What is Stellar (XLM)? Exploring the blockchain network and its powerful native token

Could blockchain and data structuring take financial transactions to the next level? Towards achieving this goal, the Stellar blockchain offers swift, cost-effective financial transactions on a decentralized network, with XLM (Stellar Lumens) as its native token.

The sophistication of Stellar's blockchain — supported by XLM — provides a simplified approach for executing international and cross-asset transactions on the Stellar ledger.

What makes this combination so potent for the future of technology? And how does it open new doors for cross-border transactions? Read on to find out more.


  • The Stellar Network uses Stellar Lumens (XLM) to speed up cross-border and cross-asset transfers, creating fast, cost-effective transactions on a decentralized network.

  • XLM is required for Stellar network operations and acts as a liquidity bridge.

  • The Stellar Consensus Protocol (SCP) powers Stellar's efficiency, making it quicker and more energy-efficient than many blockchains.

  • Stellar connects various financial institutions and payment systems, promoting a universal ecosystem.

  • Stellar offers tools to developers so they can develop on its network, highlighting the practical usage of blockchain technology.

How does Stellar work?

The Stellar network, a blockchain available to the public and built using open-source code, is optimized for fast and inexpensive transactions. It enables smooth connections between the world's monetary systems and currencies. This efficiency is propelled by the Stellar Consensus Protocol (SCP), a unique proof-of-agreement mechanism that makes Stellar faster, cheaper, and more energy-efficient than many other blockchains.

Stellar Lumens (XLM), the native digital currency of the Stellar network, plays a crucial role in maintaining network operations. Unlike other digital currencies that only concentrate on storing and transferring value, XLM plays a significant role in keeping the Stellar network running. It's used as a bridge currency to enable cross-border transactions, provide liquidity, and exchange multiple currencies.

Stellar's capacity to link together different financial organizations, payment services, and people provides a chance for universal, integrated financial services across the world. This isn't only about the exchange of money, but also about providing access to the global financial system, giving everyone, regardless of location, the ability to participate in an inclusive platform.

The features that set Stellar apart — including its SCP protocol for consensus, minimal transaction costs, and focus on interconnectivity and inclusion — make it a major technology in the blockchain space.

Stellar's efforts to provide efficient and affordable financial services, particularly in underserved areas, places it among the leading entities in the DeFi space. The structure of its operations is designed to improve the overall payment ecosystem, making it more open and fair for everyone, aligned to blockchain technology's broader aims.

What's XLM (Stellar Lumens)?

Stellar Lumens, also called XLM, is significant to the Stellar network — a platform created to facilitate digital asset representation and fast payments.

All accounts within the Stellar network must always maintain a minor balance of lumens. This minimal demand is essential for maintaining the stability and efficiency of the network.

Including lumens was a calculated move to make sure the Stellar network remained a fast and reliable payment system. By introducing a minor restriction, such as a minimum balance and a nominal transaction cost, the network can guard against abuse and spam, thereby safeguarding its intended purpose.

Currently, the minimum amount that must be held in an account is 1 lumen, with an extremely low transaction fee of 0.00001 lumen. This provides both convenience and protection.

Quick facts


  • Acts as a native token for the Stellar network.

  • Required in small amounts in each account for network operation.

Network integrity

  • Prevents ledger spamming and misuse.

  • Provides quick and effective payment processing.

Operational requirements

  • Minimum balance: 1 lumen.

  • Per-transaction fee: 0.00001 lumen.

User transactions

  • Over 7.5 million accounts use XLM for transactions.

  • Facilitates smooth money movement between users.

Lumen supply

  • 50 billion lumens exist, and no more will be created.

  • 20 billion lumens in the open market, with 30 billion retained for network development.

How do Stellar and XLM interact?

The interaction between Stellar and XLM is an important aspect of the Stellar network's functioning, particularly for technology integration, smart contracts, and decentralized applications (DApps).

Stellar's use of XLM

  • The Stellar blockchain network uses XLM to facilitate and control activities within its framework.

  • XLM is a digital asset enabling and facilitating transactions and operational needs on the Stellar platform. This combination helps to provide a smooth and effective experience for both users and developers.

XLM's role in Stellar's DApps

  • XLM is an essential element in the world of DApps on the Stellar network, being necessary for carrying out transactions and using smart contracts.

  • XLM supports the execution of smart contracts, making sure transactions within DApps are processed swiftly and reliably.

XLM's influence on Stellar’s performance

  • XLM directly impacts the performance and efficiency of the Stellar network. Its design and integration are vital to maintaining high transaction speeds and low fees, which are Stellar's hallmark features.

  • XLM's low transaction costs make it a popular choice for various financial activities, from small payments to massive transfers.

Stellar has further strengthened its status as a flexible and convenient blockchain platform by incorporating XLM into its core activities. This development allows the platform to support a broad range of DApps and services.

Stellar and XLM use cases

Stellar and XLM are increasingly being adopted by businesses for various applications. Stellar’s blockchain technology offers a decentralized and secure platform for financial transactions, making it an attractive choice for companies looking to enhance their financial operations.

Businesses using Stellar

  • Stellar is considered an ideal choice for international business operations due to its fast and cost-effective processing of cross-border transactions. Companies can use Stellar's features to simplify remittance and payment procedures, lowering the time taken and fees charged by conventional banking systems.

  • The platform's ability to scale and be secure makes it a potential choice for businesses completing a large volume of transactions.

XLM integration in business systems

  • XLM, a digital currency, allows for quick transactions on the Stellar network. Its integration into business systems allows seamless financial exchanges for internal operations or customer-facing services.

  • Businesses can use XLM to enable microtransactions, providing an affordable option for small-scale purchases or services.

Real-world use cases

MoneyGram International

MoneyGram International specializes in financial technology that supports the transfer of money worldwide. The company's adoption of the Stellar network exemplifies the potential for blockchain technology to enhance traditional financial systems:

  • Challenge: Users with limited access or exposure to digital assets.

  • Solution with Stellar: MoneyGram International used the Stellar blockchain to create MoneyGram Access, which offers cash-to-crypto services at their physical locations.

  • Integration with Stellar: The Stellar network is linked through Stellar Ecosystem Proposal-24 (SEP-24), increasing the potential user base.

  • User accessibility: Provides an easy way for users to switch between physical money and digital currency (USDC) without the need for a bank account.

  • Benefits: Quick settlements with low transaction fees, enabled by the Stellar network, improve user experience while enhancing financial inclusion.

This case study highlights MoneyGram International's innovative use of Stellar and XLM to offer accessible financial services, particularly benefiting those in cash-based economies.


Decaf uses blockchain technology focused on remittances and payments to connect digital wallets with point-of-sale systems. Stellar's technology provides support for the platform.

  • Challenge: Latin America and Africa face common traditional banking problems, such as expensive transfer fees, devaluation risks of local currencies, and difficulty accepting international payments. People often convert fiat to crypto for safety but struggle with everyday crypto payments.

  • Solution with Stellar: Decaf, a combination of 'decentralized' and 'café,' provides a convenient payment solution. It focuses on delivering a great user experience and offers cross-border fund transfers and the storage of USDC on the Stellar network to guard against inflation. People can exchange crypto payments into their native currency when necessary, while merchants can receive crypto payments.

  • Integration with Stellar: The use of the Stellar network by Decaf allows for the reduction of costs and improved efficiency, which supports their mission. Integration with MoneyGram Access will allow users to change fiat currency into USDC on the Stellar network and convert it back into fiat currency, all at MoneyGram locations — improving financial accessibility.

  • User accessibility: Using Decaf as a bridge, people with no access to traditional banking can receive financial services similar to those of standard banking systems. This, in theory, can help to make the global economy more inclusive.

  • Benefits: Decaf's use of the Stellar network has led to significant growth, with $200K worth of USDC off-ramped weekly on Stellar, 100% quarter-over-quarter growth in ramps, and usage across six continents.

The case study from Decaf illustrates how Stellar and XLM can be used to provide financial services that are affordable and accessible, especially in places where old-school banking hasn't been able to reach.


Arf, a platform for global liquidity and settlement, illustrates the potential for Stellar's blockchain technology and XLM to disrupt financial systems.

  • Challenge: Traditional banking structures, like challengers and neo-banks, make international payments hard for some users. These institutions typically bring slow transaction speeds and high pre-funding capital requirements, limiting their growth and innovation.

  • Solution with Stellar: Arf introduced a short-term and revolving USDC-based liquidity solution for cross-border payments. The solution allows financial institutions to make same-day settlements, eliminating pre-funding and reducing counterparty risk.

  • Integration with Stellar: Arf uses Stellar Ecosystem Proposal (SEP) 31 to offer liquidity access for cross-border payments to various institutions in the Stellar ecosystem, including remittance companies. This allows Arf to conduct transactions between the US and Mexico without pre-funding requirements.

  • User accessibility: Arf's infrastructure provides a broad selection of financial services, particularly for those with difficulty accessing traditional banking systems. Linking with Stellar's network allows for safe, smooth, and effective financial transactions, broadening the availability of services to more people.

  • Benefits: Since its launch in 2022, Arf has lent over $300 million in USDC, using a $10 million facility. This growth showcases the effectiveness of blockchain and USDC in addressing liquidity challenges and enhancing transaction transparency and efficiency.

Arf's case study highlights Stellar and XLM's transformative potential in addressing complex financial sector challenges, especially with cross-border payments.

Developing with Stellar and XLM

Developing with Stellar and XLM involves a suite of tools and resources used today to create innovative applications on the Stellar network.

Starting with Stellar

  • The Stellar Developer Hub is the go-to place for documentation, tools, tutorials, and support needed for building on Stellar. It offers guidance on creating smart contracts with Soroban and diving into the ecosystem of the Stellar network.

  • Developers would be wise to become well-versed in the Stellar system, especially in Soroban, Stellar's Smart Contract Program. The program has helped to promote originality on the Stellar network.

Understanding Stellar’s framework

  • A key aspect of developing with Stellar is understanding the Stellar Consensus Protocol (SCP). It may be helpful for developers to begin by studying the SCP white paper to understand the workings of Stellar's blockchain.

  • Knowledge of the Stellar Stack, both Testnet and Pubnet, is essential. Developers can use these networks to trial and launch applications securely.

Building smart contracts on Stellar

  • Stellar has tutorials for building smart contract functions. This is especially important for developers who want to add complex operations to their Stellar applications.

Developing with Stellar and XLM requires an understanding of the network’s underlying technology, such as the SCP and Soroban smart contracts, and practical experience gained through testing and deploying applications on the network. The Stellar Developer Hub provides the tools and advice needed for developers of all levels to thrive and make an impact in the Stellar network.

What's next for Stellar and XLM?

The Stellar Development Foundation (SDF) has built a collaborative platform known as the Stellar Social Club that allows Stellar fans to interact, join forces, and communicate. It's an environment where developers, network supporters, and the SDF team can come together beyond the limits of social media and annual get-togethers. The social club places great emphasis on the relationship and trust that exists within Stellar society.

The SDF has presented a new image that aligns more with its mission: "Where Blockchain Meets the Real World." The shift from outer space themes via a rebranding reflects Stellar's focus on practical applications and real-world usage.

The transformation of Stellar to its new brand signals a shift from merely speculating about potential solutions to actively crafting real-world solutions that improve people's lives. The new brand emphasizes Stellar's dedication to addressing concrete issues and backing a broad range of creators, from solo developers to more significant fintech protocols, to establish an accessible and fair ecosystem.

The final word

Can Stellar continue to make cross-border payments more accessible? The Stellar blockchain, which uses Stellar Lumens (XLM) as its native token, points to the potential that exists in this area. Stellar simplifies global and cross-asset transfers by offering rapid, economical transactions on a decentralized network.

What makes Stellar's technology stand out? And how does it change the way we handle international payments? By answering these questions, we can better understand how Stellar is helping to streamline complex operations and expand access to cross-border payments.

This article may cover content on products that are not available in your region. It is provided for general informational purposes only, no responsibility or liability is accepted for any errors of fact or omission expressed herein. It represents the personal views of the author(s) and it does not represent the views of OKX. It is not intended to provide advice of any kind, including but not limited to: (i) investment advice or an investment recommendation; (ii) an offer or solicitation to buy, sell, or hold digital assets, or (iii) financial, accounting, legal, or tax advice. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk, can fluctuate greatly, and can even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition. Please consult your legal/tax/investment professional for questions about your specific circumstances. OKX Web3 features, including OKX Web3 Wallet and OKX NFT Marketplace, are subject to separate terms of service at www.okx.com.
© 2023 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less of this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state:"This article is © 2023 OKX and is used with permission." Permitted excerpts must cite to the name of the article and include attribution, for example "Article Name, [author name if applicable], © 2023 OKX." No derivative works or other uses of this article are permitted.
Related articles
View more
View more