What Is stellar?
The Stellar Network is a low-cost global transaction network. The goal of the network is to combat poverty and exclusion by creating a world class, low cost financial system that includes all classes of global society.
Stellar believes people should be able to send any currency to anyone in the world affordably. The Stellar Network makes this possible with its native token, the lumen. When people send lumens to each other, the Stellar network will change it into the recipient's desired currency at a fair rate, using entities known as anchors.
The Stellar Network is "free" to use - they charge a nominal fee (less than one cent) per transaction for anti-spam purposes. Fees are paid in lumens.
The Stellar Team
In my opinion, Stellar has one of the most (if not the most) impressive team in all of cryptocurrency today. Here are some of the key figures:
Development
The Development Team is headed by Jed McCaleb, the co-founder of Stellar and a household name in the crypto community.
Prior to founding Stellar, he co-founded Ripple, the company behind XRP, and prior to that, Mt Gox, the first mainstream Bitcoin exchange.
Some other key figures in the development team are:
David Mazières - Director of blockchain research at Stanford.
Jonathan Jove - Software Engineer / SB in maths and physics from MIT.
Marta Lokhava - Formerly with Pandora Media / graduate of UC Berkely
Nicolas Barry - Computer Scientist / CTO / formerly with Microsoft and Salesforce
Scott Fleckenstein - Formerly lead dev Couchsurfing / lead engineer Get Satisfaction / lead engineer OpenFeint.
Board
Keith Rabois - Senior exec at Paypal / COO at Square / board member of Xoom, Yelp / VP of business development at Linkedin / angel investor in Youtube, Lyft, Airbnb.
Shivani Sorya - CEO of Inventure, a mobile credit company in East Africa / formerly with Citigroup, UNFPA
Greg Brockman - Former CTO of Stripe / graduate of Harvard and MIT.
Advisors
Stellar arguably has the most impressive Advisory board in the game. Some key figures are:
Patrick Collison - CEO of online payments company Stripe. Board member of Y Combinator and graduate of MIT.
Matt Mullenweg - Founder of WordPress and angel investor.
Naval Ravikant - CEO and co-founder of AngelList. Angel investor in Twitter, Uber and Stack Overflow.
Sam Altman - CEO of Y Combinator
Ronaldo Lemos - Board member of the Mozilla Foundation, Harvard Law graduate, Sao Paulo University law graduate.
The stellar Product
The Stellar Network is based on a decentralised network of servers.
Anybody can run a server. These servers sync with each other to reach a consensus on the state of the network, similar to how nodes work on Bitcoin. A new consensus is reached every 2-5 seconds.
You can read the whitepaper on the Stellar Consensus Protocol here.
The interesting thing about servers on Stellar is there is no monetary incentive to run a server. This is contrary to most blockchains, where securing the network provides some kind of reward, such as the staking rewards on NEO or newly mined coins on Bitcoin. With Stellar, the incentive to securing the Stellar network is...securing the Stellar network. Entities who become servers most likely will have a vested interest in the network being secure, i.e. they use the network in their business operations. Obvious entities who may want to become servers are banks, remittance companies, credit unions etc.
Transactions on the Stellar network are run through anchors.
Anchors are defined by Stellar as trusted entities. These could be banks, co-operatives, businesses, or any kind of entity. Anchors take your payments and issue credits in the Stellar Network. Stellar likens anchors to Paypal - when using Paypal you deposit money into Paypal and they credit your Paypal account with dollars that you can use on their platform. However with Stellar, because all anchors are connected to the Stellar network, it's like having many Paypals connected together so they can easily transact with one another. A list of Stellar's key anchors can be found on their website.
Stellar has the lowest transaction fees of all the major networks, and transaction speed is most likely second only to Ripple. This puts it in a prime position to achieve its goal of becoming a global payment network as adoption grows.
Stellar plans to address scalability by eventually adopting the Lightning Network - the off-chain protocol originally designed for Bitcoin.
While the Stellar Network is live and operational, from what I've read it is not yet being used for cross-border payments on any large scale. The majority of token holders are investors. There is news of a small number of banks experimenting with lumens for cross-border transactions.
A few other interesting things about Stellar:
Stellar is able to be used for ICOs, and various big-name ICOs have already been completed on the Stellar Network, including Mobius and Kik. While Stellar is not as feature-rich as Ethereum or NEO when it comes to ICOs, it is much faster and cheaper. Read more about ICOs on Stellar here.
Stellar also runs the SDEX (Stellar decentralised exchange). Stellar aims to make this the first-choice exchange for all tokens created on Stellar, including XLM. The SDEX is operational.
the stellar Token (Utility and Metrics)
The native token on the Stellar Network is the lumen.
The utility of the lumen is based around network usage. Lumens are required to pay the transaction fees on the Stellar Network, and also required to open an account on the network. A base reserve of 0.5 lumens is required in accounts at all times.
Stellar did not have an ICO. This was in line with their non-profit agenda. Instead, in 2014 Stellar generated 100 billion tokens at the network's genesis block (the starting block of the blockchain), and committed to distribute 95% of these tokens to the public for free, while the other 5% were held by Stellar for operational costs.
In addition to the 100 billion lumens generated at the genesis block, the network has a fixed inflation rate of 1% per annum. This 1% is distributed weekly to pools that the community vote for. In most cases, those pools redistribute the inflationary tokens back to the voters. This gives most investors the chance to earn ~1% passive income on their Stellar holdings
Currently, there is no hard cap for lumens, so the supply will increase by 1% for as long as the network survives. You can read more about their inflation protocol here.
The stellar Community
Stellar is governed by the Stellar Development Foundation (SDF).
The SDF is a non-profit corporation that has been operating since 2014. It has no stock, no owners and no profit distribution.
Stellar has been very active in forming partnerships with existing companies to increase adoption and usage of the Stellar Network and lumens tokens. Some of the most notable partnerships are those with IBM, Deloitte and Stripe. A full list of all corporate partnerships is listed on their website.
Stellar also has a partnership program as part of their mandate. 25% of the genesis block tokens have been allocated towards this program, which aims to incentivise early adoption and development. Stellar grants these tokens to those who they believe will contribute to the growth of the Stellar ecosystem.
The fact that the SDF has been so committed to distributing free tokens to fast-track adoption has led to a large and active community. This puts them in a strong position to capitalise as cryptocurrency adoption grows.
Provision of information on the team, developments and new partnerships is excellent. Blog posts are released infrequently but consistently.
B Money Verdict:
Stellar is considered one of the main competitors to Ripple as they are both aiming to solve the same problem (cross-border payments).
However Stellar's scope goes much further than that, shown by the development of the SDEX and the ability to create tokens, also making it a substitute for Ethereum on some levels. This was shown when Mobius decided to move their ICO from Ethereum to Stellar due to lower costs and faster transactions.
At the end of the day it's the team that matters most, as even a good idea is useless without the right team to execute. It's hard to know how effective a team is without first-hand knowledge, but on paper Stellar's team is rock star level.
The fact that it is non-profit is a plus. Profit generally correlates toward centralisation, and decentralisation is key in the Stellar concept.
The continuous distribution of free coins may dilute value, although with inflation fixed at 1% this should stabilise as adoption grows.
Overall Stellar is one of the safer bets in crypto that ticks all the right boxes when it comes to token utility, team, community and product. The key issue will be if it can cultivate mass adoption of its network and if it can handle that volume when it does. Don't be surprised if Stellar cements itself as a Top 3 cryptocurrency in future.
The Good Stuff
- Non-profit.
- Possibly the strongest team in cryptocurrency today.
- Cheapest fees of any major platform.
- Can earn passive income through inflation pools.
- Can house ICOs faster and cheaper than Ethereum.
The Bad Stuff
- Cross-border payments is very competitive in crypto.
- Anchor system means customers are still reliant on a third party.
- Constant free distribution of lumens may dilute coin value in short term.
Scorecard:
Category | Score | Notes |
|---|---|---|
TEAM | 9.5/10 | Incredibly versatile and accomplished team. Jed McCaleb is ideal as head dev. |
PRODUCT | 7.5/10 | Fast, cheap and stable. Network is very versatile. Might be trying to do too much. Scalability might be an issue but Lightning Network proposed. Mainnet not yet battle tested thoroughly. |
TOKEN | 7.5/10 | Utility is obvious. 1% inflation per year with no cap might be an issue in long run. Transfers extremely fast and cheap. Passive income. However, giving away the coins for free by the Foundation lowers this score. It's hard for free things to have perceived value. |
COMMUNITY | 8/10 | Many partnerships. Blog and social media is active. Partnership program is clever. |
32.5/40 |
How To Buy Stellar In New Zealand
To buy XLM instantly with New Zealand dollars, I recommend using EasyCrypto. Rates are fair and transactions are completed fast.
You can sign up for a free EasyCrypto account here.
Alternatively, you can also try Binance.
Useful Links
WHITEPAPER: https://whitepaperdatabase.com/stellar-lumens-xlm-whitepaper/
WEBSITE: https://www.stellar.org/
BLOG:
https://www.stellar.org/blog/
REDDIT:
https://www.reddit.com/r/Stellar/
TWITTER:
https://twitter.com/stellarorg
BUY WITH NZD: EasyCrypto
references
- Stellar for non-techies: https://medium.com/coinmonks/a-comprehensive-introduction-on-how-stellar-xlm-works-for-non-techies-7060595af749
- Jed McCaleb on Lightning Network: http://jedmccaleb.com/blog/bitcoin-lightning-stellar/
- IBM and Stellar: https://www.ccn.com/world-wire-ibm-launches-stellar-based-blockchain-payments-platform/
- Stellar vs Ripple: https://www.bitdegree.org/tutorials/stellar-vs-ripple/
- Blockonomi guide to Stellar: https://blockonomi.com/stellar-lumens-guide/