Stellar (XLM) XLM

Stellar (XLM) is an open blockchain network designed for payments and for issuing digital assets such as stablecoins and tokenised funds. Its native currency, the lumen (XLM), pays transaction fees and acts as a bridge between assets. Stellar does not use mining or staking: it relies on its own consensus protocol, run by validators that choose whom to trust. Here is how Stellar works, its history and the risks to know.

What is Stellar?

Stellar was launched in July 2014 by Jed McCaleb, founder of Mt. Gox and co-founder of Ripple, and lawyer Joyce Kim. Development is led by the Stellar Development Foundation (SDF), a non-profit organisation created in 2014 with seed funding from Stripe. The goal: let anyone send money across borders quickly and cheaply, by connecting banks, payment companies and individuals on one shared ledger.

How Stellar works

The Stellar Consensus Protocol

Since November 2015, Stellar has used the Stellar Consensus Protocol (SCP), designed by Stanford professor David Mazières. SCP is a form of federated Byzantine agreement: each validator chooses a set of other nodes it trusts (its “quorum set”), and a transaction is confirmed when overlapping groups of trusted nodes agree. There are no block rewards for validators, so no mining and no staking. SCP favours safety over liveness: in case of disagreement, the network can stall rather than confirm conflicting transactions.

Anchors, assets and the built-in exchange

Any organisation can issue an asset on Stellar, such as a dollar or euro stablecoin. Companies called anchors take deposits in traditional money and issue the matching tokens. The ledger also includes a native exchange, so a payment can be sent in one currency and received in another, with XLM used as an intermediary when needed.

Soroban smart contracts

On 20 February 2024, validators voted to upgrade the network to Protocol 20, which introduced Soroban, Stellar’s smart contract platform. Capacity was then raised in phases. In September 2025, Protocol 23, nicknamed “Whisk”, added parallel transaction execution and changes to state archival, and further protocol upgrades followed in 2026.

The lumen (XLM) supply

100 billion lumens were created at launch, with 1% inflation per year. In October 2019 a community vote ended inflation, and in November 2019 the SDF burned about 55 billion XLM from its holdings. Since then, about 50 billion XLM exist and no new lumens will ever be created. According to stellar.org, the SDF still holds a large part of this supply, which it uses to develop and promote the network.

Each account must hold a minimum balance of 1 XLM, and the minimum fee is 0.00001 XLM per operation, which deters spam while keeping payments very cheap.

A short history of Stellar

• July 2014: launch of Stellar and creation of the SDF.
• November 2015: the new consensus protocol, SCP, goes live.
• October 2017: partnership with IBM and KlickEx for cross-border payments in the South Pacific.
• October–November 2019: end of inflation and burn of about 55 billion XLM.
• 2021: Franklin Templeton launches a tokenised US mutual fund using Stellar.
• February 2024: Soroban smart contracts arrive on mainnet.
• September 2025: Protocol 23 “Whisk” upgrade.

What is Stellar used for?

Stellar is used for remittances and cross-border payments, for issuing stablecoins and tokenised real-world assets, and for micropayments thanks to its low fees. XLM itself pays fees, meets account minimums and serves as a bridge currency between less liquid assets.

Stellar vs XRP

Both networks target payments and share a co-founder in Jed McCaleb. XRP Ledger is closely associated with the company Ripple, while Stellar is steered by a non-profit foundation and has a stronger focus on asset issuance and financial inclusion. Neither uses mining.

Risks and criticism

• Concentration: the SDF holds a large share of XLM and plays a leading role in development and validation.
• Liveness: SCP can halt rather than fork if validators disagree.
• Competition: stablecoins and payments are also served by Ethereum, its layer-2 networks, Solana, Tron and others.
• Adoption: partnerships do not always translate into lasting usage.
• Volatility: XLM can lose a large part of its value.

How to buy and store XLM

XLM is available on most major exchanges; see our guide on how to buy crypto. To hold lumens yourself, use a wallet that supports Stellar, remembering the 1 XLM minimum balance, or a compatible hardware wallet. Some exchanges require a “memo” when you deposit XLM: forgetting it can delay or lose a transfer. More details are on stellar.org.