What is Stellar (XLM)?

Deep Dive

1. Purpose & Value Proposition

Stellar aims to modernize financial infrastructure by enabling seamless cross-border transactions and tokenizing real-world assets like stablecoins and funds. Unlike speculative cryptocurrencies, XLM serves as a utility token to pay transaction fees (0.00001 XLM per operation) and facilitate multi-currency swaps. Institutions like Visa, PayPal, and Franklin Templeton use Stellar for compliant, scalable solutions in payments and asset tokenization (Stellar.org).

2. Technology & Architecture

Stellar’s Consensus Protocol (SCP) relies on a federated voting system instead of energy-intensive mining or staking. Validators are publicly identifiable, prioritizing transparency and efficiency. The network confirms transactions in 3–5 seconds and handles ~5,000 operations per second. In 2024, Soroban, a Rust-based smart contract platform, launched to support DeFi, RWAs, and institutional-grade applications while maintaining low fees and deterministic execution (CoinMarketCap).

3. Tokenomics & Ecosystem

XLM has a fixed supply of 50 billion tokens (with ~32.4 billion circulating). It’s used to:
- Prevent spam via minimal transaction fees.
- Serve as an intermediary in currency conversions (e.g., USD to EUR via XLM).
- Maintain account minimum balances (~1 XLM).

The ecosystem thrives on partnerships with regulated entities like WisdomTree (tokenized funds) and MoneyGram (remittances), positioning Stellar as a bridge between fiat and blockchain economies.

Conclusion

Stellar is a purpose-built blockchain for financial interoperability, combining institutional-grade infrastructure with accessibility. Its focus on real-world utility—from remittances to tokenized assets—sets it apart from general-purpose chains. How will Stellar’s integration of traditional finance and DeFi reshape global liquidity in the next decade?