XLM could range between $3.50 and $3.84 by 2030 if Stellar captures significant market share in global payments and decentralized finance.
Is XLM safe to hold?
Stellar’s network is secure, using robust cryptographic protocols and decentralized validation. However, investors should always practice good security hygiene—using hardware wallets and enabling two-factor authentication.
How can I store XLM safely?
For maximum security, store XLM in non-custodial wallets such as Ledger (hardware) or Lobstr (mobile/desktop). Avoid keeping large amounts on exchanges vulnerable to hacks.