Stellar (XLM) is not just another blockchain project; it is an innovative platform aimed at breaking down global financial barriers. Through its decentralized, open-source blockchain technology, Stellar enables faster and lower-cost cross-border transactions, connecting financial institutions, payment systems, and individuals, and promoting the popularization and advancement of global financial infrastructure.
Core Operating Mechanism: Flexible, Secure, Efficient
The working principle of Stellar originates from its unique Stellar Consensus Protocol (SCP), which is vastly different from traditional Proof of Work (PoW) or Proof of Stake (PoS) mechanisms. SCP adopts a Federated Byzantine Agreement (FBA), allowing nodes in the network to validate transactions based on other nodes they trust. This personalized trust model ensures that the network can avoid the energy consumption of traditional consensus mechanisms while providing excellent scalability and flexibility.
The Consensus Process of SCP: Nomination, Voting, and Confirmation
Nomination Phase: Nodes propose transaction proposals, and after multiple rounds of responses and proposals, some transactions gain majority support.
Voting Phase: Nodes cast votes to reach final consensus.
Confirmation Phase: After consensus is reached on the transaction, it is finally written into the blockchain.
This flexible trust network not only enhances the security of the network but also avoids the risks associated with single points of failure.
Anchors and Decentralized Exchanges (DEX): Connecting the Real and Digital Worlds
Stellar establishes connections with the traditional financial system through 'anchors', allowing users to easily convert fiat currency into digital assets. These anchors are typically trusted entities such as banks and payment processors, ensuring smoother circulation of digital assets. Additionally, Stellar's built-in decentralized exchange (DEX) allows users to trade directly on the platform without relying on central institutions, enhancing transaction liquidity and transparency.
XLM: The Bridge for Cross-Border Transactions
The native token of the Stellar network—XLM—is not just a tool for paying transaction fees; it also serves as a bridge currency for inter-network currency transactions, especially suitable for cross-border payment scenarios. Other key roles of XLM include:
Spam Prevention: Setting low transaction fees (e.g., 0.00001 XLM) to prevent malicious trading proliferation.
Providing Liquidity: Users can utilize XLM to convert between assets in decentralized exchanges, ensuring asset liquidity.
Access to Financial Services: XLM offers users more convenient and cheaper financial services than traditional financial systems, especially in areas lacking banking services.
Routing Algorithm: Automated Optimal Trading Paths
Stellar's routing algorithm can automatically find the best exchange path for users. This means users can jump between multiple assets, automatically seeking the best trading prices without manually selecting paths, greatly improving the efficiency and convenience of transactions.
Simple Smart Contracts: Balancing Efficiency and Security
Although Stellar does not support Turing-complete smart contracts like Ethereum, it provides basic smart contract functionalities through multi-signature accounts, batch transactions, and other technologies. This design prioritizes high throughput and low latency of the network, making it an ideal platform for large-scale financial applications.
A Model for Global Financial Inclusion
Stellar's architecture makes it very suitable for various financial services, particularly small payments, remittances, and token issuance, breaking through the limitations of traditional financial systems. Stellar not only supports fiat currencies but also allows users to create and exchange various digital assets, further promoting the popularization of global financial services, especially for people in areas lacking banking services.
The Journey of Stellar: From Ripple to Independent Innovation
2014: Founded by Jed McCaleb and Joyce Kim, initially based on the Ripple protocol, aiming to promote global financial connectivity.
2015: Launched the Stellar Consensus Protocol (SCP), independent of Ripple, enhancing network security and decentralization.
2017: Partnered with IBM, marking the beginning of Stellar's recognition as a cross-border payment platform.
2020: Destroyed 55% of XLM tokens, enhancing token value and network stability.
2021 and Beyond: Expanding smart contract capabilities, collaborating with the Ukrainian government to develop digital currency, further broadening application scenarios.
Future Outlook: The Main Force of Decentralized Finance
Stellar's technological advantages make it an important tool for connecting the global financial system and promoting financial inclusion. On the basis of achieving low-cost cross-border payments, Stellar will continue to drive financial innovation, especially in the application of digital currencies, token issuance, and efficient payments. With the vigorous development of the decentralized finance (DeFi) sector, Stellar will undoubtedly become an indispensable cornerstone of the global financial architecture.
Stellar (XLM) is not just a blockchain project; it is a pioneer of global financial inclusion. With its unique consensus mechanism, decentralized exchanges, and flexible currency exchange functions, it is building a low-cost, high-performance global payment network that promotes financial services to every corner of the globe.
The cryptocurrency market is ever-changing, with technical aspects intertwined with market sentiment. Do you want more real-time market analysis and operational strategies? Combine technical aspects with market sentiment to make flexible response strategies.
Click on the Boshi homepage for daily market analysis and recommendations for quality potential coins.
