Stellar Lumens (XLM) in a Nutshell

Stellar is a platform that connects banks, payments systems, and people. Lauched in 2014, Stellar uses blockchain technology to allow for quick currency exchange and money transfer. Stellar was originally based on Ripple Lab’s protocol, but due to key philosophical differences Stellar eventually rewrote the code entirely. It is built on a semi-decentralized consensus platform and is designed to support any type of currency such as the US dollar, RMB or Yen. Stellar platform’s native currency is the Stellar Lumens (XLM).

Stellar Lumens (XLM) can be traded on Binance Exchange.

Features and Specifications

  • Transaction speed: 3-5 second confirmation time
  • Total Supply: 100B XLM created initially
  • Supports thousands of transactions per second
  • Uses Stellar Consensus Protocol (SCP) rather than Proof of Work
  • Simple, clean API
  • Multisig and smart contracts
  • Decentralized distributed database
  • 1% fixed annual inflation

How fast is Stellar?

Stellar XLM Logo

The Stellar network can confirm transactions within 3-5 seconds with a transaction cost of less than $0.00001. This makes the network ideal for mass consumer adoption and cross border transactions. The network itself can support more than 1000+ transactions per second.

How Does Stellar Lumens work?

Decentralized network

A decentralized network consists of peers that can run independently of each other. This means that the Stellar network does not depend on any single entity. The idea is to have as many independent servers participate in the Stellar network as possible, so that the network will still run successfully even if some servers fail.


Like a traditional ledger, the Stellar ledger records a list of all the balances and transactions belonging to every single account on the network. A complete copy of the global Stellar ledger is hosted on each server that runs the Stellar software. Any entity can run a Stellar server.

These servers form a decentralized Stellar network, allowing the ledger to be distributed as widely as possible. The servers sync and validate the ledger by a mechanism known as consensus.


Stellar uses the Stellar Consensus Protocol (SCP) rather than Proof of Work. The Stellar Consensus Protocol (SCP) is a protocol that achieves optimal safety against ill-behaved participants. Basically, it aims to be more secure and offer better protection against malicious parties.

The Stellar servers communicate and sync with each other to ensure that transactions are valid and get applied successfully to the global ledger.

For example, if you want to send $5 to a friend on the network, a list of trusted servers will begin a process to agree on the validity of your $5 payment to your friend. The majority of these servers will have to agree that you do in fact own $5 worth of credit on the network before they will mark the transaction as valid.

This entire process of coming to consensus on the Stellar network occurs approximately every 2-5 seconds.

Anchors, trust, and credit

Anchors are simply entities that people trust to hold their deposits and issue credits into the Stellar network for those deposits. They act as a bridge between different currencies and the Stellar network. All money transactions in the Stellar network (except the native digital currency of lumens) occur in the form of credit issued by anchors.

Anchors do two simple things:

  1. They take your deposit and issue the corresponding credit to your account address on the Stellar ledger. You can make a withdrawal by bringing them credit they issued.
  2. You have to trust the anchor to honor your deposits and withdrawals of credit it has issued.

Anchors exist in the pre-stellar world now. For example, to use Paypal, you deposit money in from your bank account. Paypal then gives you credit in your Paypal account. You can now send that Paypal credit to anyone that trusts Paypal (anyone with a Paypal account). Someone that received your Paypal credit can convert it to real money using Paypal by withdrawing it to the bank.

Anchors perform the same function in Stellar. The difference is, all the “Paypals” and other anchors are operating on the same network so they can all transact with each other now – this makes the system way more powerful. People can now easily send and exchange all these different anchor credits with each other.

Distributed Exchange

The Stellar ledger is able to store offers that people have made to buy or sell currencies. Offers are public commitments to exchange one type of credit for another at a pre-determined rate. The ledger becomes a global marketplace for offers.

All these offers form what is called an orderbook. There is an orderbook for each currency/issuer pair. So if you are wanting to exchange Virgin Bank/EUR for bitstamp/BTC you look at that particular order book in the ledger to see what people are buying and selling it for.

This allows people to not only buy and sell currencies in a foreign exchange like manner but also to convert currencies seamlessly during transactions.

Stellar Lumens Partnerships

Stellar key aim is to help to poor and the unbanked. In 2017, IBM announced a partnership with Stellar protocol to develop a cross-border blockchain-based payment system for large banks. This would greatly improve the efficiency of cross border transactions, especially for countries in Southeast Asia where remittance costs matter and many domestic helpers cannot afford to send money back home. Currently the program works with 47 currencies and in 72 countries.

Stellar Lumens (XLM) Currency

Lumens is the name given to the token of the Stellar network. They were originally called stellars back when the Stellar network launched in 2014, but with the launch of the upgraded network in 2015, the name of the token changed from stellar to lumen.

The Stellar network’s built-in currency, the lumen, serves two purposes:

  1. Acts as a small anti-spam role
    • Each transaction has a minor fee—0.00001 lumens—associated with it. This fee prevents users with malicious intentions from flooding the network (otherwise known as a DoS attack). Lumens work as a security token, mitigating DoS attacks that attempt to generate large numbers of transactions or consume large amounts of space in the ledger.
    • Similarly, the Stellar network requires all accounts to hold a minimum balance of 20 lumens. This requirement ensures that accounts are authentic, which helps the network maintain a seamless flow of transactions.
  2.  May facilitate multi-currency transactions
    • XLM sometimes facilitate trades between pairs of currencies between which there is not a large direct market, acting as a bridge. This function is possible when there is a liquid market between the lumen and each currency involved.

Stellar Lumen token metrics

At the genesis of the Stellar Network, 100 billion lumens (XLM) were created as specified in the protocol. As part of its custodial mandate, the Stellar Development Foundation (SDF) is entrusted to oversee that the vast majority, 95 billion, of the lumens are distributed to the world.

  • 50% to be given in small increments to as many people as possible.
  • 25% to be given to other businesses and non-profits to reach people that wouldn’t otherwise be able to reach through the Direct Signup program.
  • 20% to be given to bitcoin and XRP holders
  • 5% to be retained by for operations.

The Stellar network has a built-in, fixed inflation mechanism. New lumens are added to the network at the rate of 1% each year. The network also collects a base fee for each operation in a transaction. The funds from base fees are added to the inflation pool.

As a balancing measure for the ecosystem, anyone who holds lumens can vote on where the funds in this pool go. Each week, the protocol distributes these lumens to any account that gets over .05% of the votes from other accounts on the network.

How to mine Stellar (XLM)

One question that is frequently asked is how to mine Stellar (XLM). Stellar cannot be mined in a process similar to Bitcoin because it doesn’t use Proof-of-Work. Instead Stellar relies on re-established nodes that confirm transactions via a voting system. Block rewards are given to Stellar Nodes at a 1% inflation rate per year. You can buy or sell Stellar (XLM) on the Binance Exchange.


Stellar website

SCP whitepaper


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Ben is a cryptocurrency China correspondent who loves Bitcoin and Bananas. He has been covering the Chinese cryptocurrency market for the past 5 years and has a deep understanding of the industry. He is passionate about the potential of blockchain technology and its impact on the world economy.


  1. my stellar account a lot ,,,, but can not be upgraded because the email is not active ,,, please help me find the solution ,,,,

  2. I am so so upset I have been trying for days to sign up for a way tu buy stellar and ripple and others but i am having problems with coinbase kraken and do not know where to go can someone please help me!!!!!!!

  3. I sent ETH over to kraken to buy XLM which is steller lumins and I cannot do it with my ETH.

    How do I change it over to usd so I can purchase it

    can you please help me.

  4. SO, every crypto claims better performance than bitcoin but none has caught up on investment value. Why?

  5. Bitcoin is first to market, larger committed/loyal userbase, and limited 21 million coin base. End of story.

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