Analysis of Stellar (XLM)
Stellar is a platform that aims to make it easy to move digital assets around the world quickly and reliably.
The Stellar protocol is created in a way that allows for many microtransactions while maintaining high transaction throughput. Stellar is the platform and Lumens are the tokens used to transfer assets.
They are attempting to solve the problems of reducing remittance and micropayment cost. Currently it is very expensive to send money from one part of the world to another. For instance, if I work in one country and want to send money to my family living in another, it would cost on average about 7% of the total to send it (via remittanceprices.worldbank.org). Stellar attempts to fix this problem by connecting with banks and allows users to turn their fiat transaction into a digital one. They also allow for large amounts of microtransactions since each transaction fee is .00001 Lumens (which is about 250,000 transactions for a dollar). Sending a remittance every day would cost less than a dollar in a lifetime.
Stellar uses a consensus method called the Federated Byzantine Agreement, which means that different nodes on the network can each validate different transactions at once and will eventually come to an agreement over certain transactions. One node will validate a transaction and broadcast it. A second node will also accept the transaction. Then a third accepts it, and this continues until eventually enough nodes accept it (51%) and it gets added to the ledger. Stellar is the only well known coin that is currently using this method of consensus and is doing so successfully.
Their roadmap for 2018 is full of great additions:
- SDEX: This is the Stellar decentralized exchange. It will be built to allow the tokens launched on top of Stellar to be tradeable against each other, and against Lumens. They want to have low fees and also users controlling their own private keys.
- Lightning on Stellar: They want to add the lightning network to their platform which would help the platform scale long term. They also want to make it easier to run a full node on the Stellar network and they think adding lightning will help solve this problem.
My Thoughts:
I had not done much research on Lumens prior to this write up and had heard only negative opinions. After reading the white paper and understanding it better, I think it is much more suited to tackle the task Ripple is trying to tackle. The fact that it has over 30 developers, working APIs and wallets are a huge plus.
What I would look for if I were to invest:
- Their decentralized exchange actually works and can be used at scale.
- There continues to be ICOs launched on the platform and they partner with more businesses to bring real world use case to their platform.
Additional Resources:
Please note: all opinions I have expressed are my own.
