What is Stellar?
Stellar is an open blockchain network designed for payments, especially sending value between different currencies and countries. It launched in 2014 and was co-founded by Jed McCaleb and Joyce Kim. The non-profit Stellar Development Foundation supports its development.
The network's native coin is the lumen, with the ticker XLM. Lumens pay for transactions and help keep the network free of spam. Every account must also hold a small minimum balance of XLM, which stops people from creating huge numbers of empty accounts.
How does it work?
Stellar does not use mining. It uses the Stellar Consensus Protocol (SCP), a system in which each validator chooses a set of other validators it trusts. Agreement spreads through these overlapping groups until the network settles on the same ledger. This is often called federated Byzantine agreement.
Many assets on Stellar are issued by anchors: businesses that hold real money, such as dollars or euros, and issue matching tokens on the network. Stellar has a built-in exchange that lets one asset be swapped for another during a payment, so a sender and receiver can use different currencies. Since 2024, Stellar also supports smart contracts, programs that run automatically on the network, through a platform called Soroban.
What is it used for?
Stellar's main focus is moving money cheaply between people, businesses and countries.
- Cross-border payments and remittances
- Issuing and transferring stablecoins and other tokenized assets
- Paying network fees and holding the small minimum balance each account needs
- Running smart contracts built with Soroban
Key facts
- Launched: 2014
- Co-founders: Jed McCaleb and Joyce Kim; supported by the Stellar Development Foundation
- Consensus: Stellar Consensus Protocol (federated Byzantine agreement)
- Native blockchain: Stellar
- Supply: the inflation mechanism that created new lumens was switched off in 2019
Explainer written by Finvane from official project documentation. It is not investment advice.