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Stellar is a public blockchain used for payments, asset issuance and smart contracts. Its native currency is the lumen, identified by the ticker XLM. As of October 8, 2026, the network's documentation covers a broader platform than the bank-to-bank payment concept described in early cryptocurrency profiles.
The distinction between XLM and assets issued on Stellar is central. Sending a tokenized dollar is not the same as sending XLM. The transfer may settle on the same ledger, but the tokenized dollar can depend on an issuer's reserves, redemption terms and restrictions outside the blockchain.
What XLM is used for
XLM is the network's native asset and is used for transaction costs and account-related requirements. It is not an equity interest in the Stellar Development Foundation or a claim on the reserves of another token issuer.
Network costs discourage abuse and help allocate resources. An application can sometimes manage costs on behalf of users, but that does not remove the underlying requirement. A low fee also does not mean that currency conversion, cash withdrawal or a third-party service will be free.
Stellar's documentation distinguishes original supply, total supply and circulating supply. These categories should not be interchanged when reading a market-data page. A foundation-controlled balance that has not been distributed is different from a token circulating through user accounts.
How Stellar reaches agreement
Stellar uses the Stellar Consensus Protocol, a form of Federated Byzantine Agreement. Validators select sets of other validators they trust for consensus. This differs from both competitive proof-of-work mining and a proof-of-stake system where token holdings determine block-production eligibility.
Official documentation states that validators do not receive monetary protocol rewards for running a validator. That matters when a service advertises XLM yield: the yield should not automatically be described as native Stellar staking. It may come from lending, incentives or another arrangement with different risks.
Trust configuration is also a real design consideration. The ability to run a node does not, by itself, demonstrate that every node has equal influence. Safety and continued operation depend on how the participating network is configured and how its trusted sets overlap.
Issued assets and payment gateways
Stellar supports assets issued by identifiable accounts. A token's code is only part of its identity; the issuer matters too. Two assets with the same display code can represent completely different obligations.
Anchors connect on-chain assets with services such as deposits, withdrawals or local payment rails. They can be useful for moving between a blockchain balance and money outside the chain. Their terms, customer checks and operational availability remain separate from consensus.
For example, a successful token transfer does not establish that a recipient is eligible to redeem it in a particular country. That requires a service provider capable of honoring the relevant claim. The blockchain records ownership changes; it does not independently guarantee a bank account balance held elsewhere.
Smart contracts broaden the platform
Stellar's smart-contract environment, commonly known as Soroban, allows programmable applications alongside the network's established asset and payment features. The current developer documentation includes contracts, authorization, storage, fees and testing.
More programmability means more things can be built, but it also makes application-level review important. A contract can have upgrade controls, dependencies or economic assumptions that do not follow automatically from Stellar's consensus design.
A user signing an application transaction should understand the requested authorization. A familiar network name or wallet brand does not make every contract safe, and an audit does not cover changes made after the audited version without further review.
What happened to lumen inflation
Stellar initially created 100 billion lumens and once had annual inflation. Validators ended that inflation mechanism on October 28, 2019. The Stellar Development Foundation then reduced its holdings through a large burn in November 2019, leaving total supply at roughly 50 billion.
That history makes the old claim that most tokens would simply be released over the next decade misleading. Current supply categories should be read from the network's own definitions, and distribution should not be inferred from a long-expired schedule.
Where the practical risks sit
XLM can be traded through cryptocurrency venues, while issued assets can have their own markets and restrictions. Before a transfer, the correct asset, issuer and recipient requirements need to match. Some custodians require additional routing information, so an address alone may not be sufficient.
Stellar is best understood as shared financial infrastructure with several layers of responsibility. Consensus handles the ledger; issuers stand behind issued assets; applications implement their own rules; and gateways connect the ledger to outside services. Understanding those boundaries is more useful than a historical market-cap ranking or a prediction about replacing banks.