Stellar (XLM): The High-Speed Blockchain Protocol for Global Payments and Smart Contracts

Stellar (XLM) is an open-source, decentralized blockchain protocol specifically engineered to facilitate fast and cost-effective cross-border payments and asset transfers. Designed as a public network for financial infrastructure, it connects banks, payment systems, and individuals, enabling seamless value exchange across borders with transaction confirmations in 3-5 seconds at a fraction of a cent. The native digital asset, XLM (Lumens), serves as the network's bridge currency and anti-spam mechanism.

Core Technology: The Stellar Consensus Protocol (SCP) and XLM's Role

Unlike proof-of-work or proof-of-stake blockchains, Stellar operates on the Stellar Consensus Protocol (SCP), a unique, energy-efficient federated Byzantine Agreement model. SCP allows for decentralized, fast, and secure transaction validation without relying on a closed validator set. Within this system, XLM plays two pivotal roles: it acts as a bridge currency to facilitate trades between different assets (like fiat currencies) and is used to pay minimal transaction fees, preventing network spam.

From Payments to Programmable Finance: The Soroban Smart Contract Era

A monumental upgrade arrived with Stellar Protocol 20, officially launched in February 2024. This update introduced Soroban, a developer-friendly, scalable smart contract platform built directly into Stellar. Soroban supports popular languages like Rust and JavaScript, allowing developers to build decentralized applications (dApps), complex financial agreements, and DeFi protocols on Stellar for the first time. This marks a strategic expansion from a focused payment rail to a versatile platform for programmable finance.

Founded for Financial Inclusion: A Brief History

Stellar was co-founded in 2014 by Jed McCaleb (also a co-founder of Ripple) and lawyer Joyce Kim with a mission to promote financial inclusion. The non-profit Stellar Development Foundation (SDF) oversees the protocol's development. The launch of Soroban represents its most significant evolution, positioning Stellar to attract a new wave of developers and use cases while enhancing its core utility for efficient, global value transfer.

Important Note: This overview is for informational purposes only, detailing the Stellar protocol's technology and features. It is not intended as, and should not be construed as, financial or investment advice. Cryptocurrency investments are volatile and involve risk.