Stellar Lumens, or Stellar for short, was launched in 2015 as an alternative to storing and moving money. The Stellar protocol links people, banks, and other financial institutions with the intention of reducing transaction costs and time lags between transfers. But Stellar says it is more than that, aiming to be a universal system for digital money that can serve as a medium of exchange between illiquid assets.

Behind the transactions

The Stellar Network uses blockchain technology to provide a decentralized, secure, and scalable platform for financial transactions. The Stellar Network is a decentralized peer-to-peer framework, powered by Lumens token (XLM). XLM, Stellar native token is used as an intermediary between different fiat currencies.

 To confirm transactions, Stellar uses a consensus algorithm, called the Stellar Consensus Protocol (SCP), to reach consensus on the state of the ledger. SCP in turn, is a construction of the Federated Byzantine Agreement (FBA).

FBA differs from other well-known consensus mechanisms like Proof of Work (which relies on a node’s computational power) and Proof of Stake (which relies on a node’s staking power). Instead, it relies on the agreement of trusted nodes. In practice, the protocol can convert deposits into XLM, then convert XLM into the requested currency.

Total supply and circulation

There are currently about 50 billion lumen coins in existence, with 20 billion available in the open market. The remainder will slowly be meted out to the public over the next few years.

A BIT more about the Stellar network

The Stellar project was co-funded by Jed McCaleb, who was the co-founder of Ripple. As with many other crypto projects, Stellar also seeks to bring its technology to developing communities that either feel the burden of traditional banking or are unable to access it at all.