What is Stellar (XLM)?

Deep Dive

1. Purpose & Value Proposition

Stellar aims to bridge traditional finance and blockchain by enabling institutions to tokenize assets (e.g., stablecoins, bonds) and process cross-border payments at scale. Its network supports compliance tools, making it a preferred choice for regulated entities like Franklin Templeton (Stellar.org) and Visa. Unlike speculative tokens, XLM’s primary role is to stabilize operational costs for financial applications.

2. Technology & Architecture

Stellar uses the Stellar Consensus Protocol (SCP), a Byzantine Fault Tolerant system that relies on quorum slices (trusted validators) instead of mining or staking. This design ensures low energy use, 3-5 second settlement times, and fees under $0.001. The 2024 Protocol 20 upgrade introduced Soroban, a Rust-based smart contract platform optimized for financial use cases like DeFi and RWAs (Stellar.org).

3. Key Differentiators

• Real-World Focus: Prioritizes compliance and interoperability with legacy systems (e.g., ISO 20022 standard).
• Institutional Adoption: Partners include MoneyGram, WisdomTree, and the UNDP for humanitarian aid distribution.
• Tokenization Hub: Hosts $500M+ in tokenized assets daily, such as Franklin Templeton’s BENJI money-market fund.

Conclusion

Stellar is a bridge between traditional finance and blockchain, prioritizing efficiency, compliance, and real-world utility. As global payment systems modernize, will Stellar’s focus on regulated, institutional use cases solidify its role as a backbone for tokenized economies?