Stellar is an open-source, distributed payments infrastructure that aims to enable efficient cross-border transactions between any pair of currencies. The Stellar Development Foundation, a Delaware-based nonprofit organization, supports the protocol and was created in collaboration with Stripe CEO Patrick Collison.
Who created Stellar Lumens?
Jed McCaleb, the founder of the failed Mt. Gox exchange and co-founder of Ripple, created the Stellar network in 2014, following disagreements on the implementation of Ripple’s core principles. McCaleb introduced the network as an open-source, decentralized payment network protocol that facilitates cross-border transactions between different currency pairs efficiently and cost-effectively.
Stellar Lumens (XLM) is the native cryptocurrency of the network, which powers all of its operations.
Stellar’s ledger system requires the fundamental use of Lumens. The official document stated that introducing its native currency would deter bad or frivolous actors by imposing a minimum balance on each account and a small transaction fee as a nominal barrier. The network seeks to avoid the ledger becoming filled with spam or nonsense.
How many Stellar Lumens are there in circulation?
When the Stellar network first went live, 100 billion XLM were created. 25% of the Stellar Lumens created would be allocated to other non-profits working toward financial inclusion. At the same time, Stripe received 2 billion of the initial XLM coins in return for its seed investment.
For the first five years of the protocol’s existence, the supply of Stellar Lumens increased by 1% annually.
However, the inflation mechanism was put to an end in October 2019 after a community vote. A month following the decision, the overall XLM supply was reduced. Stellar Lumens supply is now capped and finite. There are around 50 billion XLM in existence, and no new tokens will be created in the future.
Although the finite supply of XLM remains at 50 billion, there are around 25 billion Stellar Lumens in the open market. At the same time, the Stellar Development Foundation retains the other half to develop and promote the cryptocurrency. The rest of the XLM held by the foundation would enter the public markets over the next few years.
Where can you buy XLM?
Similar to many of its large-cap counterparts, Stellar Lumens is available on many cryptocurrency exchanges, including Coinbase, Kraken and Binance.
Stellar also has its native exchange, Lobstr, which allows users to buy XLM directly on the network.
Are Stellar Lumens a security?
While the United States Securities & Exchange Commission (SEC) has filed a lawsuit against Ripple Labs, stating that XRP is a security, Stellar Lumens has managed to distance itself from the controversy.
Stellar Development Foundation CEO Denelle Dixon clarified that Stellar Lumens is more inclined toward utility and that XLM focuses on being a bridge currency on…
Read more:What is Stellar? XLM beginner’s guide