Stellar Price

What Is Stellar?

Stellar, also known as Stellar Lumens, is an open-source protocol mainly used for cross-border payments. Stellar has a similar approach to Ripple (XRP), although its focus is not exclusively on banking. Rather, Stellar wants to equip organizations, financial institutions and people with a cheap, fast and decentralized payment method. 

Stellar Lumens is an open blockchain aimed at facilitating large transactions between financial institutions and smaller entities alike. On average, it takes several days to transfer large amounts between financial institutions with remittance systems such as SWIFT, and these transactions typically involve several intermediaries, making their cost high. 

Stellar’s network serves to ensure almost instantaneous settlement of transactions with no intermediaries, lowering the overall cost. It allows for cross-border transactions of both fiat currency and cryptocurrency, connecting banks, payment providers and people worldwide and across national borders with its payment platform and making money transfers more transparent. 

What Is XLM?

Lumen (XLM) is the native currency of the Stellar payment network. Originally, its name was the same as that of its parent blockchain — Stellar. Although it was later changed, cryptocurrency exchanges still typically list it as Stellar.

What Is XLM Used For?

XLM is used to transfer money within the Stellar payment network. Funds, both cryptocurrency and fiat currency, can be converted into Lumens and sent via Stellar’s blockchain. XLM serves as the backbone of the whole network. It provides the perfect exchange rate between different currencies to ensure seamless global money transfer.

Who Is the Founder of XLM?

Jed McCaleb — commonly known as the founder of Mt. Gox, and co-founder of Ripple — and Joyce Kim founded Stellar after leaving Ripple back in 2013. The network was officially launched in July 2014, receiving $3 million in seed funding from Stripe.

Supported by the Stellar Development Foundation, a nonprofit, the Stellar Lumens protocol also serves as a driver of the Foundation to provide greater access to financial services worldwide.

McCaleb is currently the Founder and Chief Architect of the Stellar Development Foundation.

How Does XLM Work?

To understand the inner workings of Stellar Lumens, one must first internalize the following concept: Stellar is at its core a system for cross-border currency transfer, with Lumen (XLM) used as a means of transferring value. This means that when a payment is made, the outgoing currency is first converted into Lumens. Subsequently, these are sent through the network to be converted into the target currency on the recipient’s end.

Every transaction is recorded on the Stellar ledger. In this context, a consensus mechanism always guarantees the integrity of the entire blockchain. Structurally, Stellar hardly differs from many other blockchain projects, although the underlying protocol has some unique features. We’ll discuss these in more detail below.

The development of Stellar is to enable transactions in a variety of currencies, with its XLM token acting as the bridge. In addition to fiat currencies and cryptos, users can also send their own currencies with Stellar. For instance, airline miles or reward points can be converted and transferred using the Stellar network. Stellar is constantly looking for the best exchange rates to make the transactions as cheap as possible.

As mentioned earlier, XLM is used for transaction facilitation and currency exchange. At the same time, the network also prevents transaction spam. Individual transactions aren’t significant, but large-scale spam attacks represent a cost risk for attackers that shouldn’t be underestimated. Thanks to the lean consensus algorithm, the network updates itself every 2 to 5 seconds.

Stellar has the ability to handle several thousand transactions per second (TPS) in test environments. However, it’s difficult to give an exact figure, as the performance of individual nodes and their overall utilization significantly influence this number. Jed McCaleb himself stated in a podcast that the network handles 4,000 TPS under optimal conditions, while developers have found that Stellar is capable of at least 3,000 TPS. In one test scenario, the network also reached a throughput of 10,000 TPS.

Why Is XLM Valuable?

As we've explained above, XLM serves as a bridge currency. It powers the Stellar payment network: The more useful the Stellar network, the greater the demand for XLM. Note that the network hosts various projects, with the most significant product being its global exchange network, which hosts crypto-to-fiat and crypto-to-crypto exchanges. 

As mentioned, the Stellar network also operates a cross-border payment system. However, in the rarest of cases, a direct transfer from the sender to the receiver occurs. Transactions usually go through a series of exchange processes, or so-called “swaps,” which are mapped via the Stellar decentralized exchange (SDEX). In the SDEX, Lumens are crucial for the entire exchange process. The value of the Lumens is closely linked to the success of the entire project. If Stellar is successful, XLM price will also rise.

This deep integration into the network also makes XLM valuable. A potential billion-dollar market awaits Stellar Lumens, because millions of people are still unbanked or underbanked — and it’s precisely in these areas that Stellar Lumens has already been able to create some impressive partnerships. 

What Makes XLM Unique?

Let’s look at some features of the Stellar protocol that set it apart from the crowd.

Anchors

Anchors have the role of securing the Stellar network. These are trusted entities within the network that are licensed to take user deposits and to issue credit. They basically act as a two-way street between fiat currencies and tokens.

Anchors accept deposits in fiat currencies (such as USD, CNY and BRL) and send users the equivalent digital tokens representing those deposits on the Stellar network. They also allow holders to redeem each crypto asset for the real-world assets they represent.

Low Transaction Costs

Transaction fees can be very high due to congestion, especially when engaging in cross-border payments. What makes Stellar unique is its low transaction fee of just 0.00001 XLM per transaction. For instance, if an individual is looking to transfer 100,000 XLM ($14,000), the cost of doing so is just $0.14. 

Evidently, as transaction costs are kept low, Stellar has become highly popular among users, who get to save more of their own money even when making cross-border payments. 

Stellar Consensus Protocol (SCP)

The network uses the Stellar Consensus Protocol (SCP) as a security tool. SCP controls the decision-making of all nodes in the network to prevent bad actors from exploiting potential loopholes.

The developers behind Stellar have designed their blockchain protocol based on a centuries-old problem: In 1453, the generals of the Ottoman army faced a serious communication problem during the siege of Constantinople (formerly Byzantium). They were looking for a suitable method to inform the troops about orders to attack and retreat quickly. The difficulty was that an unknown number of the generals involved possessed treacherous qualities. In conceptualizing network protocols, Byzantine fault tolerance (BFT) is spoken of in this context.

An otherwise error-free overall consensus can compensate for a small number of Byzantine errors. However, a critical mass is reached as soon as the errors accumulate and tolerance limits are exceeded. For the SCP developers used different approaches to adhere to BFT. Specifically, the SCP is based on what’s known as the Federated Byzantine Agreement. In this case, only a few nodes in the network — so-called "quorum slices" — have to agree to activate a transaction. These nodes trust network participants who need to reach a majority, and thus a consensus in a small group.

How Many XLM Are in Circulation?

As of this writing, Stellar has a live market cap of approximately $3,496,000,000, and a circulating supply of 24,960,243,363 XLM, about 49.9% of the maximum supply of 50,001,806,812 XLM. The Stellar Development Foundation regulates the distribution of Lumens. Note that XLM crypto cannot be mined. The Stellar network is kept safe, thanks to the consensus protocol between accounts.

At its launch, the network had a total supply of 100 billion XLM. 25% of these were assigned to other nonprofits working toward financial inclusion. Stripe received 2% of the total supply, or 2 billion XLM, in return for its seed investment.

How to Store XLM

Users can choose the Stellar Lumen wallet, which is downloadable and can be used to store private keys on the mobile app or desktop. In addition, most hardware and software wallets are XLM-compatible. However, if users seek more functionality from their wallets, they can use services from crypto exchanges such as Bybit.

Where to Buy XLM

You can buy XLM from any top crypto exchange, including Bybit.

How to Buy XLM on Bybit

To purchase XLM on Bybit, simply follow these steps:

1. Select your trading pair on the left side of the page. For XLM, you can choose to trade with USDT, BTC or USDC.

2. Head to the spot trading page of XLM.

3. Choose the type of order you'd like to make: Limit Order, Market Order or Conditional Order.

For Limit Orders:

1. Select Limit.

2. Enter the order price.

3. Enter the amount of XLM to buy.

4. Click on Buy XLM.

5. Once you’ve confirmed that the information is correct, click on Buy XLM.

6. View your order details under Active on the web page, and Orders if you’re using the Bybit app.

For Market Orders:

1. Select Market.

2. Enter the amount of USDT you’ve paid to buy XLM.

3. Click on Buy XLM.

4. Once you’ve confirmed that the information is correct, click on Buy XLM.

5. View your order details under Filled.

For Conditional Orders:

1. Select Conditional.

2. Enter the trigger price.

3. Choose to execute at Market Price or Limit Price.

   Market Price: Order price need not be set.

   Limit Price: Order price needs to be set.

4. According to order types:

   Market Buy: Enter the amount of USDT you’ve paid to buy XLM.

   Limit Buy: Enter the number of XLM you want to buy.

5. Click on Buy XLM.

6. Once you’ve confirmed that the information is correct, click on Buy XLM.

7. View your order details under Conditional on the web page, and All Orders → Current Orders on the Bybit app.

For more help, you can also visit the Bybit spot trading guide.