The Stellar Network is a decentralized and open-source blockchain designed for high-speed, low-cost, and energy-efficient financial transactions. Stellar lets you send and receive international remittances and cross-border currency exchanges fast and at low cost.
Founded by Jed McCaleb and Joyce Kim in 2014, Stellar was developed to improve cross-border transactions, build more efficient financial systems, and expand financial access in unbanked regions. McCaleb was a co-founder of Ripple and key developer of the XRP Ledger, but he left because of differences in vision for Ripple’s future direction. He then co-founded Stellar to improve the financial system in regions where traditional banking infrastructure is lacking or inefficient.
Because they share a co-founder, Stellar is very similar to XRP. You can think of XLM as a decentralized, permissionless, peer-to-peer, cross-border payment version of XRP. The main difference is that unlike Ripple Labs, which operates as a for-profit company focused on improving cross-border payments for banks and financial institutions, the Stellar Development Foundation is a non-profit organization that aims to give more people access to financial services, regardless of who or where they are.
Here are some of the key features of the Stellar Network:
Stellar is an open-source, decentralized, and peer-to-peer network. Anyone can participate and use its services without requiring permission from a central authority. It’s especially useful for international remittances and cross-border currency exchanges. Stellar is also used to run real-world applications and decentralized finance (DeFi) solutions that are easy to scale and deploy across the globe.
Stellar's infrastructure is optimized for performance and cost efficiency. Since the cost per transaction is lower than traditional financial platforms and many other blockchains, you can use Stellar for everything from daily micropayments to high-volume transactions.
Stellar’s native currency is the Stellar Lumen, or XLM. Every Stellar account is required to hold a minimum balance of 1 XLM to ensure that only those who genuinely intend to use the network maintain Stellar accounts. For every transaction, you need to pay a fee of 0.00001 XLM, which is small enough to keep the network affordable to many users but big enough to discourage spammers from flooding the network with malicious or pointless transactions.
XLM is also used as a “bridge” between different types of currencies on the Stellar network. You exchange one type of asset for XLM, and then convert the XLM into another type of asset or token. You can easily trade on the Stellar decentralized exchange even if you’re using less commonly traded fiat or crypto pairs. This way, Stellar avoids problems with liquidity and allows you to transact between many kinds of assets without the need for third-party services to supply the funds you need.
Originally, the Stellar network launched with 100 billion lumen, but the number has decreased into only about 20 billion lumens in public circulation. The rest is held in reserve by the Stellar Development Foundation.
Unlike networks using Proof-of-Work, Stellar uses the Stellar Consensus Protocol (SCP) and the Proof-of-Agreement consensus mechanism. They make the network faster, more energy-efficient, environmentally-friendly, and cheaper compared to many other blockchains. In fact, Stellar can process transactions in around 5 seconds or less. Another good thing about this system is that even if some nodes fail or act maliciously, the network can still reach consensus.
Stellar's smart contracts are designed to be simpler and more accessible than those on platforms like Ethereum. Still, they are powerful enough to support many different kinds of applications, financial products, and services. For instance, you can create your own customized crypto token that represents currencies, stocks, or other assets, and trade them on the Stellar decentralized exchange.
Anchors in the Stellar ecosystem bridge traditional financial systems with the Stellar blockchain. They allow you to seamlessly convert fiat currency to cryptocurrency and vice versa. The Stellar anchor network supports over 180 countries and more than 20 different digital assets. Because of the strength of the network, developers can build innovative financial services for more users worldwide, even in places with limited banking access.
The Stellar network is a powerful, efficient, and environmentally friendly blockchain platform designed to connect different financial systems on a single platform. In the future, it plans to integrate more advanced smart contract capabilities and further expand its service offerings to fulfill its mission of creating a more inclusive financial system for all.
