Stellar is a network optimized for fast transfers and for issuing/exchanging assets (e.g., stablecoins) with low fees. Its strength is payment use cases and the on/off-ramp infrastructure via partners and services.

Why is XLM needed if you can transfer stablecoins on the network?

XLM is the network’s utility asset: it pays fees and is required as a reserve (minimum balance) for an account to exist; XLM is also sometimes used as an intermediate asset when swapping.

What’s the main criticism of XLM as an “investment”?

The “value capture” issue: the network can be heavily used, but the direct need to hold a lot of XLM is limited (fees are very low and only a base reserve is required). So more usage doesn’t always translate into a higher XLM price.

Why did many people distrust Stellar’s tokenomics in the past?

Because of the former inflation model and how it was distributed. Eventually, the community/ecosystem moved to disable inflation at the protocol level.

Why was so much XLM burned in 2019, and how did it affect supply?

The SDF burned 55B XLM and reworked the distribution programs. After that, total supply became ~50B and protocol inflation was disabled — no new XLM is minted “by network rules.”

What was the backlash around XLM “airdrops”?

Stellar is an open validator network, but the Stellar Development Foundation (SDF) has historically played a major role in development, ecosystem funding, and communications. Some market participants see this as “manual influence” and a reputational risk. Large airdrops also attracted spam and fake accounts; the Keybase case ended early due to abuse, hurting Stellar’s airdrop reputation.

Why do exchanges often require a MEMO for deposits, and what happens if you forget it?

Exchanges often use one address for many users and identify deposits by MEMO. Without a MEMO, a deposit may not be credited automatically and may need support to resolve.

What is Soroban, and does it change Stellar’s core purpose?

Soroban is smart contracts on Stellar (not a separate blockchain): it adds DeFi/apps on top of the network, but doesn’t replace Stellar’s payments layer.

What is Stellar (XLM)

Stellar is a blockchain platform for fast, low-cost transfers and settlements between currencies/assets, with built-in support for exchange and “bridge” operations. XLM (lumen) is used to pay network fees and can also serve as an intermediate asset for swaps.

Launch 31.07.2014 Stellar (native)

Who created it

Jed McCaleb, Joyce Kim, Stellar Development Foundation (SDF)

Why it was created

The goal is to create an open payment network for global transfers and asset exchange with low fees and fast confirmation, to simplify cross-border settlements and enable the issuance and circulation of tokenized assets.

How it’s used

Paying network fees in XLM
Maintaining the account minimum balance (reserve) in XLM to protect the network
Fast XLM transfers between wallets and exchanges
“Bridge” asset for conversion/swaps via built-in exchange and routing mechanisms
Settlements using stablecoins and tokenized assets issued on the Stellar network
Integrations with payment services and providers (remittances/payments/fiat cash-out via partners/issuers)

Risks

Centralization and “manual steering” of the XLM economy by the SDF (major decisions on rules/distribution can abruptly shift market expectations).
Historical distrust due to the former inflation model: a large share of inflation payouts effectively went to the SDF, which was perceived as an unfair distribution.
Perceived supply actions as potentially manipulative: burning 55B XLM and resetting the foundation’s strategy were seen by some as “tuning supply to price/narrative.”
Risk of disappointment from “big partnerships”: corporate initiative announcements may not reach the expected scale.
Weak link between “network usage growth” and “XLM price growth”: fees are tiny and the practical need for XLM is limited to the network’s minimum requirements.
User experience depends on “anchors” and on/off-ramp providers (compliance limits, freezes, service denial) — complaints often hit the whole ecosystem, including Stellar.

FAQ

What is Stellar?: Stellar is a network optimized for fast transfers and for issuing/exchanging assets (e.g., stablecoins) with low fees. Its strength is payment use cases and the on/off-ramp infrastructure via partners and services.
Why is XLM needed if you can transfer stablecoins on the network?: XLM is the network’s utility asset: it pays fees and is required as a reserve (minimum balance) for an account to exist; XLM is also sometimes used as an intermediate asset when swapping.
What’s the main criticism of XLM as an “investment”?: The “value capture” issue: the network can be heavily used, but the direct need to hold a lot of XLM is limited (fees are very low and only a base reserve is required). So more usage doesn’t always translate into a higher XLM price.
Why did many people distrust Stellar’s tokenomics in the past?: Because of the former inflation model and how it was distributed. Eventually, the community/ecosystem moved to disable inflation at the protocol level.
Why was so much XLM burned in 2019, and how did it affect supply?: The SDF burned 55B XLM and reworked the distribution programs. After that, total supply became ~50B and protocol inflation was disabled — no new XLM is minted “by network rules.”
What was the backlash around XLM “airdrops”?: Stellar is an open validator network, but the Stellar Development Foundation (SDF) has historically played a major role in development, ecosystem funding, and communications. Some market participants see this as “manual influence” and a reputational risk. Large airdrops also attracted spam and fake accounts; the Keybase case ended early due to abuse, hurting Stellar’s airdrop reputation.
Why do exchanges often require a MEMO for deposits, and what happens if you forget it?: Exchanges often use one address for many users and identify deposits by MEMO. Without a MEMO, a deposit may not be credited automatically and may need support to resolve.
What is Soroban, and does it change Stellar’s core purpose?: Soroban is smart contracts on Stellar (not a separate blockchain): it adds DeFi/apps on top of the network, but doesn’t replace Stellar’s payments layer.