What is Stellar and how do you claim inflation?
During research for Blockchain Manchester I have take an interest in the Stellar Blockchain and have bullish opinions on how well it will perform in the coming years.
Stellar is a Blockchain platform with a native currency is called Lumens or XLM
Stellar aims to a global payment platform — without the issues and disagreements effecting the current largest crypto-based payment network: Bitcoin.
Stellar is positioning itself to capitalise and capture some of Bitcoin’s lost market share.
Below are some of the reasons why we are bullish on Stellar:
- A working and comprehensive product offering — a must for any Blockchain in my opinion.
- Comprehensive documentation and tooling — having a strong API and developer centric platform in my opinion is a great benefit to any blockchain. See www.stellar.org
- A wide range of official SDKs in multiple mainstream languages such as Java, JS, .Net, Go, Python & Ruby. Reducing the barrier to entry especially for the enterprise customer.
- Strong partnership with IBM — currently hosting many of the validating nodes around the world as well as testing cross border payments with Stellar. See dashboard.stellar.org
- Built in support for decentralised exchanges and custom token of fiat pegs. Stellar Term, is already live. FairX, another decentralised exchange, is set to launch in 2018 which is rumoured to also use Stellar base pairs aiming to help financial institutions address the processes of universal cross-border payments.
- Several ICOs are planning on using Stellar in 2018 as well as some which already have. See stellar.org/blog/using-stellar-for-ico/ for more details on using Stellar as an ICO platform.
- Quick transaction times & low fees — Our initial testing moving currency around wallets and between addresses validates this claim but as the network grows this must scale. Also on Stellar’s website, stellar.org/blog/using-stellar-for-ico, it compares costs and transaction times against Ethereum however these look slightly inflated. If you are looking for pure payment processing this Blockchain it should definitely be considered.
It is early days for Stellar but if they can carry on delivering like they have and the claims about transaction times and cost remain low, its in a good position to become a leading Blockchain payment processing and ICO platform.
Disclaimer: I am not a financial advisor. This post should not be used as financial advice.
How does Stellar Inflation work
Stellar does not use proof-of-stake (PoS) like Qtum or Ethereum's soon to be released Casper PoS implementation or proof-of-work like how Bitcoin & Ethereum currently does. It also does not use a dividend reward system such as Neo’s Gas generation. So you are asking how do you recieve rewards, the answer is inflation.
The Stellar distributed network has a built-in, fixed, nominal inflation mechanism. New lumens are added to the network at the rate of 1% each year. Each week, the protocol distributes these lumens to any account that gets over .05% of the “votes” from other accounts in the network.
Basically every week, once you are setup to receive inflationary rewards, you account will be debited with XLM. Distribution of inflation and any fees used on the network is based on the voting power you possess, the number of votes is based on the number of Lumens, XLM, you own. The minimum amount of you need to vote is 0.05% of all Lumens in existence which for most XLM owners will mean joining a pool which many will also charge you for the privilege e.g. 10% of any rewards earned.
This is .05% of the existing lumens, the minimum amount of votes needed to get any part of the inflation pool.
There are several populatar inflation pools but I am not going to endorse any specific pools however ensure you always do your research and never give out your private keys to these pools!
Many will view this distribution mechanism in as negative, calling it out as a form of centralisation, i.e. the rich get richer, but this is a subject not for this post and something we can discuss in the later post if people are interested. Next I will cover how to actually join a pool and claim inflation.
How to receive Stellar Inflationary Rewards
- First you must move your XLM from an exchange and into a wallet. I use the basic official Stellar web wallet — https://www.stellar.org/account-viewer/#!/
- Once moved, visit https://www.stellar.org/laboratory/, ensuring you are on the public network — selecting “Transaction Builder”
- Enter your public Stellar address i.e. your public stellar wallet address.
- Once entered click “Fetch next sequence number for account starting with “ — — — — ”” If this fails ensure you are on the public network. The sequence number is used as part of the weekly scheduling mechanism and will fail if this is wrong.
- Next select “Set Options” from “Operation Type” — this then presents you with full configuration options for signing a operation.
- Almost all options can be ignored but you need to then enter the “Inflation Destination” of the pool you are joining. Often found on the landing page for the pool.
- After entering the pools address you must then send and sign this transaction by clicking “Sign in Transaction Signer” e.g.
- After this you are presented with a screen to either connect to your Ledger S or enter your Secret Key — this is the only time you will need to enter your secret key in the process. No inflation pool should EVER ask you for your secret key!
- You will also see an overview of the transaction and notice a small fee for submitting it, these are the fees which are distributed as part of the weekly inflation distribution process.
1/10000000 or 0.0000001 XLM- Clicking “Submit” will then post your transaction to the network and you will have joined a inflationary pool.
- You should be able to see the submitted transaction when viewing your account e.g. stellarchain.io/address/[your public address]
That’s all you need to do to enable receiving inflationary rewards via an XLM inflation pool.
Checking your account in a few weeks time you will hopefully see some additional XLM on you balance. If you have XLM then there is no reason not to do this unless you plan of day trading or spending the XLM.
Hopefully this helps you out, if so please feel to give me a clap!
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