Stellar is an open-source, blockchain-based platform that facilitates fast and cost-effective cross-border payments between multiple different currencies. In a manner that is similar to how Ripple company’s XRP-based transactions are conducted, Stellar’s payment system uses a distributed ledger technology (DLT)-enabled network to transfer value between two different parties.
Initially launched by crypto entrepreneur Jed McCaleb as a fork of Ripple’s real-time gross settlement protocol, the Stellar network uses a native cryptocurrency, called lumen (XLM), to perform all operations on its platform.
As explained in a blog post published on Blockchain.com, XLM-based transactions are registered on a shared, public blockchain network, which consists of a distributed database management system that’s accessible to everyone throughout the world.
Stellar Consensus Protocol Optimized for “Safety Over Liveliness”
Consensus among (transaction) validator nodes on the Stellar network is achieved through the platform’s unique Stellar Consensus Protocol (SCP). As noted in its technical documentation, the SCP allows network participants to reach consensus regarding the validity of transactions without “relying on a closed system” to verify financial information.
According to its developers, the SCP has been implemented by using “provable safety properties” which optimize the distributed payment network for “safety over liveness.” The SCP safeguards against potential security vulnerabilities including partitions and malicious conduct by misbehaving nodes.
In instances involving dishonest nodes, the Stellar network’s progress is suspended until consensus is achieved through the SCP. As mentioned in its specification document, the SCP has been developed to allow for decentralized control, “asymptotic” security, low latency, and “flexible” trust.
Validity of Transaction Determined Within Seconds
Stellar’s distributed consensus mechanism enables quick and low-cost payments - while allowing all network participants to reach agreement regarding the validity of transactions within “a few seconds.”
Participants on the Stellar platform, referred to as nodes, may add XLM transactions to the network’s globally accessible ledger. This process requires that each node select its own “mini-network” of other trusted Stellar nodes that have reached agreement about the transactions they have submitted.
As noted in its technical document, the Stellar blockchain is able to reach consensus “very quickly” about which transactions to approve and record on the platform’s ledger. According to its developers, the mini-networks, known as quorum slices, must continue to overlap so that the Stellar network nodes can reliably verify transactions.
Processing “Thousands” of Transactions Per Second (TPS)
The value of the Stellar blockchain and its native XLM cryptocurrency is derived from the ability of its network to effectively function as a global exchange platform. As explained by its development team, the Stellar network can host “thousands” of exchanges between multiple currencies and crypto tokens per second.
Converting between fiat money and cryptoassets can be quite costly and also require relatively long periods of time before transactions are settled. However, transactions made through the Stellar network, which uses XLM as its base currency, allow for significantly faster settlement times.
$125 Million XLM Airdrop to Blockchain Wallet Users
In early November 2018, the management at Blockchain.com, a crypto wallet and block explorer service provider, revealed that it would be conducting the largest airdrop in the “history of crypto.”
The leading London-based crypto wallet company announced that it would distribute $125 million in XLM tokens to Blockchain wallet users. According to CryptoCompare data, the market capitalization of Stellar’s XLM tokens currently stands at over $2 billion with each token trading at around $0.103456 (at the time of writing).
Spreading Awareness, Accelerating Crypto Adoption
As explained by Blockchain.com’s management, the extremely large XLM airdrop was conducted in order to give each Blockchain wallet user the opportunity to receive their first $20 in cryptocurrency. McCaleb, the Chief Technical Officer (CTO) at the Stellar Development Foundation (an organization that focuses on accelerating the growth of the Stellar platform), noted that cryptocurrency airdrops help in creating a more “inclusive digital economy.”
San Francisco-based cryptocurrency exchange, Coinbase also provides the opportunity to acquire XLM tokens. By participating in the Coinbase Earn program, people can learn about how the Stellar network and its base currency work - while earning as much as $50 in XLM.
IBM Launches Cross-Border Payments Solution on Stellar Network
On March 18, 2019, tech giant IBM announced the launch of “IBM Blockchain World Wire,” a project that the New York-based firm had first introduced in September 2018. As described by its development team, the World Wire platform is designed to serve as a blockchain-enabled cross-border payments network.
Notably, IBM’s DLT-based, international payments platform has been developed on the Stellar network. According to IBM’s technical team, the traditional cross-border funds transfer system is highly inefficient as it involves too many third-parties and a separate clearing and settlement process.
By implementing a new payment network on the Stellar platform, IBM’s developers claim that most transactions can be cleared in “real-time.” This, as the Stellar blockchain and its native currency, XLM, allow users to reliably settle transactions by using clear “payment instruction messages.”
Stellar Network Goes Down for 2 Hours
On May 15, 2019, the Stellar network went offline for approximately 2 hours. During this time period, no new transactions were added to Stellar’s blockchain and the outage was only noticed by network participants that had been running validator nodes.
On May 16, 2019, the Stellar Development Foundation (SDF) published an incident report in which it confirmed that the XLM ledger’s state managed to remain “safe and consistent” across the DLT-powered cryptocurrency platform.
Representatives at the SDF acknowledged that the outage was “highly undesirable”, however user funds reportedly remained safe while the network went down. The SDF also clarified that users’ account balances were not affected by the fork (network upgrade) - which was carried out to ensure that the platform would operate reliably in the future.
According to its developers, the Stellar network outage indicated that the platform “needs better tooling around uptime.” The development team also claimed that the functionality of the Stellar network had returned back to normal.
Future updates to the Stellar blockchain will focus on implementing improved status monitoring for transaction validators, the SDF noted. It added that the process for restarting an XLM validator node (after it goes down) should be made a lot simpler.