Guides to Cryptocurrencies
13. Stellar (XLM)
Chinese Name: 恒星币
Founder and CEO: Jed McCaleb
First Release Date: 31 July 2014
Stellar is an open source payment transfer platform that uses blockchain technology, it is available to the public and allows its users to do cross-border transactions, transfer between fiat currency and digital currency via any currency pair of their choice. Stellar allows non-complex applications with simple smart contracts to be developed on its platform.
Stellar was launched by founder, Jed McCaleb after he left Ripple which was founded by him as well. Interestingly, Stellar became Ripple’s biggest competitor and will probably remain so for a long time.
Stellar does not allow the public to operate nodes, the developers run their own nodes currently using multiple servers. Private organizations and banks may run nodes if they decided to get into a partnership with Stellar and use their blockchain technology.
The native cryptocurrency coin of Stellar is Lumen (XLM), built on the same network and can be kept, traded or used as an asset by its users to swiftly transfer money or conduct transactions globally between different currencies securely.
Origin of Lumen
Lumen was originally named “Stellar” with 100 billion coins launched globally in 2014. It was then renamed to Lumen after the network was upgraded in 2015 to distinguish itself from the Stellar network. There is a minimum balance requirement of 0.5 lumens for all XLM accounts to encourage users to remove unused or unnecessary accounts from the ledger.
Steller does not use miners. The supply of Lumen coins is controlled by the developers and set by fixed protocol level rules, with a 1% annual inflation rate. No one except the Stellar team can create new lumen coins arbitrarily but they can submit a proposal to change the rule and protocol for creation of Lumen coins, subject to the acceptance of the validators on the Stellar network. There is a total of 100 billion Lumens launched but only around 20 billion coins are in market circulation as of April 2019. Hence, some critics criticized Stellar for being too centralized.
Lumens are used on the XLM network for prioritization and prevent malicious spamming and overloading of the network. There is a fee of 0.00001 lumens for every transaction, around $1 USD for 400,000 transactions as of April 2018. The fee for one transaction is very small, but for anyone trying to generate huge number of transactions via a Denial of Service (DoS) attack, they will have to pay considerable amount of lumens. Hence, the fee mechanism is a deterrence to counter malicious attackers.
Lumens can be used as a bridge currency between pairs of currencies where there is no direct market. Hence, Lumens and its Stellar platform conveniently connect people, payment systems and banks quickly. XLM transaction settlement time are reported to be 5 seconds on average.