Stellar was founded in 2014 by Jed McCaleb (also co-founder of Ripple) and Joyce Kim after McCaleb departed Ripple under contentious circumstances. The Stellar Development Foundation (SDF) is a nonprofit organisation — a notable difference from most blockchain projects — with a mission explicitly centred on financial inclusion: providing fast, cheap cross-border payments and financial access to the estimated 1.4 billion adults globally who are unbanked or underbanked. Where Ripple (XRP) targets financial institutions and correspondent banking relationships, Stellar targets both institutions AND individuals directly — designing its network to be accessible for remittances, micropayments, and direct consumer cross-border transfers. Circle (USDC issuer), MoneyGram, and multiple national CBDC projects have chosen Stellar as infrastructure, validating the network's payments positioning.
Stellar Consensus Protocol: Federated Byzantine Agreement
Stellar doesn't use Proof of Work, Proof of Stake, or standard BFT consensus. Instead, it uses the Stellar Consensus Protocol (SCP), based on Federated Byzantine Agreement (FBA): each node defines its own "quorum slice" — a set of nodes it trusts. Consensus is achieved when overlapping quorum slices agree on transaction ordering. The properties: Decentralised control (no central authority determines which nodes are trusted), Low latency (3–5 second finality), Flexible trust (nodes can choose trusted validators based on their own criteria), Asymptotic security (requires attackers to compromise a significant portion of overlapping quorum slices across the network). In practice, the Stellar network has a relatively small set of trusted validator nodes (approximately 50–100) due to the trust-relationship structure — a more centralised validator set than Ethereum but sufficient for the payments use cases it targets. Transactions on Stellar are incredibly cheap: a standard payment costs 0.00001 XLM (effectively zero).
Payments Use Cases: Real-World Adoption
USDC on Stellar: Circle issues USDC natively on Stellar (alongside Ethereum, Solana, and other chains). Stellar USDC benefits from the network's near-zero fees and 5-second finality — ideal for cross-border business payments. The MoneyGram partnership (2021) demonstrated real-world integration: MoneyGram uses Stellar USDC for settlement in its "Account to Cash" corridors — digital USDC transferred on Stellar, converted to local currency for cash pickup. This provides faster, cheaper remittance corridors compared to traditional wire transfers. CBDCs: Multiple governments exploring or deploying Central Bank Digital Currencies have chosen Stellar: the Republic of the Marshall Islands (SOV), Mintbase (tokenised assets for Nigeria's eNaira project architecture consultation), and several others in various stages. The Stellar network's regulatory compliance tooling, compliance-friendly transaction structure, and the SDF's nonprofit mission make it an attractive partner for government financial infrastructure. Enterprise payments: Flutterwave (pan-African payments), Tempo (European SEPA to Africa remittances), and dozens of smaller fintech companies use Stellar for settlement infrastructure.
XLM Tokenomics and the SDF's Role
XLM's total supply is fixed at 50 billion (deflationary model — no new issuance). The Stellar Development Foundation controls approximately 30 billion XLM used for SDF operations, grants, and ecosystem development. XLM has a unique base reserve mechanism: each Stellar account must hold a minimum 1 XLM base reserve plus 0.5 XLM per additional entry (trust lines, offers, etc.) — providing anti-spam properties and ensuring network participants have skin in the game. XLM's investment case is primarily driven by adoption of the Stellar network for payments, which drives XLM demand as the network's native fee and liquidity asset. The SDF's nonprofit structure and institutional focus mean XLM rarely generates the retail speculative excitement of DeFi-native tokens — but the genuine real-world payment volumes and institutional partnerships provide a fundamentals-driven value thesis that many speculative tokens lack.
Stellar Anchors and USDC Integration
Stellar anchors are the bridge between the Stellar blockchain and traditional financial systems: anchors are licensed financial institutions that accept fiat deposits and issue equivalent Stellar-based tokens (USDC, regulated stablecoins, or anchor-specific tokens) that can then be sent globally over Stellar's network at near-zero cost. The anchor model means Stellar can move value between bank accounts in different countries with a Stellar transaction as the settlement layer — the sender deposits fiat with their local anchor, the anchor issues Stellar tokens, those tokens are sent globally in seconds, and the recipient's anchor redeems them for local fiat. This architecture is how Moneygram's Stellar-based cross-border remittance service operates.
Circle's USDC is natively issued on Stellar, making Stellar one of the primary institutional blockchains for USD stablecoin transfers. For high-volume payment use cases (payroll, remittances, B2B invoicing), the combination of Stellar's 5-second transaction finality, sub-cent fees, and native USDC support makes it technically superior to Ethereum for pure payment applications that don't need smart contract composability.
The Stellar Consensus Protocol (SCP) achieves consensus through Federated Byzantine Agreement — a model where each validator configures its own quorum slice (a set of nodes it trusts), and network-wide consensus emerges from overlapping trust relationships rather than requiring all validators to trust a single canonical validator set. SCP provides fast finality (3-5 seconds) without requiring miners or stakers, with Byzantine fault tolerance as long as quorum slices overlap sufficiently across the network. This consensus model was designed specifically for cross-border payment networks where different institutions need to trust different counterparties.
Stellar's built-in DEX allows on-chain order book trading and atomic path payments — a payment that automatically finds the best exchange route through multiple asset pairs to convert the sender's currency to the recipient's preferred currency in a single transaction. This path payment feature is foundational for remittance corridors: a sender using USD can pay a recipient who wants EUR, with Stellar's DEX automatically executing the conversion through whatever intermediate asset provides the best exchange rate. XLM trades on Coinbase, Binance, Kraken, and Bybit. Our stablecoins guide covers USDC on Stellar. Use our crypto tools for XLM analysis and our DennTech blog for Stellar payments updates.
Stellar's Partnership with MoneyGram provides one of the most concrete real-world use cases for any blockchain: MoneyGram customers can convert cash to USDC at physical MoneyGram locations, transfer USDC globally over Stellar in seconds, and convert back to local currency at destination locations — combining Stellar's digital rails with MoneyGram's global physical cash network to create a hybrid digital/physical remittance corridor that outperforms traditional wire transfers on both speed and cost for underbanked populations.