XLM or Stellar is a peer-to-peer (P2P) decentralized network created in 2014 by The Stellar Development Foundation or Stellar.org. The network officially launched in 2015 with the purpose of connecting the world’s financial systems and ensuring a protocol for payment providers and financial institutions.
The platform is designed to move financial resources swiftly and reliably at minimal cost. Stellar links people, banks, payment processors and allows users to create, send and trade multiple types of crypto.
The basis of the network is its native digital currency – XLM or Lumens. XLM acts as an intermediate currency for operations and is also used to pay transaction fees. How it works: the protocol converts money in a few seconds, first into XLM, and then into the requested currency.
The Stellar payment protocol is based on distributed ledger technology — an open-source development, community-owned and distributed by community. The crypto asset of the Stellar platform helps with cross-border transactions, overcoming the problems of high fees and slow procedures.
XLM is more focused on assisting individuals transfer money than they are with institutions. Thus, Stellar offers access to financial systems, and people can send money at low cost and promptly around the world.
The Founder of XLM
Jed McCaleb founded Stellar with the lawyer Joyce Kim after leaving Ripple in 2013 over disagreements about the company’s future direction.
In explaining the rationale behind Stellar in September 2020, McCaleb told CoinMarketCap: “The whole original design of Stellar is that you can have fiat currencies and other kinds of forms of value run in parallel with each other and with crypto assets. This is super important to drive this stuff mainstream.”
McCaleb’s goal is to ensure that Stellar can give people a way of moving their fiat into crypto — and eliminate the friction that people normally experience when they are sending money around the world.
He currently serves as the CTO of Stellar, as well as the co-founder of the Stellar Development Foundation. This not-for-profit organization aims to “unlock the world’s economic potential by making money more fluid, markets more open, and people more empowered.”
The Circulation of XLM
A total of 100 billion XLM were issued when the Stellar network launched in 2015 — but things have changed since the release date. At present, the total supply stands at 50 billion XLM, and the circulating supply is currently 20.7 billion.
In 2019, the Stellar Development Foundation announced that it was burning over half of the cryptocurrency’s supply. This means that it now controls approximately 30 billion XLM. While some of this capital is earmarked for marketing and helping the organization develop, about one third is reserved for making investments in other blockchain ventures.
Explaining why it took this drastic move — and promising not to burn any more XLM in the future — the foundation explained: “SDF can be leaner and do the work it was created to do using fewer lumens… Those 55.5 billion lumens weren’t going to increase the adoption of Stellar.”