Stellar Lumens update: what's behind the explosive rise in XLM?
Stellar Lumens surged 94% over the past week.
Stellar Lumens jumped 94% over the past week. A stampede toward the top ten on CoinMarketCap. Almost everyone didn’t see this coming. Right now the project has a market cap of just over $13 billion, putting it at No. 14 among the most valuable cryptocurrencies. A one-off move or the start of a rally?
Stellar Lumens is one of the oldest projects in the space, founded in 2014. And it brings together a lot of partners in one project: IBM, the United Nations, and also Sam Altman, the founder of OpenAI. With cross-border payments, low fees, full transparency, and high speed, Stellar aims to realize its vision — and that even somewhat decentralized. A look at the vision behind the network, its history, performance, and future prospects.
The origins of Stellar Lumens: an alternate path for Jed McCaleb
Stellar Lumens was founded ten years ago and is often called the "little sister of Ripple" because of the similar tech and goals. Both projects even share a founder: Jed McCaleb. He co-founded Ripple but left the project because he felt Ripple was too bank-focused and centralized. His answer? Stellar Lumens.
The development of Stellar is led by the nonprofit Stellar Lumens Foundation. The source code is open source, and Stellar has over the years regularly distributed XLM tokens via airdrops to prevent a small group of holders from gaining too much power. Additionally, the network uses a unique consensus method, the Stellar Consensus Protocol, which uses no mining or staking. Anyone can run a node and participate in the network. Currently there are about 150 active nodes, three of which are operated by the Stellar Lumens Foundation. The design ensures the network keeps functioning even if some nodes are malicious. This makes Stellar potentially less vulnerable and more decentralized than Ripple.
A philanthropic vision with real-world use cases
Stellar focuses on cross-border payments and improving financial access for underserved groups and refugees. In many cases, migrants pay sky-high fees to send money home. Globally, around $900 billion in such transfers were sent in 2023, often with costs of 10% or more. Additionally, the World Bank estimates about 1.7 billion people live without a bank account, mostly in developing countries. In the U.S. too, about 5% of the population doesn't have access to a bank account. Stellar aims to fix these problems by offering fast, cheap financial solutions.
McCaleb said in 2015: "The payments industry hasn’t kept pace with the internet. It works well for people in developed countries, but those paying 10% for transfers or lacking a bank account are disadvantaged." One of Stellar’s solutions is a partnership with MoneyGram, a company with ATMs in more than 180 countries. Through these machines people around the world can withdraw money for free, directly from their Stellar wallets with USDC.
Stellar has rolled out several real-world examples, especially in Latin America and Ukraine. In collaboration with the UN, millions of dollars in aid were distributed to refugees in Ukraine via Stellar. This innovative approach won two awards in 2023. Carmen Hétt, treasurer of the World Refugee Organization, said: "This will completely change how we fundraise."
Strong partnerships and future outlook
Over the years, Stellar has attracted prominent advisors and partners, including Sam Altman (CEO of OpenAI) and Matt Mullenweg (founder of WordPress). The project works with big names like Visa, Mastercard, IBM, and Circle on enhanced cross-border payments. In addition, Stellar has partnerships with central banks in Ukraine, Indonesia, and Brazil.
Stellar also partners with Franklin Templeton, one of the world’s largest asset managers. In 2021, the Franklin OnChain U.S. Government Money Fund was launched, running on Stellar. This fund currently manages about half a billion dollars and collaborates with other blockchain platforms like Polygon.
Franklin Templeton is bullish on Stellar. On a panel he recently said: "15,000 transactions through traditional financial systems cost us $15,000. On Stellar Lumens it costs us only $120." He also noted paying $200 million in transaction costs annually, which would drop dramatically with blockchain technology.
Stellar Lumens as an investment
Right now, more than half of all Stellar Lumens are in circulation, about 30 of the total 50 billion tokens. The total circulating supply grows about 1% per year. The current market capitalization is $15 billion. Stellar Lumens remains roughly 53% below its 2018 all-time high, when one token was nearly $1. The price is currently around $0.44.
While there are no reliable predictions for where the price goes next, the recent growth, network activity, and strategic partnerships suggest Stellar Lumens is being valued again as a long-term crypto project. The team has been steadily working toward the same vision for ten years, regardless of market swings, and is now starting to reap the benefits. How high the price will rise, however, depends a lot on broader market dynamics.
