What Is Stellar

Definition of Stellar

Stellar (XLM) is a decentralized blockchain network designed for fast, low-cost cross-border payments and financial services. Stellar originated in 2014, founded by Jed McCaleb, who previously co-founded Ripple, along with Joyce Kim. The project aims to connect global financial systems, enabling seamless transfers between different currencies and assets. At its core, Stellar focuses on financial inclusion, particularly for underserved populations, through its open-source protocol. The ecosystem includes the native token XLM (Lumens), which facilitates transactions and acts as an anti-spam mechanism. Backed by the Stellar Development Foundation, a non-profit, it emphasizes partnerships with financial institutions and supports asset tokenization. This makes Stellar a bridge between traditional finance and blockchain.

How Does Stellar Work

Operational Mechanisms

Stellar operates on a decentralized blockchain that uses the Stellar Consensus Protocol (SCP), a form of Federated Byzantine Agreement (FBA). Unlike Proof-of-Work or Proof-of-Stake, SCP relies on trusted nodes to reach consensus quickly, securing the network through reputation rather than computational power or stakes.

Consensus and Technical Principles

Validators in the network form quorums to agree on transactions, preventing double-spends and ensuring security. Smart contracts are enabled via Soroban, built with Rust for performance and safety. Transactions involve public and private keys: public keys serve as addresses, while private keys sign operations. The network converts currencies via anchors (trusted entities) and uses XLM as an intermediary for efficient exchanges. This setup allows sub-five-second finality with low fees.

How Is New Stellar Created

Issuance and Supply Model

Stellar's total supply is capped at 50,001,806,812 XLM, with an initial creation of 100 billion at launch, though some were burned. New XLM isn't mined like Bitcoin; instead, the network features a 1% annual inflation rate distributed to accounts based on community votes.

Reward and Distribution Mechanisms

There's no traditional mining or staking rewards. Validators run nodes voluntarily for network stability, not financial incentives. Inflation pools reward holders who vote on distribution, but this mechanism was disabled in 2019. Circulating supply grows minimally, focusing on utility rather than speculative creation.

The Use Cases of Stellar

Payments and Cross-Border Transfers

Stellar excels in remittances, allowing instant, low-cost global payments by converting currencies through XLM as a bridge.

DeFi and Asset Tokenization

It supports decentralized finance applications, including lending and exchanges via Soroban smart contracts. Real-world assets like stablecoins and tokenized funds are issued on Stellar, attracting institutions for compliant on-chain solutions.

Other Applications

Governance occurs through community proposals. NFTs and everyday financial services, like micropayments, leverage its speed. It's used for connecting traditional banking with blockchain, enabling things like tokenized money market funds.

Buy, Send, or Store Stellar

Purchasing and Trading Channels

You can buy XLM on exchanges like WEEX, which offers a trusted platform for trading cryptocurrencies. Register on WEEX to earn a free 20 USDT bonus and start trading securely. https://www.weex.com/how-to-buy

Wallets and Storage

Store XLM in hot wallets (software like mobile apps) for easy access or cold wallets (hardware devices) for enhanced security. Always enable two-factor authentication and backup private keys. To send, use a wallet to input the recipient's public key and confirm the transaction on the network.

Pros & Cons / Risks

Advantages

- High speed and low transaction fees, ideal for microtransactions. - Strong security via SCP consensus, resilient to attacks without financial incentives. - Focus on real-world financial inclusion and asset tokenization. - Sustainable model without energy-intensive mining.

Risks and Disadvantages

- Price volatility common in crypto markets. - Regulatory uncertainties, especially for cross-border finance. - Dependence on trusted anchors could introduce centralization risks. - Technical vulnerabilities in smart contracts, though mitigated by Soroban's design.

Comparison

Stellar vs. Alternatives

Compared to Ripple (XRP), Stellar is more decentralized and open-source, targeting individuals and non-profits rather than banks. Unlike Bitcoin, which focuses on value storage via Proof-of-Work, Stellar prioritizes fast payments without high energy use. Ethereum offers broader smart contracts, but Stellar's Soroban is specialized for finance with lower costs and faster finality, positioning it as a efficient alternative for DeFi and remittances.

Conclusion / Next Steps

Stellar holds strong potential in bridging traditional finance and blockchain, with growth in smart contracts and RWAs suggesting expanded adoption. Future developments may include more partnerships and protocol upgrades. For deeper insights, review the Stellar whitepaper, roadmap, or join community discussions. Consider exploring WEEX for hands-on trading—sign up to learn more.

Market & Ecosystem

Market Cap & Trading Volume

As of September 4, 2025, Stellar's market cap stands at $11,342,783,170 USD, with a 24-hour trading volume of $194,049,635 USD. It ranks #16 by market cap, reflecting steady interest despite a recent 1.86% dip.

Exchanges Where It’s Listed

XLM is available on major platforms, including WEEX Exchange for secure trading.

Community Size & Activity

Stellar boasts active communities on Twitter (now X), Reddit, and Telegram, with hundreds of thousands of followers engaging in discussions on updates and developments.

Ecosystem Growth

Partnerships with institutions like Franklin Templeton drive RWA adoption. Developer activity is robust, especially around Soroban, with ongoing projects in DeFi and payments fostering ecosystem expansion.