Step-by-Step Guide to Stellar

Stellar Guide


Where Stellar came from?

Stellar was created in 2014 by business partners Jed McCaleb and Joyce Kim. McCaleb was the founder of crypto exchange Mt. Gox and co-founder of the payment protocol Ripple, which he left due to conflicts about the future of the project.

Along with the Stellarn network, the team also launched the Stellar Development Foundation. Stripe CEO Patrick Collision collaborated on the nonprofit corporation, and Stripe provided $3 million to Stellar in exchange for 2% of the initial launch (2 billion XLM).

The Stellar Development Foundation is the organization behind Stellar. It supports the network’s technical and business communities, maintains the codebase, and releases regular reports on the Stellar network.

How does Stellar work?

At its most basic, Stellar is a system for tracking ownership. Like accountants have for centuries, it uses an immutable ledger to do so, but Stellar’s innovation is that there is no actual accountant. Instead there’s a network of independent computers each checking and rechecking the work of the others. Stellar is a system without a central authority,meaning no one can stop the network or secretly adjust the numbers to his or her liking. Yet, even without a central authority, the Stellar ledger is verified and updated every five seconds.

This is made possible by a unique algorithm called the Stellar Consensus Protocol (SCP), which keeps everything in sync via Proof-of-Agreement (PoA). There are many ways to get agreement, or achieve consensus, across a decentralized system—Bitcoin’s visionary Proof-of-Work method was the first and is still the most famous. But, like many first drafts, Proof-of-Work left room for improvement. PoA and SCP strive to be better by being configurable, fast, and highly energy efficient. If you’re interested in the details, you can read our Proof-of-Agreement explainer to see how PoA works or the SCP peer-reviewed paper, published by SOSP (the oldest and most prestigious systems conference), for complete technical details.

To give a high-level overview of SCP, here’s how it works. For every account holder, Stellar’s ledger stores two important things:

What the account holder owns (account balances, like “100 USDC” or “5000 XLM”)

What the account holder wants to do with what he/she owns (operations, like “send 100 peso tokens to so-and-so’s account”)

All the balances and operations are broadcast to the entire network and resolved every five seconds. In order to accomplish this, computers called nodes run Stellar’s core software and therefore publish and check the ledger.

For example, when you send someone an euro token on a Stellar-built app, the nodes check that the correct balances were debited and credited. Then each node makes sure every other node sees and agrees to the transaction. Once consensus has been achieved, the details of the transaction are published to the ledger.

Stellar is currently verified by hundreds of nodes across the globe; the nodes and how they communicate is public information, and anyone can install Stellar Core – an implementation of SCP – to join the consensus process. This is different from how accounting works at a centralized institution, where a single authority unilaterally decides what happens, more or less in secret.

Right above this core layer sits a powerful API called Horizon so that you don’t have to understand the particulars of SCP in order to build on Stellar. Simple, well-documented functions allow you to move digital assets using models that you’re used to. It’s very easy to transact between accounts, make markets, and issue assets.

Can I make passive income with Stellar?

It’s possible to generate passive income with Stellar through the Ultra Stellar product. Ultra Stellar is built on the Stellar network and issues the following yield-generating tokens:

  • yXLM
  • yUSDC
  • yBTC
  • yETH

Each yield-generating token is backed 1-to-1 by the corresponding token. For example, 1 yXLM is backed by XLM.

Ultra Stellar lets you swap your regular tokens for yield-generating tokens and earn interest on them. If you have XLM, you can exchange it for yXLM and start earning daily interest payments. If you want to switch back and convert your yXLM to XLM, you can do so at any time.

Is Stellar a good investment?

Stellar is often considered to be an underrated cryptocurrency investment. It demonstrates real-world usability and has established some excellent partnerships. The Stellar network is growing, with the number of year-over-year payments jumping by 378% from 2020 to 2021.

Like other cryptocurrencies, Stellar is volatile, and there’s no guarantee that it will be a long-term success. One potential concern is that Stellar has similar uses to the Ripple payment protocol, but Ripple’s native cryptocurrency, XRP (CRYPTO:XRP), has a much bigger market cap.

Ultimately, the decision to invest in Stellar depends on what you think of its future as a payment network and the team behind it. If you believe that blockchain technology is the future of cross-border payments, then Stellar could be a good choice.

How To Choose a Stellar Wallet?

Stellar is a large, well-known cryptocurrency that is supported by many different wallets. Each user, depending on their needs, must determine the wallet that’s right for them.

Kriptomat offers a secure storage solution, allowing you to both store and trade your XLM tokens without hassle. Storing your XLM with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling XLM, or exchanging them for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

Stellar Mining

Due to a fixed total supply and the maximum amount of XLM already in circulation, Stellar does not have any form of mining or staking.


Stellar is a cryptocurrency that tries to act as a cross-border payment system for any digitized asset or currency. Most people look at it as a decentralized XRP aimed towards consumers, rather than institutions.

What Gives Stellar Value?

While Stellar has first rolled out with the intention to have a 1% inflation per annum, its economy changed over the years.

As of late 2019, the 1% per year subsidy is no longer in force, as Stellar users voted in favor of ending the programmatic supply increases. The Stellar Development Foundation also took steps to regulate the XLM economy that year by choosing to reduce its share of the XLM supply.

In addition to its finite supply, Stellar derives value from the use cases it currently has – as well as its ability to transfer digital assets across borders cheaply and efficiently.


How Is Stellar (XLM) Different From Ripple (XRP)?

Stellar is a network very similar to XRP, both in terms of use case and the person who founded them. Both of these digital currencies were created by Jed McCaleb. McCaleb has, after leaving Ripple, taken more of a bottom-up approach with XLM, rather than the top-down approach of its predecessor.

In essence, XLM is a decentralized, permissionless, peer-to-peer cross border-payment version of XRP.

Is Stellar (XLM) Anonymous?

Stellar transactions have a certain level of anonymity, but are not anywhere near privacy coins’ anonymity features. Therefore, it can be put in the same category as Bitcoin, as it is pseudonymous rather than anonymous.

Do I Need To Wait for Confirmations When Sending or Receiving XLM?

No, the transactions are almost instantaneous and don’t require multiple confirmations to become valid. An average Stellar transaction is cleared in around 5 seconds.

How To Buy Stellar?

Buying XLM is as easy as visiting the Kriptomat how to buy Stellar page and choosing a method of payment

How To Sell Stellar?

If you already own Stellar and hold it on a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.