Stellar Lumens (XLM)

From CryptoWiki

Stellar Lumens
TypeSettlement network between banks, digital IOU’s
Ticker symbolXLM
Consensus mechanismStellar Consensus Protocol (SCP). SCP is an implementation of the federated Byzantine agreement (FBA) consensus model.
Total supply50.000.000.000 XLM
Websitehttps://www.stellar.org/

Basics

  • fka STR
  • Started in / Announced on: 2-2014
  • Based in: USA
  • Mainnet release: 7-2014, with a relaunch in 11-2015
  • Settlement network between banks, digital IOU’s
  • Short explanation: Super fast digital payments
  • Longer explanation:

Stellar Lumens, the coin operated by the nonprofit Stellar Development Foundation, can be used as currency similar to Bitcoin and Ripple. The platform is built for speed and ease of use, with transactions being completed in 3–5 seconds, and fees as low as $0.01

The goal of the Stellar Development Foundation (SDF) is to act as the world’s digital payment method by connecting users all over the world with banks and payment systems. The SDF plans to “fight poverty and maximise individual potential” by delivering their services primarily in regions where citizens have low access to banks, such as in Oceania.

History

  • XLM is a hard fork of XRP code, and Stellar’s co-founder Jed used to work for Ripple and got sued by them for violating the separation contract of when he leaved XRP.
  • From this reddit post:

“Ripple was developed by Jed McCaleb, Arumthjr Britto, and David Schwartz. They came up with the consensus mechanism. After the launch of Ripple there was a dispute and the company opted to keep the then CEO Chris Larsen which was intolerable to Jed. Jed apparently had difficulty separating personal life from his business life and left the company. He started to tank the price of XRP by dumping his holdings onto he market sparking a legal dispute that was eventually resolved by coming to an agreement that controls the rate at which Jed can sell his XRP.

In the meantime Jed forked the Ripple code to create Stellar. Jed made some adjustments to the code then his own Stellar network forked which he blamed on bad Ripple code even though the had changed the code and the same vulnerabilities were not found in the Ripple code base. Stellar sputtered for a while as he eventually divorced the wife that been the cause of some problems when he was at Ripple. Now it is widely believed, but unproven, that Jed supports the price of Stellar with the revenue from his XRP sales. Stellar also benefits from brand confusion but the companies are very different. One is professional, large, and has many established relationships, and the other (Stellar) still seems to be in the very early stages of trying to figure out what it is all about. It doesn't have the same relationships as ripple.”

"While Mt. Gox was imploding, McCaleb and Chris Larsen co-founded Opencoin to create a new digital currency based on the Ripplepay protocol developed by Ryan Fugger in 2004. McCaleb and team worked to evolve Ripplepay toward a more decentralized system based upon a web of trust among nodes, a concept foundational to Stellar. McCaleb remained with OpenCoin until July 2013 when he left over personal conflict with Larsen and perhaps other issues. A couple of months later OpenCoin officially became Ripple Labs Inc. and fully open sourced its code. It also launched the XRP coin, which is now the second largest cryptocurrency by market cap (McCaleb owns billions of XRP).

In February 2014, McCaleb announced he was working on a secret bitcoin project. The project was revealed as Stellar in July 2014 with the creation of the non-profit Stellar Development Foundation (SDF). SDF’s stated mission is “to promote global financial access, literacy, and inclusion […] through the development and maintenance of technology and partnerships.” Fueled with seed funding from Stripe and other investors SDF launched the Stellar network and the Lumens (XLM) token in July 2014."

Audits & Exploits

Bugs/Exploits

"On December 2, 2014 Stellar’s consensus protocol experienced a ledger fork that rolled back hours of transactions. This prompted Stellar to temporarily centralize the network to a single node until it could launch a new provably safe, decentralized consensus protocol that was being designed by Stanford professor Dr. David Mazières."

Network Down (2019)

"Stellar network went down at 4:15 p.m. ET for nearly two hours Wednesday as enough nodes "stopped for various reasons" and the network halted. The network couldn't reach consensus and no transactions were validated in that time period.

Jed McCaleb, co-founder of Stellar, told The Block: "Over the last months we have worked to get people to not depend on the SDF nodes. As of maybe a month or so ago the SDF nodes could safely go down and the network would continue. But this also means that the network can halt even if the SDF nodes are still running. Unfortunately this is what happened."

The SDF nodes and the majority of validators in the network were running, according to Stellar, but they couldn't close ledgers safely because they weren't hearing from enough nodes in their quorums.

Nicolas Barry, CTO of Stellar, said more information about the issues will be forthcoming "in the next few days" including the steps that Stellar is going to take to address them. Barry said: "All I can say right now is that it was caused by being too decentralized too fast and the system behaved the right way by halting." The price of Stellar lumens (XLM) is up 20% since this incident."

Token

Launch

Token Allocation

  • UPDATE (10-2019): Stellar-core v12.0.0. will "end of inflation as we know it" their Github is now saying they will 'disable' inflation.
  • Stellar has a fixed, nominal lumen inflation rate of 1% per year. There also exists a fee pool where the lumen fees for network transactions are sent. Each week, the new lumens created from inflation and the lumens from the fee pool are distributed to Stellar wallets. The amount of lumens each wallet receives is based on a voting system. Every wallet gets to vote for another wallet to receive lumens; each lumen in a wallet counts as one vote. Check out a detailed description of the lumen distribution mechanism here.
  • As of October 29th, 2017, there exists 103 billion lumens, with approximately 96 billion lumens held by the Stellar Development Foundation. The annual inflation rate of lumens is 1%. Update (5-11-2019): "The Stellar Development Foundation, the institution that manages the Stellar Lumens cryptocurrency, decided to burn more than 50% of the supply, making the price go up by double digits. The Lumens supply went from 105 billion to 50 billion in just one day, as a consequence. According to the foundation “giveaways and airdrops have diminishing effects, especially in the outsized amounts our original plan was designed to support,” so most of the coins burned were destined for these purposes."

Give away attracted spammers

"Stellar tried to give away 2B XLM tokens on Keybase. Then the spammers came. What was advertised to be a 2 billion XLM giveaway will now be much less. “The total giveaway amount will have been 300 million Lumens (approximately $16,000,000 USD),” Keybase wrote."

Utility

  • Lumens play an anti-spam role in the network. Each transaction has a fee denoted in lumens and this makes spamming the network expensive. Additionally, all accounts in the network require a minimum balance of 20 lumens (same as Ripple).
  • Second, lumens add liquidity to Stellar’s built-in decentralized exchange by acting as a trading bridge for low volume currency pairs. StellarX fully launched in October 2018 with zero-fee transactions. For a review of the exchange look here.

Other Details

Stablecoin

Coin Distribution

"About  95% of total XLM supply is held by addresses with a balance of at least 1/1K of total supply. This is largely because the Stellar Development Foundation (SDF) holds over half of XLM supply. According to the SDF’s mandate, it currently holds 29.4B XLM. Additionally, the SDF recently burned 50% of total XLM, bringing the supply down to 50B. These burned XLM still appear on-chain since they were sent to a burn address, and therefore get counted as part of the supply distribution."

Tech

  • Whitepaper can be found here (4-2015).
  • Code can be viewed [insert here].
  • Programming language used: does not use a language but gives the option of 5 different operations (4-2-2019). The limited set of operations and constraints available on Stellar greatly limits the types of applications and use cases that it can support compared to platforms like Ethereum, which provide general-purpose smart contract languages.

Transaction Details

"The Stellar network is often claimed to support thousands of transactions per second (TPS). The figure given on Stellar’s website is 1000 operations per second (OPS). The distinction between a Stellar transaction and a Stellar operation is important to understanding practical throughput limitations of Stellar and evaluating the various TPS claims that conflate the two." For more details, check out the provided links. The article concludes that 100 TPS is the limit, with 10 TPS as reality.

How it works

  • Premined/Not Mineable. Stellar uses a consensus model called the Stellar Consensus Protocol (SCP). SCP is an implementation of the federated Byzantine agreement (FBA) consensus model.
  • Permissioned blockchain with the Stellar Consensus Protocol (SCP).
  • From this article (4-2-2019):

"Stellar is not a typical smart contract platform in that it does not have a smart contract language or virtual machine that can be directly compared to Ethereum’s. Instead it provides a well-defined set of operations that it claims “can be used to build sophisticated smart contracts.” This is just one example of how Stellar’s approach is very different from Ethereum’s and other platforms we’ve looked at in this series. Other distinguishing factors include the fact that Stellar’s consensus protocol is not proof-of-anything, it has no mining or other sybil resistance mechanism, no one knows who all the nodes are, anyone can issue tokens for any real world asset and immediately trade them on the platform’s built-in exchange, and users can pay for goods and services in sheep even when the seller explicitly does not accept sheep.

Stellar employs Federated Byzantine Agreement (FBA), which favors safety over liveness. An FBA protocol is essentially a Byzantine Fault Tolerant (BFT) protocol with an open participation model that allows consensus nodes to freely join and leave the network. Stellar’s FBA has been proven to be optimally safe in an asynchronous setting, meaning that it guarantees agreement under any failure scenario in which it’s possible for some protocol to provide such a guarantee. In contrast to Nakamoto consensus, SCP stalls when nodes cannot reach agreement, but, like most BFT protocols, the agreements it reaches are immediately final, so forks, chain reorganizations, and double spends are impossible (within some fault tolerance limits). However, unlike BFT protocols, SCP nodes cannot reach consensus by a fixed quorum (e.g. 2/3 of consensus nodes agreeing) because the set of nodes participating at any given time is unknown. Instead, they reach consensus through peer-to-peer trust arrangements managed locally at each node.

An SCP node defines its trust arrangements as a list of node sets, called quorum slices, that the node trusts to provide truthful information. The node will only agree to a ledger if all of the nodes in at least one of its quorum slices agrees to it. Nodes gossip their intentions to each other in a multi-stage federated voting process that reaches consensus once a quorum — a set of nodes that encompasses at least one quorum slice of each of its members — agrees on the same ledger. A network has quorum intersection if any two quorums we can construct overlap in at least one node (kind of like how actor relationships overlap with Kevin Bacon). With quorum intersection it’s not possible for two quorums to finalize different ledgers unless all of the overlapping nodes violate the protocol by voting for conflicting ledgers. If at least one of the overlapping nodes follows the protocol it will prevent conflicting ledgers from being finalized.

The consensus safety of the Stellar network hinges on the configuration choices of node operators, which are entirely subjective and loosely coordinated at best."

Upgrades

The Stellar Development Foundation (SDF) has announced (27-1-2024) a delay in the Protocol 20 upgrade of the Stellar blockchain, originally scheduled for January 30. The decision follows the discovery of a bug in Stellar Core v20.1.0, which could potentially impact Soroban transactions.

Staking

"On Monday, 10/28, at 1600 UTC validators will vote on whether to upgrade the public network to Stellar-core v12.0.0. It has a few big changes including the introduction of a new operation that makes path payments symmetrical."

Liquidity Mining

Scaling

"As [of] July 2018 Jed McCaleb publicly stated that “At some point — to reach scalability — we will have to do things like sharding and subnetworks” but, at the time of writing, the only scaling solution that Stellar has publicly announced is the layer 2 payment channels project called Starlight."

Interoperability

Different Implementations

Other Details

Compliance

"The power to refuse to credit or freeze any account at the anchor’s discretion can be used to support compliance with various regulations, and Stellar provides a built-in compliance protocol to enable anchors to comply with Anti-Money Laundering (AML) laws that require these powers. However, Stellar also supports open and non-revokable issuance of assets by allowing Anchors to remove these powers over the assets they issue."

Oracle

Their Other Projects

ICO's

  • The Stellar network supports many different kinds of assets and allows anyone to issue an asset. This makes it a suitable platform for ICOs. Although there haven’t been many ICOs conducted on the Stellar network yet, this could change as Stellar comes into the cryptocurrency spotlight.
  • Ethereum is the largest blockchain hosting ICO tokens right now and ICOs have played a key role in driving ether’s price up over the last year. However, there is actually a strong case for companies to choose Stellar over Ethereum for ICOs. For one, the Stellar network is significantly faster and cheaper to use than Ethereum’s (e.g. 5 second vs 3.5 minute confirmation times). Faster and cheaper transactions make ICOs more accessible and more accessibility means more money raised. The Stellar network also has a built-in feature that lets developers whitelist ICO contributors. This reduces development time for ICOs that want to ensure complete legal compliance. Finally, the Stellar network’s transaction model is simpler than Ethereum’s and simplicity reduces the chances of security pitfalls. This is significant for ICOs that do not require the expressiveness provided by Turing-complete smart contracts.
  • From this article (4-2-2019):

"2018 was a year of major ICOs on Stellar, starting with Mobius’s 39 million USD raise in January and continuing with several other large token sales throughout the year. Whereas Ethereum is still far and away the leading platform for ICOs, concerns about Ethereum’s fees, security, scalability, and other issues have led some to consider Stellar a better alternative for issuing their token."

Governance

"Stellar’s consensus protocol is not proof-of-anything, it has no mining or other sybil resistance mechanism, no one knows who all the nodes are.

There are many autonomous Stellar-based projects, though some of the more prominent ones are run by McCaleb’s for-profit company Interstellar. Stellar’s governance structure is mostly centralized within the SDF, whose board of directors oversee all policy decisions. Institutions who are approved by SDF and make recurring financial donations can become part of the SDF’s Expansion Board and earn the right to participate in some of SDF’s governance processes through voting. Other stakeholders and community members are apparently excluded from this process.

Some amount of governmental power in Stellar can be wielded by anchors, the trusted entities that issue assets on the Stellar network. Anchors enable real world assets to be exchanged on Stellar by issuing digital credits in exchange for deposits of the asset. Users must trust that the issuer will properly redeem the credits and formally declare this trust by creating trustlines to the anchor that holds their deposit. By default, anchors have the ability to authorize and revoke access to the assets they issue."

DAO

Treasury

Roadmap

  • Can be found [Insert link here].

Usage

"By the end of 2016 Stellar had announced several remittances and payments projects built on the Stellar network. In May 2017 McCaleb and Brit Yonge co-founded the for-profit Lightyear to build a universal payment network on Stellar. Lightyear recently acquired Chain.com to form InterStellar, which is building tools, products, and services that make it easier to use and build on Stellar."

Projects that use or built on it

  • Signal; privacy-centric messaging application. From Bitcoin.com (27-1-2021): "A few reports this week have disclosed that Signal is experimenting with cryptocurrencies and may even introduce its own coin. The tech newsletter called Platformer said that Signal was toying with a Stellar derivative called Mobilecoin, which is a token built using the Stellar blockchain."
  • USDC is planning to integrate onto Stellar (15-10-2020).
  • Velo Protocol

Competition

Stellar, Waves and OmiseGo compared (23-10-2017)

  • “Stellar, Waves, and OmiseGo all aim to serve very similar use cases. All three platforms have native support for a decentralized exchange. All three platforms support multiple assets. Although Waves is not currently focused on micropayments, remittances, and mobile payments, Stellar and OmiseGo are both gunning for these three use cases.
  • From my research, it seems that Stellar comes out just slightly ahead of Waves as a multi-asset trading platform. Although Stellar is losing in terms of ICOs, Stellar has many more anchors than Waves has gateways. Most of Stellar’s anchors are operated by external companies that include large financial institutions. Waves, on the other hand, currently operates all of its gateways. Stellar is also currently much faster than Waves. Stellar supports a theoretical of maximum of 1000 transactions/second whereas Waves only supports 1.7 transactions/second. This will change as the WavesNG protocol comes online, but that’s not for another few months and even then, Waves’s maximum transaction throughput is still shy of Stellar’s 1000 transactions/second.
  • Stellar could give OmiseGo a run for its money. Almost everything that OmiseGo aims to do, Stellar is planning to do or is already doing it. Not to mention Stellar already has a robust, secure, and fast blockchain already running in the wild whereas OmiseGo is still a far-cry away from even launching a public testnet. At this point we have no idea what the OmiseGo blockchain will even look like. Having a functioning public blockchain also gives Stellar a headstart in business integrations. As mentioned above, a multitude of payment companies, especially in Asia and Africa, have integrated with Stellar and are already sending payments through the platform. We also can’t forgot the massive IBM and banking integration that was recently announced."

Pros and Cons

Pros

Cons

Team, investors, partnerships, etc.

Team

  • Malmi, Martti (sirius); wants to advance it through MONI
  • McCaleb, Jed; co-founder
  • Nicolas Barry, CTO
  • Nowotarski, Bartek; developer, has a masters in computer science from Jagiellonian University. Before joining Stellar, Bartek worked as a lead developer and security consultant, and he has found vulnerabilities in high-profile sites such as Facebook and Yahoo.
  • Kim, Joyce; cofounder & board member, “Joyce was a VC at Freestyle Capital and an entrepreneur. Prior to that, she was an attorney at Wilmer Hale and Sherman & Sterling and pro bono at Sanctuary for Families and the Innocence Project. Joyce graduated from Cornell University at the age of 19, followed by graduate school at Harvard and Columbia Law School. She is also a Director’s Fellow at the MIT Media Lab”
  • Mazieres, David; Chief Scientist,
  • Rabois, Keith; Board member, “has been a key player in shaping the future of money having served as a senior executive at Paypal, COO at Square and board member at Xoom, as well as being a board member at Yelp and a VP of business development at LinkedIn. Keith is an investment partner at Khosla Ventures and was an early investor in Youtube, Yammer, Palantir, Lyft, Airbnb, Eventbrite and Quora.”
  • 'Zack'

Advisors include:

  • Mullenweg, Matt; advisor, “the founder and CEO of Automattic, the company behind WordPress.com. He is also a social media entrepreneur, developer, lecturer and musician. Matt is a very active angel investor, named on Forbes’ Most Influential Angel Investors on AngelList.”
  • Ravikant, Naval; advisor, “the CEO and a co-founder of AngelList. He previously co-founded Epinions (which went public as part of Shopping.com) and Vast.com. He is an active Angel investor, including Twitter, Uber, Yammer, Stack Overflow and Wanelo.”
  • Collison, Patrick; CEO of Stripe
  • Stein, Greg, Director at the Apache Software Foundation
  • Altman, Sam; President of Y Combinator

Works together/is used by:

  • a professor of Computer Science at Stanford University, where he leads the Secure Computer Systems Group. Prof. Mazières received a BS in Computer Science from Harvard and Ph.D. in Electrical Engineering and Computer Science from MIT. His research interests include Operating Systems and Distributed Systems, with a focus on security.
  • Deloitte “One of the world’s largest financial consulting firms set out to innovate in the core banking space with blockchain technologies. 3 engineers, 4 weeks, and 1 Stellar integration later, Deloitte had a prototype that reduced transaction costs by 40%. Each transaction resolved in 5 seconds.”,
  • Tempo Money Transfer “Has a network of 190,000 locations in 120 countries”, Using the Stellar network, Tempo can power 600,000 transactions for $0.01 in fees. Tempo launched the EURT token on the Stellar network in April 2017. EURT is valued at full parity to the EUR by TEMPO and its partners. The token can be traded for PHP (Philippine Pesos), XLM (lumens), and JPY (Japanese Yen) on Stellar. The EURT is the first step by TEMPO in integrating the Stellar network as its primary payments settlement platform.
  • Parkway Projects “As a licensed mobile money operator, Parkway uses the Stellar network to connect Nigeria’s 5 major telcos. Parkway develops financial technology for 3,000 clients across Africa, including Ecobank, Wema Bank, and Diamond Bank. Their end-to-end financial solutions are used in 30 countries in sectors such as healthcare, education, and energy.”
  • IBM (who Stellar has a partnership with) and a network of South Pacific and Oceania banks have successfully deployed a cross-border payments platform that uses the Stellar network. This new Stellar-based solution allows the banks to send money in real time whereas the old process typically took days. Although the platform is currently limited to cross-border payments involving British pounds and Fiji dollars, it’s expected to scale up to 60% of all cross-border payments in the region once all seven currencies are added. IBM’s vice president of global blockchain development, Jesse Lund, has cautioned that the use lumens as an exchange bridge between currencies is temporary but this doesn’t mean that the Stellar network will not continue to be used.
  • NGO’s; Praekelt Foundation, philafy and bext360
  • More partners can be found here,
  • Stellar Development Foundation partnered with Blockchain.com to distribute $125M in Stellar lumens, nearly half a billion tokens, to Blockchain.com wallet holders who sign up for the airdrop; this makes Stellar the first partner for Blockchain's airdrop program and guiding framework announced in 7-2018. 
  • Stellar's General Counsel Candace Kelly sits on the board of the Blockchain Association (22-9-2020). 

Funding

Stellar Development Foundation

Basics

  • The nonprofit foundation operating Stellar Lumens.
  • The goal of the Stellar Development Foundation (SDF) is to act as the world’s digital payment method by connecting users all over the world with banks and payment systems. The SDF plans to “fight poverty and maximise individual potential” by delivering their services primarily in regions where citizens have low access to banks, such as in Oceania.
  • As of October 29th, 2017, there exists 103 billion lumens, with approximately 96 billion lumens held by the Stellar Development Foundation. The annual inflation rate of lumens is 1%.

Investments

  • Is backing accelerator program Startup Studio
  • Stellar Development Foundation partnered with Blockchain.com to distribute $125M in Stellar lumens, nearly half a billion tokens, to Blockchain.com wallet holders who sign up for the airdrop; this makes Stellar the first partner for Blockchain's airdrop program and guiding framework announced in 7-2018.
  • Abra has received (6-5-2020) $5 million in funding from the Stellar Development Foundation. The company now looks to incorporate the Stellar blockchain into its platform, as well as develop Stellar-based products.
  • Had $13M parked at Genesis at the time of collapse (20-1-2023). Abra had $30M there.
  • Wyre; got an $5M investment (26-1-2021).

Team, investors, partnerships, etc.

"The Stellar Development Foundation's work with Ukraine's government to digitize the hryvnia will officially launch this month."

(:

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