What’s Stellar (XLM): A Beginner’s Guide

The current financial infrastructure comprises siloed systems with huge gaps between each other. This means financial organizations cannot share data freely with each other, making for time wastage and high transaction costs. It means that money moves slowly across borders, leaving people stranded. This system has led to the exclusion of millions of people from the global financial system. 

To remedy this, the world needs a global, and affordable financial infrastructure that’s not only innovative but also safe. Such a system would be open to anyone as long as they have an internet connection. Organizations everywhere can take advantage of such a system to provide low cost and more inclusive financial services. 

Stellar is a network that wants to help achieve this. It utilizes blockchain tech to provide a decentralized system where all this is possible. Decentralization eliminates a single point of failure such that such a network wouldn’t go down even if some computers malfunctioned or came under attack. It also means that there’s no single authority controlling transactions, removing the possibility of financial censorship or arbitrary decision-making. It also ensures the integrity of transactions because network participants together decide the authenticity of transactions. 

Let’s explore the inner workings of Stellar and how exactly it achieves this. We’ll also get a look at the platform’s native cryptocurrency – Stellar Lumens.

Understanding Stellar

Stellar is a blockchain-based and decentralized network that brings together various players of the finance ecosystem to provide affordable, safe, and timely transfer of value. From the Nigerian naira to the Peso to the Australian Dollar and every currency in between. The Stellar team says its goal is to help even small companies have “the power and reach of an international bank.”

How Does Stellar Work?

Like any distributed network, the Stellar network is run and secured by thousands of computers across the globe. Behind these computers are both individuals and organizations that keep track of all network activity. 

Stellar relies on several components to execute its goals. Let’s take a look at some of the most important ones below.

1.  Anchors

Anchors are entities on the Stellar network that serves as a bridge between various currencies and Stellar. It’s a swap of sorts through which you convert your money into a form compatible with the Stellar blockchain. Anchors facilitate the near-instant transfer of funds, meaning you do not have to wait for hours of days like it is with traditional systems like Banks and PayPal. It also removes the friction associated with old school cross-border transfers.

2.  Distributed Exchange

In addition to facilitating the movement of value, the network also supports a distributed exchange that gives users the option to exchange various currencies. Stellar does not control the exchange rates – these have already been determined by the party initiating the transaction. 

Let’s say you wanted to exchange AUD for USD. You would place that order in the network’s order book, which would then enter the global pool of such orders. You’d then check how your order compares to similar orders. All types of currencies go – whether it’s Fiat, crypto, or Fiat trading pairs.

3.  Multi-currency Transactions

Like we mentioned before, the Stellar network supports the cross-border transfer of assets without the friction prevalent with old school payment systems. It achieves this through either of the following ways: 

Stellar matches the order with an existing offer in the order book and automatically executes the transaction

Stellar utilizes Lumens as the go-between the two currencies. Let’s say you’re converting the South African Rand to the New Zealand dollar. Stellar will convert the Rand to Lumens, and then convert the Lumens to the New Zealand dollar 

If there’s no matching pair for the two currencies, the protocol will scour the network for any offer that will facilitate a chain conversion that will finally yield the currency you want (e.g., AUD to JPY, JPY to KRW, KRW to USD, USD to CHF). 

This automated process creates a fast, affordable, and seamless process through which you can easily swap from virtually any currency to another on a global scale.

Stellar’s Federated Byzantine Agreement

Stellar utilizes a consensus mechanism known as the Federated Byzantine Agreement. Unlike with proof of work or proof of stake, this mechanism does not rely on mining or chosen participants to validate transactions. Rather, it utilizes ‘quorum slices’ (a subset of nodes) to complete transactions. 

Each node on the network chooses, individually, which other nodes to trust. This will then create a subset of nodes that trust each other. When a transaction is approved by all nodes in a subset, it’s added to the blockchain. This protocol allows for near-instantaneous transactions – Stellar is said to handle up to 1,000 TPS. 

Who is Using Stellar?

Stellar has racked up impressive achievements in the partnerships department. In 2017, the project entered into a partnership with IBM to create remittance corridors in the South Pacific region. 

The project has also partnered with Norway-based fintech company Saldo to facilitate quick and cheap remittances. Another platform is East Africa-based Clickpesa, which facilitates automated and low-cost payments for products and services. 

This is just a snapshot of the tens of varied partnerships between Stellar and Fintech companies all over the world. 

Lumens (XLM), Stellar’s Native Token

The native token of the Stellar network is known as Lumens, with ‘XLM’ as the ticker. 100 billion Lumens were created at the beginning, and their distribution was as follows: 

  • 5% for operational costs
  • 50% for the direct signup program
  • 25% for the partnership program
  • 20% was allocated for the Bitcoin program

As of August 8, 2020, XLM traded at $0.102267 with a market cap of 2.01 billion which made it the 14th largest cryptocurrency in the world. It has a 24-hour volume of $418, 941, 195, a circulating supply of 20, 525, 399, 964, and a total supply of 50, 001, 803, 785. The coin’s ever highest and lowest price was $0.938144 (Jan 04, 2018) and $0. 001227 ( Nov 18, 2014) respectively. 

Buying and Storing XLM

You can purchase XLM from a variety of trusted exchanges such as Binance, Huobi, Coinbase Pro, OKEx, HitBTC, Bitrue, BitHumb, OKEx, Kraken, HotBit, BitZ, Bitfinex, CoinHe, and BitForex. In most of these exchanges, you’ll find the coin paired with BTC, ETH, USDT, and USD and BNB. 

For storage, the Stellar team recommends the following wallets: Curv, Tangem, Lobstr, Ledger Nano, StellarX, Lumenshine, Stellaport, OwnBit, StellarTerm, and 

Closing Thoughts

Stellar has a simple yet powerful approach to the decentralization of finance. It’s not just versatile, but also supports a variety of innovative use cases. Individuals and entities alike can make payments, send money across borders, and exchange currencies in real-time. The Stellar blockchain is built for the common people, and it’s gratifying to see its rack of partnerships – a signal that its product is working. It will be interesting to watch the growth of Stellar. 

Forex Assets

What Should You Know About The ‘XLM/USD’ Crypto Fiat Pair


XLM is the abbreviation for Stellar. This cryptocurrency was founded in 2014 by Jed McCaleb. Stellar is also a payment technology that was created mainly to connect financial institutions and reduce the costs for cross-border transfers.

Stellar is actively traded in the market against fiat currencies and other cryptocurrencies. In this article, we shall be analyzing Stellar against the US dollar, abbreviated as XLM/USD.

Understanding XLM/USD

The price of XLM/USD depicts the value of the US Dollar that is equivalent to one Stellar. It is quoted as 1 XLM per X USD. For example, if the value of XLM/USD is 0.073264, then each stellar is worth 0.073264 US dollars.

Note: The price is considered from coinbase exchange.

XLM/USD Specifications


It is the athematic difference between the bid and the ask price managed by exchanges. It varies based on the type of execution model used by exchanges.

Spread on ECN: 450 pips

Spread on STP: 520 pips


A Fee is nothing but the commission on the trade. It is charged only on ECN accounts, and there is no fee on STP accounts.


The difference between the trader’s intended price and the broker’s executed price is called slippage. It varies based on the volatility of the market and the exchange’s execution speed.

Trading Range in XLM/USD

The trading range is simply the illustration of the pip movement in a pair for different timeframes. With these values, a trader will know how long they have to wait for their trade to perform. Also, they can calculate approximate profit/loss on a trade beforehand.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XLM/USD Cost as a Percent of the Trading Range

The following tables represent the total cost variations for ECN and STP accounts. It represents how the costs vary with the change in volatility.

ECN Model Account

Spread = 450 | Slippage = 70 |Trading fee = 50

Total cost = Slippage + Spread + Trading Fee = 70 + 450 + 50 = 570

STP Model Account

Spread = 520 | Slippage = 70 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 70 + 520 + 0 = 590

Trading the XLM/USD

It is a known fact that cryptocurrency is a 24-hour market and is traded even during the weekend. However, this does not mean we can enter any time to pull out a trade from it. Though many traders do this, it is not a professional approach. Using the volatility and cost variation values, we can determine the ideal times to trade this pair.

The pip values seem to look really large, but it doesn’t indicate high volatility. This pair is as volatile as other major cryptocurrencies. From the cost table, it can be ascertained that the values are large for lower volatilities that decease as the volatility increases. So, traders who are concerned with high costs can trade during the times when the volatility high. However, they must be cautious about the risk involved in it. On the other hand, traders who wish to have an equilibrium between the two, then they may trade when the volatility is around the average values.

Furthermore, trading via limit and stop orders also reduces costs by a good number. In doing so, the slippage will be taken off of the total costs. So, in our example, the total cost would reduce by 70, which is quite a decent reduction.