Cryptopedia - Stellar

## What Is Stellar (XLM)? The Stellar network is a decentralized, fast, scalable, and uniquely sustainable blockchain built for financial products and services. The network launched in 2014 with the purpose of connecting the world's financial systems by offering a protocol for payment providers and financial institutions that facilitates near-instant global payments and currency exchanges. In 2024, Stellar released [protocol 20](https://stellar.org/blog/developers/protocol-20-and-smart-contracts-are-live-on-mainnet), enabling full-featured [smart contracts](https://stellar.org/soroban) to the network. The network is transforming international payments and remittances through safer, faster, and more affordable solutions, and connecting real-world assets to [DeFi](https://stellar.org/use-cases/defi) to enable comprehensive everyday financial services. The Stellar network’s native digital currency - Lumens (“XLM”) - is used to pay the network’s transaction fees. (XLM can also be used as an intermediate currency for operations. How it works: the protocol converts money in a few seconds, first into XLM, and then into the requested currency.) Stellar's unique Proof-of-Agreement (PoA) consensus mechanism – the [Stellar Consensus Protocol (SCP) ](https://stellar.org/learn/stellar-consensus-protocol)– differs from both Proof of Stake and Proof of Work. SCP is designed to secure the network through reputation rather than through computing resources or staked crypto tokens. All Stellar validators are required to have a publicly-accessible and verifiable record identifying themselves, building trust within the network. By design, Stellar does not provide onchain financial incentives to run validators, nor does it rely on stake or hash power to secure the network. Instead organizations run nodes for network benefit and collaborate to reach a network-wide agreement about the validity of transactions. Stellar is a proven platform for asset issuance; many well-known institutions select Stellar as their preferred network for bringing [real-world assets ](https://stellar.org/use-cases/tokenization)(RWAs) onchain. The network's speed and low fees, robust asset issuance framework, compliance tools, and anchor network provide financial institutions the infrastructure needed to tokenize assets while maintaining regulatory compliance. This approach has attracted significant RWA volume, with hundreds of millions of dollars in stablecoins, tokenized funds, and other real-world assets flowing through the network daily. It has also led to groundbreaking implementations like Franklin Templeton's BENJI fund, the first U.S. registered money market fund on a public blockchain. Stellar's smart contract platform extends the network's capabilities to support sophisticated financial applications while maintaining Stellar's core principles of efficiency and accessibility. Built with Rust and WebAssembly, Soroban prioritizes performance through features like deterministic concurrency and multi-dimensional fees, enabling complex operations with predictable costs and sub-five-second finality. Security is foundational, with Rust's memory safety guarantees, no-reentrancy design, and an authorization-required framework that makes it difficult to introduce vulnerabilities. Unlike general-purpose platforms, Soroban is purpose-built for financial applications, supporting everything from decentralized exchanges and lending protocols to tokenized assets. This aligns with Stellar's purpose to connect traditional finance with blockchain technology, providing developers the tools to build real-world everyday financial services that are scalable, secure, and accessible to users worldwide. #### In summary, the benefits of the Stellar network include: * Ultra fast low-cost blockchain optimized for scalable payment solutions * A global ramp network that connects digital assets to regulated financial institutions and existing payment rails * Enterprise grade security and features optimized for RWA tokenization * A smart contract platform to build scalable DeFi applications