Stellar (XLM)

1. General Presentation

• What is the name of the cryptocurrency and its symbol?
  • Name Stellar, Symbol: XLM
• What is its current market capitalization?
  • market capitalization of approximately $7,5 billion 29/03/2025
• What is its ranking on CoinMarketCap?
  • 15th 29/03/2025

2 . Technology and Infrastructure

• Is this cryptocurrency a Layer 1 (independent blockchain) or a Layer 2 (built on an existing blockchain)?
  • it’s a layer 1 cryptocurrency, it has its own blockchain
• If it is a Layer 2, which blockchain does it rely on?
• Is it a native token (used for transaction fees and securing the network) or a non-native token (an asset on an existing blockchain)?
  • it’s a native token of the stellar network
• What consensus mechanism does it use? (Proof of Work, Proof of Stake, or another?)
  • Federated Byzantine Agreement (FBA) algorithm implemented through the Stellar Consensus Protocol (SCP), => faster transaction processing because it doesn’t require mining. This is because it uses quorum slices (or a portion of the network) to approve and validate a transaction rather than a network-wide competition to propose blocks.

3. Use Case and Functionality

• What is the main purpose of this cryptocurrency? (Payments, smart contracts, DeFi, NFTs, etc.)
  • Enable seamless cross-border transactions while bridging the gap between traditional financial systems and digital currencies
• Who are its main competitors?
  • Ripple and Ethereum because they also allow cross border transactions. Ripple is a closed system while Stellar is open-source.

4. Strengths and Weaknesses

• What are its advantages? (Speed, low fees, security, decentralization, etc.)
  • fast because and low fee because no mining: microtransactions and remittances
  • provide financial services to unbanked populations
  • decentralisation
• What are its weaknesses? (Scalability, security risks, centralization, etc.)
  • network relies on a small number of nodes, many of them controlled by the SDF (in 2019 two failed and the blockchain had to stop for an hour)
  • high number of lumens tokens controlled by the Stellar Development Foundation.  some investors worry that they could be sold on the market, thereby diluting potential investors’ holdings
• How does it address the blockchain trilemma (scalability, security, decentralization)?
  • scalability : cross border so easy scalability, 1,000+ transactions per second (TPS) (faster than bitcoin or ethereum)
  • security: finality of the transaction, Validators (financial institutions, businesses, or independent nodes) are selected based on reputation, reducing risks from anonymous actors
  • decentralisation: there is a risk of centralisation by the  Stellar Development Foundation but they intentionally destroyed 55 billion lumens tokens in 2019 to reassure investors

5. Adoption and Ecosystem

• Who are the main users of this cryptocurrency? (Retail users, developers, businesses, institutions?)
  • very wide range of users, from retail users, developers, businesses, and financial institutions
• Are there any major partnerships or integrations?
  • IBM: Collaborated with Stellar to develop World Wire, a cross-border payment solution.​
  • MoneyGram: Integrated with Stellar to enable seamless money transfers.
• How active is its developer community?
  • it’s an open source cryptocurrency so Stellar boasts an active developer community contributing to its ecosystem, developing applications, and enhancing the network’s functionality

6. Tokenomics and Supply

• What is the maximum supply of the token?
  • at first Stellar had 100 billion XLM but underwent a significant burn, reducing the total supply to 50 billion XLM
• How is it distributed? (Mining, staking, pre-mined, allocated to the team?)
  • Approximately 20 billion lumens are available on the open market, while the Stellar Development Foundation retains the remaining 30 billion to support the network’s growth and development
• Does it have a burning mechanism or any deflationary aspect?
  • automatic burn mechanism through transaction fees to prevent spam: the fees of each transaction is burned rather than paid to validators
  • One time burn in 2019 passing from 105 to 50 billion

7. Risks and Future Outlook

• What are the biggest risks to this cryptocurrency’s success? (Regulation, security, competition?)
  • regulation:
    • comply with AML (Anti-Money Laundering) and KYC (Know Your Customer) laws, especially since it focuses on financial transactions
    • Potential classification as a security by the SEC could impact adoption (if it is considered stocks or bonds, rather than a currency or commodity)
  • competition: 
    • Ripple (XRP) has strong banking partnerhips
    • alternative: Visa, Mastercard, and SWIFT are integrating blockchain solutions, reducing the need for Stellar
  • the centralisation problem is often pointed out as a big limit of this cryptocurrency
• What are the upcoming developments in its roadmap?
  • The potential integration with MoneyGram allows users to convert fiat to crypto
  • Stellar is working with central banks to develop Central Bank Digital Currencies
  • Some countries are exploring Stellar for their national digital currencies
  • Stellar is trying to improve its transaction speed and security features

focus on emerging markets: If adoption grows in Africa, Latin America, and Southeast Asia, it could become the go-to blockchain for financial access.