Stellar is an open-source payments network that serves as a distributed intermediary blockchain for global financial systems and circulates a native asset, Stellar Lumens (XLM). The Stellar blockchain allows anyone to issue new assets in the network and exchange for other assets via built-in asset exchange features. Assets on Stellar are issued and redeemed by anchors, who are trusted entities that issue digital credits on the Stellar network in exchange for deposits of the asset with the trusted entity. Anchors enable real world assets to be exchanged on Stellar by leveraging a distributed exchange that maintains an order book for every asset pair. Stellar supports the issuance of any type of asset including stocks, currencies, cryptoassets and more.
After leaving Ripple in 2013 due to internal conflicts over vision, Jed McCaleb, along with partner Joyce Kim, forked the Ripple protocol and launched the Stellar project in 2014. With the creation of the non-for profit Stellar Development Foundation (SDF), the team aimed to “promote global financial access, literacy, and inclusion…and create an open and affordable financial system where people of all income levels can access simple-to-use, secure, and low cost financial services.” The Stellar Development Foundation was created in collaboration with Stripe CEO Patrick Collison. Stripe invested $3 million in seed funding and received 2 billion Stellar Lumens (XLM) in exchange. At launch the network generated 100 billion XLM and featured a 1% annual issuance rate.
In 2015, Stellar redesigned its consensus protocol following a ledger fork in 2014 that rolled back hours of transactions. It’s new and current consensus protocol called “Stellar Consensus Protocol” was developed by Stanford professor David Mazières, chief scientist of the SDF. In 2017, Jed McCaleb and Brit Yonge launched Lightyear as a for-profit entity of Stellar, that would build a universal payment network on Stellar. In 2017, Stellar announced a grants program that would award partners up to $2 million worth of Lumens for project development.
In October 2019 Stellar removed the 1% annual issuance rate from the Stellar protocol stating that it was not benefiting the projects building on Stellar.
In November 2019, the Stellar Development Foundation announced it burned more than 55 billion XLM (~55%) tokens as it moves away from airdrop programs. Previously the foundation had retained 68 billion XLM earmarked for giveaways in order to grow the community. Citing a declining utility from airdrops, the SDF burned 50 billion of those tokens along with 5 billion of the 17 billion previously held in its operating fund. The burn reduced the total supply to 50 billion XLM of which SDF’s ownership of the total dropped from XLM supply from 85% to 60%.
