• stellar

Cryptocurrency Category: CoinsCryptocurrency Tags: lumen, stellar, and XLM

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    Stellar | Move Money Across Borders Quickly, Reliably, And For Fractions Of A Penny.

    Stellar is a platform that connects banks, payments systems, and people. Integrate to move money quickly, reliably, and at almost no cost.

    One lumen (XLM) is a unit of digital currency, like a bitcoin. Lumens are the native asset of the Stellar network.

    Native means that lumens are built into the network. Asset is how the network refers to an item of value that is stored on the ledger.

    While you can’t hold a lumen in your hand, they are essential to the Stellar network—they contribute to the ability to move money around the world and to conduct transactions between different currencies quickly and securely.

    The Stellar network offers the innovative features of a shared public ledger on a distributed, global database—often referred to as blockchain technology. The Stellar network’s built-in currency, the lumen, serves two purposes:

    Why does the Stellar network need a native asset?

    First, lumens play a small anti-spam role.

    Lumens are needed for transaction fees and minimum balances on accounts on the Stellar network in order to prevent people from overwhelming the network and to aid in prioritization.

    Each transaction has a minor fee—0.00001 lumens—associated with it. This fee prevents users with malicious intentions from flooding the network (otherwise known as a DoS attack). Lumens serve as a security measure that mitigates DoS attacks that attempt to generate large numbers of transactions or consume large amounts of space in the ledger.

    Similarly, the Stellar network requires all accounts to hold a minimum balance of 0.5 lumens. This requirement incentivizes users to declutter the ledger by eliminating abandoned accounts, thereby that ensuring that all accounts are likely to have economic utility on the network.

    Second, lumens may facilitate multi-currency transactions.

    Lumens sometimes facilitate trades between pairs of currencies between which there is not a large direct market, acting as a bridge. This function is possible when there is a liquid market between the lumen and each currency involved.

    Who governs lumen creation?

    Lumen supply is determined by fixed, protocol-level rules. The number of lumens created at genesis was 100 billion. Every year, there is a 1% inflation rate. New lumens cannot be generated arbitrarily by anyone.

    While somebody could theoretically push a proposal to change the protocol to change the rule around lumen creation, validators on our network are very unlikely to accept and ratify it. The decentralization of the protocol prevents us from unilaterally controlling any changes — if we tried to force a change, people would lose trust in Stellar.org, refuse to accept the changes, and keep using the original protocol with the original rules. Therefore, we will never do it.

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