Stellar (XLM) is a pioneer in cross-border payments that has revolutionized the way value is transferred globally by providing a decentralized platform that connects financial systems and enables fast, low-cost international transactions. Understanding Stellar is crucial for anyone interested in the future of financial inclusion and the growing impact of blockchain technology on global remittances.

History and Origin of Stellar

Founding and Initial Vision

Stellar was founded in 2014 by Jed McCaleb, co-founder of Ripple, and Joyce Kim, with the aim of creating a decentralized network that could bridge the gap between traditional financial institutions and the blockchain. The project was initiated to address the inefficiencies in the global payment systems, particularly in remittances and cross-border transfers, which are often slow, expensive, and inaccessible to many people around the world.

The initial vision of Stellar was to create an open financial system that allows users to send money across borders quickly and at a fraction of the cost of traditional financial services. Stellar’s mission was to democratize access to financial services, particularly for the unbanked and underbanked populations, by providing a platform that facilitates seamless and affordable transactions.

Development Milestones

Since its launch, Stellar has achieved significant milestones in its development. In 2015, the Stellar Development Foundation (SDF) was established as a non-profit organization to support the growth and adoption of the Stellar network. That same year, Stellar underwent a major protocol upgrade, transitioning from the Ripple protocol to a new consensus algorithm known as the Stellar Consensus Protocol (SCP), designed by Stanford professor David Mazières.

Stellar’s growth continued with the launch of partnerships with major financial institutions and technology companies, including IBM, which used Stellar’s blockchain for its World Wire payment network. This partnership marked a significant step in Stellar’s journey to becoming a leading blockchain for cross-border payments.

Main Features of Stellar

Cross-Border Payments

Stellar’s primary use case is enabling cross-border payments. The network allows users to send and receive money across borders in seconds and at a fraction of the cost of traditional methods. By leveraging Stellar’s decentralized network, users can bypass intermediaries, reducing fees and transaction times.

Tokenization of Assets

Stellar also supports the tokenization of assets, allowing users to create, send, and trade digital representations of any asset, including fiat currencies, stocks, and commodities. This feature is particularly valuable for creating stablecoins and other digital assets that are pegged to real-world assets.

Decentralized Exchange (DEX)

Stellar includes a built-in decentralized exchange (DEX) that allows users to trade tokens directly on the network. The DEX is integrated into the Stellar protocol, enabling fast and secure trades without the need for a central authority. This feature enhances liquidity and provides users with more control over their assets.

How does Stellar work?

Stellar operates as a decentralized blockchain network that facilitates the exchange of digital assets and currencies. Here’s a more detailed look at how it works:

Stellar Consensus Protocol (SCP) At the core of Stellar’s functionality is the Stellar Consensus Protocol (SCP), a unique consensus algorithm that allows the network to reach agreement on transactions quickly and securely. Unlike proof-of-work (PoW) used by Bitcoin or proof-of-stake (PoS) used by Ethereum, SCP is designed to be more energy-efficient and scalable, making it ideal for a global payment network.

Anchors and Trustlines Stellar’s ecosystem relies on entities called "anchors," which act as bridges between traditional financial systems and the Stellar network. Anchors hold deposits and issue corresponding digital credits on the network. Users can trust these anchors by setting up "trustlines," which define the amount of credit they are willing to accept from a particular anchor. This system allows for the seamless conversion of fiat currencies and other assets into digital tokens on the Stellar network.

Path Payments One of the innovative features of Stellar is its path payment mechanism, which allows users to send payments in one currency and have the recipient receive it in another. The network automatically finds the most efficient conversion path, enabling smooth transactions between different currencies and assets.

Stellar Ecosystem and Notable Projects

The Stellar ecosystem includes a wide range of projects and integrations that enhance its functionality and expand its reach. These projects leverage Stellar’s scalable infrastructure to provide innovative solutions in the financial services industry.

IBM World Wire

IBM World Wire is a global payment network built on Stellar that enables financial institutions to clear and settle cross-border payments in real-time. By leveraging Stellar’s blockchain, World Wire provides a more efficient alternative to traditional banking systems, reducing the time and cost associated with international transactions. This partnership with IBM highlights Stellar’s potential to disrupt the global payments industry.

Circle and USDC

Circle, the issuer of the USD Coin (USDC), has integrated Stellar as one of the blockchains supporting its stablecoin. USDC on Stellar offers fast and low-cost transactions, making it an ideal solution for remittances, payments, and other financial applications. The integration of USDC into the Stellar network enhances its liquidity and expands its use cases within the ecosystem.

Tempo

Tempo is a European remittance provider that has partnered with Stellar to offer cross-border payment services. By using Stellar’s network, Tempo can provide faster, cheaper, and more transparent remittance services, particularly to underbanked populations in regions like Africa and Southeast Asia. Tempo’s use of Stellar exemplifies the network’s commitment to financial inclusion and its ability to support real-world use cases.

XLM Supported on CoinsDo

CoinsDo is excited to announce that it now supports transactions on Stellar and the related XLM token. This new integration means that CoinGet and CoinSend can now efficiently manage these assets, providing users with a seamless and secure digital asset management experience.

If you're in the market for a reliable, secure, and cost-effective digital asset management system, reach out to us to learn how CoinsDo can empower your business.