What is Stellar (XLM)?

Deep Dive

1. Purpose & Value Proposition

Stellar’s core mission is to make global finance more accessible and efficient. It aims to solve the slow, expensive problem of cross-border payments by providing a protocol that connects disparate financial institutions (CoinMarketCap). The network acts as a bridge, allowing different currencies—both fiat and digital—to be exchanged seamlessly and near-instantly.

2. Technology & Architecture

Stellar operates on the Stellar Consensus Protocol (SCP), a distinct mechanism that differs from proof-of-work or proof-of-stake. SCP relies on a decentralized network of identified validators that reach agreement on transactions, offering high speed (3–5 second finality), low cost, and minimal energy consumption (CoinMarketCap). In 2024, Stellar launched Soroban, a smart contract platform built for financial applications, extending its capabilities to decentralized finance (DeFi) and complex programmable assets.

3. Ecosystem Fundamentals

Stellar has become a leading network for tokenizing real-world assets (RWAs). Major financial institutions like Franklin Templeton and partners like PayPal (with its PYUSD stablecoin) and Visa use Stellar’s infrastructure for compliant asset issuance and payments (CoinDesk). This focus on regulated, enterprise-grade use cases drives significant on-chain volume and distinguishes Stellar from general-purpose blockchains.

Conclusion

Stellar is fundamentally a financial infrastructure blockchain, evolving from a cross-border payments rail into a foundational layer for tokenized real-world assets and institutional finance. How will its focus on regulated, compliant utility shape its role in the future of global finance?