Stellar

Introduction to Stellar

Stellar is a decentralized network designed to facilitate cross-border transactions and connect financial institutions. Founded in 2014 by Jed McCaleb (co-founder of Ripple) and Joyce Kim, Stellar aims to make money more fluid, markets more open, and people more empowered. The network’s focus on financial inclusion and low-cost transfers has attracted partnerships with major organizations and positioned it as a bridge between traditional finance and blockchain.

Unlike many cryptocurrency projects focused on speculation or DeFi, Stellar maintains a clear mission: create equitable access to the global financial system. The network processes millions of transactions while maintaining some of the lowest fees in the industry.

How Stellar Works

Stellar Consensus Protocol (SCP)

Stellar uses a unique federated Byzantine agreement mechanism:

• Quorum Slices: Each node chooses nodes it trusts
• Federated Voting: Consensus without central authority
• Flexible Trust: Decentralized trust decisions
• Fast Finality: Transactions confirm in 3-5 seconds

This differs from Proof of Stake or Proof of Work by not requiring staking or mining, enabling low resource requirements and minimal fees.

Anchors and Assets

Stellar’s architecture enables tokenization:

Anchors: Trusted entities that issue tokens representing fiat currency, commodities, or other assets Trustlines: Users choose which assets to accept Built-in DEX: Native trading of any asset pair

This system allows:

• USD stablecoins issued by regulated entities
• Tokenized commodities
• Central bank digital currencies
• Custom organizational tokens

Technical Specifications

Metric	Value
Transaction Speed	3-5 seconds
Transaction Cost	0.00001 XLM (~$0.000001)
TPS	1,000+
Consensus	Stellar Consensus Protocol
Total Supply	50 billion XLM
Inflation	None (removed in 2019)

Key Features

Built-in Decentralized Exchange

Every Stellar account has DEX access:

• Trade any asset pair
• Automated path payments
• Order books on-chain
• No smart contract needed

Path Payments

Atomic multi-hop transfers:

• Send USD, recipient receives EUR
• Network finds best conversion path
• Single atomic transaction
• No intermediate holding required

Multi-signature Accounts

Native multi-sig support:

• Configurable signature thresholds
• Multiple signing keys
• Time-locked transactions
• Organizational control

The Lumens (XLM) Token

Utility

XLM serves specific purposes:

• Transaction Fees: Minimal cost (burned)
• Account Reserves: Small minimum balance
• Anti-Spam: Prevents network abuse
• Bridge Currency: Default for path payments

Non-Inflationary Design

In 2019, Stellar removed inflation:

• Initial supply: 100 billion XLM
• 55 billion burned
• Current supply: ~50 billion
• No new token creation

Real-World Applications

Remittances and Payments

Major use cases include:

• Cross-border money transfers
• Remittance corridors
• B2B payments
• Mobile money integration

USDC on Stellar

Circle launched USDC on Stellar:

• Low-cost stablecoin transfers
• Fast settlement
• Multi-chain USDC strategy
• Enterprise adoption

MoneyGram Partnership

Integration with MoneyGram enabled:

• Cash-to-crypto and crypto-to-cash
• Global location network
• Traditional finance bridge
• Mainstream accessibility

CBDCs and Asset Tokenization

Stellar has been explored for:

• Central bank digital currency pilots
• Security token offerings
• Real estate tokenization
• Supply chain assets

Ecosystem Overview

Soroban Smart Contracts

Stellar launched smart contracts in 2024:

• Rust-based development
• WebAssembly execution
• Predictable fees
• DeFi capabilities

Ecosystem Projects

• StellarX: Trading interface
• Lobstr: Popular wallet
• StellarTerm: DEX frontend
• Coinqvest: Merchant payments

Comparison with XRP

Given the shared founder, comparisons are inevitable:

Aspect	Stellar	XRP
Target	Individuals	Institutions
Non-profit	Yes	No
Smart Contracts	Yes (Soroban)	Limited
Consensus	SCP	RPCA
Focus	Financial inclusion	Enterprise payments

Challenges and Criticism

Adoption Speed

Despite partnerships:

• Consumer adoption limited
• Enterprise pilots slow to scale
• Competition from stablecoins

Decentralization Questions

• Stellar Development Foundation influence
• Validator concentration
• Upgrade authority

Competition

• Cheaper alternatives emerging
• CBDC development by governments
• Stablecoin proliferation

Recent Developments

Soroban Mainnet

Smart contract launch enables:

• DeFi on Stellar
• Token programmability
• Complex applications
• Developer ecosystem

Enterprise Focus

Continued institutional engagement:

• Payment corridor partnerships
• Stablecoin issuers
• Fintech integration
• Regulatory relationships

Future Roadmap

Development priorities include:

• Soroban Ecosystem: Growing DeFi and applications
• Anchor Network: Expanding fiat on/off ramps
• Enterprise Tools: Better business integration
• User Experience: Simplified interfaces
• Interoperability: Cross-chain capabilities

Conclusion

Stellar occupies a unique position in the blockchain landscape, maintaining focus on practical financial infrastructure rather than speculation. The network’s low costs, fast transactions, and regulatory engagement make it suitable for real-world payment applications.

The launch of Soroban smart contracts opens new possibilities while maintaining Stellar’s efficiency focus. Whether competing against CBDCs, stablecoins on other chains, or traditional payment rails, Stellar’s decade of operation and clear mission provide a solid foundation.

For those seeking to understand how blockchain can serve financial inclusion and traditional finance integration, Stellar offers a pragmatic model distinct from both Bitcoin maximalism and DeFi speculation.