A Shining Star?
There are thousands of crypto-assets vying for investor attention, but in the cosmos of so many options, Stellar (XLM) shines bright.
Launched by Mt.Gox and Ripple founder Jed McCaleb, development began in 2014 — before Vitalik Buterin had even proposed the now-beloved Ethereum.
Banking the Unbanked
After founding Ripple in 2011, McCaleb saw some fundamental differences between his original vision and how the company was moving forward. Where Ripple wanted to expand through institutional partnerships, McCaleb was focused on banking the unbanked.
His brainchild, Stellar, was made to do just this. The network can confirm transactions in mere seconds while also performing almost anything expected from a smart contract-enabled blockchain.
105 billion XLM tokens were pre-mined as the initial supply, but 55 billion XLM was burned by The Stellar Development Foundation (SDF), creating a total supply of 50 billion tokens. This was done to project better how much use it would see over a ten-year period.
Small Price, Big Value
XLM reached its all-time high value in January 2018. From almost $0.70, the token is now worth around ten times less.
Stellar has seen a few ups and downs in price performance, and while there have been upswings, XLM still hasn’t come close to touching its peak values since. In March 2020, XLM was valued between three and four cents.
The token has since recovered, currently priced at around eight cents. While this isn’t much progress towards the early-2018 levels, it’s still more than 100% appreciation since the start of the year.
This is somewhat similar to the trend seen with XRP, and since they are both primarily focused on similar goals, its value could be somewhat correlated with global remittance.
(Not) Rocket Science!
Stellar was designed for use with stablecoins before the word ‘stablecoin’ had even been coined (no pun intended). While it supports many different fiat currency-based tokens, the network’s primary token is lumens (XLM).
The network requires users to have a minimum balance of 1 XLM (much less than a single Euro), and encourages a minimum transaction fee of 0.00001 XLM (an immeasurably small amount in most fiat currencies).
By making everyone hold a little XLM, the Stellar network creates a liquid environment to trade crypto-assets and send money across the world.
A Proven Track Record Of Crypto Projects
Stellar’s team truly lives up to its name. Jed McCaleb is one of the only figures in the cryptocurrency space that has launched more than three successful large projects – eDonkey, Mt. Gox, Ripple, and now Stellar. David Mazieres, a Stanford professor specializing in computer security systems, is the SDF’s Chief Scientist.
He created a federated model for Internet-level consensus called ‘The Stellar Consensus Protocol,’ which was a fundamental milestone in the network’s development.
Nicholas Barry, a Microsoft veteran and massive contributor to Stellar’s development, currently holds the CTO position at the Stellar Development Foundation.
Denelle Dixon is the foundation’s CEO and Executive Director, who, with nearly a decade of experience at Mozilla in various important positions, hopes to “unlock the world’s economic potential” by empowering people.
In its ‘SDF Mandate,’ the team writes that they want to make Stellar the global payment standard. With no shareholders, dividends, or profit motives, this foundation could bring us to a far more decentralized future than previously imagined.
Colonizing the Future of Money
A decentralized project is nothing without its community, and Stellar is no exception. The community surrounding this project is quite large and spans multiple countries across the world.
Stellar also has the SCF (Stellar Community Fund), which comprises a Seed Fund and a Lab Fund. The Seed Fund is to help on-board businesses to Stellar, while the Lab Fund is to research different use-cases and stress-test the network.
Community members can vote on which projects receive these funds, Projects can also apply for these grants, creating a community that truly funds itself, and innovates on the technology it has already built.
The Race to the Next Frontier
Though Ripple and Stellar have similar goals, their target markets are quite different. In a sense, one could present them as competitors, but Ripple has to compete with international payment networks like Swift, while Stellar is more small-business oriented.
Ethereum is another competitor, as usual. As with any smart contract platform, there are similarities between the two. However, Stellar does bring some advantages that could shake the world of blockchain in the years to come.
Stellar has lower transaction costs and a built-in DEX, which could prove useful in this age of DeFi booms and rising gas fees.
USDC, one of the world’s biggest U.S. Dollar-pegged stablecoins, recently announced that it would be made available on the Stellar network in Q1, 2021. With over $2.7 billion worth of USDC on the Ethereum blockchain, there’s a huge amount of capital to tap into.
Using the Stellar Community Fund, the network had made a $5 million investment in global crypto and fiat wallet and exchange app, Abra, earlier in 2020.
Since then, Abra has proceeded to enable a variety of features on its platform, including a more easy-to-understand lending protocol for users to earn interest.
Just a few months after Abra’s funding, the Stellar was integrated into Samsung’s Blockchain Keystore, opening them up to a whole new market of people. The Stellar Development Fund also invested more than half a million dollars into SatoshiPay, a Berlin-based instant payment platform.
With this, the SDF has invested over $6.3 million this year alone. As a blockchain that strives to connect the world’s economies, Stellar is doing a great job.
The team is credited with creating stablecoins before stablecoins ever existed — not because they saw a market opportunity, but because they saw a human need.