What is Stellar (XLM) and what is it used for?

Stellar lumens, or XLM, are the native token of the Stellar network, a public blockchain designed for moving money and issuing digital assets. Stellar's own FAQ describes it as purpose-built for financial products and services. People and businesses use it to send payments, hold stablecoins like USDC, and convert between currencies.

What is the Stellar Development Foundation?

The Stellar Development Foundation (SDF) is the nonprofit that supports the network. Its mandate page says it has no shareholders and that its mission is to widen access to the global financial system using Stellar. SDF builds tools, funds projects and promotes the network, and it dates its work to 2014.

SDF also holds a large share of lumens for those purposes. Its mandate page lists billions of XLM across development, growth, product and liquidity accounts, with balances that change over time. According to Wikipedia's profile of Jed McCaleb, he co-founded SDF with Joyce Kim in 2014, and the network launched on July 31 that year.

What is XLM used for?

Stellar's developer docs give lumens two main jobs. First, every transaction carries a small fee in XLM, which keeps people from flooding the ledger with spam. Second, each account must hold a minimum balance, currently two base reserves of 0.5 XLM each, or 1 XLM. Extra items like trustlines and open offers each add another 0.5 XLM.

Lumens are not mined. The docs explain that 100 billion XLM were created at launch, a 1% yearly inflation ran for about five years, and validators ended it in October 2019. Over 55 billion XLM were later sent to accounts nobody can access, most of it by SDF in November 2019. That leaves roughly 50 billion in existence.

Stellar uses the Stellar Consensus Protocol rather than mining or staking, and new ledgers close about every five seconds. It also supports smart contracts through Soroban, written in Rust. For how this compares to other designs, see what a consensus mechanism is.

How are USDC payments made on Stellar?

Circle lists USDC as a native Stellar asset. Circle's page says USDC on Stellar is used for low-cost cross-border payments, bulk payouts, and moving between cash and crypto through on and off ramp providers. To hold USDC, a Stellar account opens a trustline to the asset, which adds to its minimum XLM balance. For background, see what a stablecoin is.

What is the difference between Stellar and XRP?

The two are often compared because of shared history. Jed McCaleb helped found Ripple, the company tied to the XRP Ledger, and left his active role there in 2013 before co-founding Stellar. Both networks focus on payments, have pre-created supplies, and use agreement among trusted validators instead of mining.

The differences are mainly in who runs them and how. Stellar is backed by a nonprofit foundation, while XRP is closely linked to Ripple, a technology company. They run separate software and separate tokens. Read what XRP is for that side of the comparison.