Last updated: October 2026
Stellar is an open payments network built to move money — dollars, euros, stablecoins or tokenized funds — across borders in a few seconds for a tiny fraction of a cent. Its native token, lumens (XLM), pays network fees, keeps accounts active and can act as a bridge currency between assets. Stellar was co-founded in 2014 by Ripple co-founder Jed McCaleb and is stewarded by the non-profit Stellar Development Foundation (SDF). Since 2024 it has also run smart contracts through Soroban, and in 2025–2026 its upgrades focused on speed and zero-knowledge tooling.
Key takeaways
- Stellar settles payments in roughly five seconds using the Stellar Consensus Protocol (SCP), not mining or staking.
- “Anchors” — regulated businesses — connect bank money to tokens on Stellar, enabling cash-in/cash-out services such as MoneyGram’s.
- The SDF burned about 55 billion XLM in November 2019, cutting total supply to roughly 50 billion; new XLM is no longer created.
- Soroban smart contracts went live in 2024; Protocol 23 “Whisk” (2025) added parallel transaction processing.
- Circle’s USDC is widely used on Stellar, and the network hosts tokenized funds such as Franklin Templeton’s money market fund.
History and Founders
Jed McCaleb had already created the Mt. Gox exchange (later sold) and co-founded Ripple. After disagreements over Ripple’s direction, he left and in 2014 launched Stellar with lawyer Joyce Kim, backed by $3 million in seed funding from payments company Stripe. Stellar initially used a fork of Ripple’s code, but a 2014 network fork exposed weaknesses in that consensus model.
In 2015 Stanford professor David Mazières, the SDF’s chief scientist, published the Stellar Consensus Protocol, and the network relaunched on it. Milestones since then:
- 2014: 100 billion lumens created, with 1% annual inflation and plans to give much of the supply away to individuals and nonprofits.
- 2019: validators voted to end inflation, and in November the SDF burned about 55 billion XLM from its own holdings, saying it needed fewer tokens to fund its mission. Supply fell to roughly 50 billion.
- 2021: Circle began issuing USDC natively on Stellar, and Franklin Templeton’s US government money fund began recording share ownership on the network.
- 2022: MoneyGram’s service let users convert USDC on Stellar to cash at participating locations in many countries.
- February 2024: Protocol 20 brought Soroban smart contracts to mainnet.
- 2025: Protocol 23 “Whisk” introduced parallel transaction execution and a unified event format for contracts and classic operations.
- 2026: Protocol 25 “X-Ray” added zero-knowledge cryptography primitives (BN254 and Poseidon), and Protocol 26 “Yardstick,” live in May 2026, added further cryptographic and transaction-control features.
McCaleb left Stellar’s day-to-day work years ago and now leads a space company, Vast; Denelle Dixon has been the SDF’s CEO since 2019.
How Stellar Works
Stellar Consensus Protocol
SCP is a “federated Byzantine agreement” system. Each validator chooses a set of other validators it trusts (a quorum slice); when overlapping slices agree, a ledger closes. There is no mining and no staking reward, which keeps fees low but means validator operators run nodes for business or mission reasons rather than yield.
Anchors and assets
Anyone can issue a token on Stellar, but most real activity comes from anchors — licensed companies that hold dollars, euros or other assets and issue matching tokens. Wallets connect to anchors through standard APIs, so a user can deposit local currency, receive a token, send it abroad and have it cashed out by another anchor.
Built-in exchange and path payments
Stellar has an order book and liquidity pools at the protocol level. A “path payment” lets you send euros and have the recipient receive pesos, with the network routing through XLM or other assets automatically.
Soroban smart contracts
Soroban is a Rust/WebAssembly smart contract platform with predictable fees and state that must be “rented.” It enables lending markets, AMMs and tokenization tools on Stellar.
Who Uses Stellar Today
Stellar’s activity looks different from DeFi-heavy chains: much of it is payments and asset issuance by companies rather than speculative trading.
- Remittance and cash access: wallet apps connect to anchors so users can turn local currency into USDC and back. MoneyGram’s integration let people cash out USDC at participating agent locations.
- Humanitarian payments: in 2022 the UN Refugee Agency (UNHCR) piloted Stellar-based USDC cash assistance for displaced people from Ukraine, who could collect funds via MoneyGram locations.
- Tokenized funds: Franklin Templeton’s on-chain US government money market fund has recorded shares on Stellar since 2021, an early example of real-world-asset tokenization.
- Stablecoins and fintechs: Circle’s USDC and euro-denominated tokens from regulated issuers settle on Stellar, and payment startups use it as back-end plumbing.
- Soroban apps: lending markets, AMMs and wallets built on Soroban have grown since 2024, though they remain small compared with Ethereum or Solana DeFi.
Tokenomics
- Supply: roughly 50 billion XLM total, with no new issuance since 2019. A large share is still held by the SDF and released gradually for grants, partnerships and operations — check the SDF’s public mandate reports for current figures.
- Fees: the base fee is 100 stroops (0.00001 XLM) per operation, rising only during congestion.
- Minimum balance: every account must hold a small XLM reserve (currently 1 XLM base, plus more for each trustline or offer). This prevents spam accounts.
- No native staking: holders do not earn protocol rewards. Yield products on Stellar come from lending or liquidity provision, with the usual risks.
Stellar vs XRP and Other Payment Rails
Stellar is often compared with XRP because they share a founder and a payments focus, but their emphases differ. A fuller breakdown is in our XRP vs Stellar comparison.
Another payment-focused network to compare is Nano; how Nano’s feeless block-lattice works explains who runs the network without block rewards and how it adapted after spam.
For a phone-first payments network, read our guide to Celo and its mobile-first design, where gas can be paid in stablecoins.
| Stellar (XLM) | XRP Ledger | Bitcoin Lightning | USDC on fast chains | |
|---|---|---|---|---|
| Main users | Fintechs, remittance apps, asset issuers | Banks, payment firms, Ripple partners | Bitcoin users and merchants | Anyone needing dollar transfers |
| Steward | Non-profit SDF | Ripple (for-profit) plus community | Open-source developers | Circle (issuer) |
| Settlement | ~5 seconds | ~3–5 seconds | Near-instant off-chain | Seconds, varies by chain |
| Native token needed? | Small XLM reserve and fees | Small XRP reserve and fees | BTC | Chain’s gas token |
For a wider ranking of payment-focused assets, see the best crypto for payments.
How to Buy and Hold XLM
- Pick an exchange that lists XLM — it trades on most major platforms, including Coinbase, Kraken and Binance where they operate. Our step-by-step how to buy Stellar guide compares options.
- Choose a Stellar wallet such as LOBSTR (mobile), Freighter (browser extension) or a hardware wallet that supports Stellar. Back up the recovery phrase.
- Fund the account with at least the minimum reserve. A new Stellar address doesn’t exist until it receives at least 1 XLM.
- Include the memo when sending to an exchange. Exchanges use one shared address and identify you by memo; forgetting it is the most common way people lose XLM deposits.
- Add trustlines before receiving other assets such as USDC; each trustline raises your reserve slightly.
Risks: Is Stellar Crypto a Good Investment?
- Value capture: payments can flow in USDC or other tokens without much XLM demand beyond fees and reserves.
- Concentrated supply: SDF holdings mean ongoing distribution into the market.
- Competition: stablecoins on Solana, Ethereum layer 2s, Tron and the XRP Ledger compete for the same flows.
- Smart contract risk: Soroban apps are newer and less battle-tested than Stellar’s classic payment features.
Optimistic scenarios rely on tokenized funds and stablecoin remittances growing on Stellar; pessimistic ones assume usage grows without lifting XLM. Scenario ranges are in our XLM price prediction, and more payment networks are in the crypto coin directory.
FAQ
Is Stellar better than XRP?
Neither is better outright. Both settle in seconds for tiny fees. Stellar is run by a non-profit foundation and leans toward fintech apps, anchors and tokenized assets; XRP is closely tied to Ripple’s for-profit business with banks and payment firms. Stellar added Soroban smart contracts in 2024, while XRP Ledger has its own native features. Your choice depends on which ecosystem you believe will win usage.
Does Stellar work with USDC?
Yes. Circle has issued USDC natively on Stellar since 2021. Wallets such as LOBSTR let you hold and send it after adding a USDC trustline, and anchors like MoneyGram’s service have allowed conversion between USDC on Stellar and local cash in participating countries. Always confirm you’re using the official Circle-issued asset.
Can you stake XLM?
Not natively. Stellar has no staking rewards because its consensus does not rely on locked tokens, and the old 1% inflation payouts ended in 2019. Any “XLM staking” product is really lending or a liquidity pool run by an exchange or DeFi app, which carries counterparty or smart contract risk.
Why do I need a memo to send XLM to an exchange?
Exchanges typically use one Stellar address for all customers and use the memo to credit the right account. If you send without the memo, the funds arrive at the exchange but can’t be matched to you automatically, and recovery depends on support. Personal wallet transfers usually don’t need a memo.
Crypto is volatile and risky; this is education, not financial advice. Do your own research.
