Footprint Analytics: Stellar aims for rebound in 2022

by [email protected] Analytics

Date: January 8, 2022

Data source: Stellar dashboard

Last month, the Stellar Development Foundation (SDF) participated in a hearing on cryptocurrency hosted by the US House Committee on Financial Services.

CEO Denelle Dixon introduced the technology and applications of the decentralized payment system Stellar. With the recent news that Ukraine and Mexico will use Stellar to power their cryptocurrency, Stellar is once again back in the spotlight.

What is excellent

Launched in 2014, Stellar is a platform that supports cross-border transactions between currency pairs and aims to solve global payments problems through blockchain technology.

The global payments and settlement system is complex with many fiat currencies, financial and regulatory systems for each country.

Stellar aims to solve this problem by making transfers between different currencies efficiently (within 5 seconds) and low cost (less than 1 US cent) through decentralized transaction verification.

The current status of Stellar

In seven years of development, Stellar has had a illustrious history.

It was once one of the top 10 blockchain projects by market capitalization. And he even set a record for a 100-fold increase in the price of a token prior to the DeFi Summer.

Unlike projects in the crypto world, Stellar has forged many partnerships with the traditional financial community, including IBM and national financial institutions.

Fingerprint Analytics - XLM Price
Fingerprint Analytics – XLM Price

However, according to Footprint Analytics, Stellar is currently growing slowly.

After years of growth, it has a TVL of about $1.5 billion so far, which puts it in the 40th place among public chains, and this rate is significantly lower than public chains that are just starting out.

Fingerprint Analytics - Stellar TVL
Fingerprint Analytics – Stellar TVL

The Stellar ecosystem is very underdeveloped, with only two projects at the moment and very homogeneous.

Fingerprint Analytics - TVL Protocols in Excellent
Fingerprint Analytics – TVL Protocols in Excellent

Causes of slow growth of stellar stars

Bad ecosystem incentives

At the time of Stellar’s ​​creation, an inflation mechanism was created to prevent a decline in XLM trading.

Each year, the inflation scheme generates tokens equal to 1% of the total Stellar supply and representing more than 0.05% of the total Stellar share that receives additional XLM tokens.

The purpose of the blowing mechanism is stimulation. However, analysis by Coinmetrics shows that 98% of additional XLM coins went to the SDF (Stellar Development Foundation) and did not benefit from the Stellar project.

One of the reasons for this is that the foundation has been involved since the early days and thus can participate in the annual distribution of newly created tokens.

The second reason is that most of the Stellar participants who joined during the 2017 blast are speculative users with little involvement in the ecosystem.

XLM Inflation CoinMetrics
XLM Inflation CoinMetrics

omission of sd

The institution holds a large number of tokens due to inflation mechanisms. However, the organization failed to use these codes to help the project work better. Crypto Slate analysts stated in 2019 that the foundation only spent $40,000 on community projects. Having a large sum of money but not using it well determines the inaction of the enterprise.

In 2019, the Stellar Development Foundation initially mitigated the token mismatch by ending its inflation plan and destroying more than 50% of its tokens. However, XLM still needs to expand its use scenario.

The way forward to the stars

Although Stellar has ended up falling behind since its launch, it is set to return from 2021.

With the explosion of DeFi projects, multi-currency and cross-chain remittances have become a current weakness of the blockchain, Stellar offers one of the solutions that sets a new standard for global payments.

Stellar has gained prominence in the marketplace with expanded payment companies, national banks, financial institutions, and more, and has gained recognition from multiple parties and many powerful partners as a global solution for cross-border payments.

EVM . Compatibility

The incompatibility of the Stellar contracts with the EVM means that developers cannot quickly publish projects on Ethereum to Stellar in February 2021.

FlareNetworks has announced the integration of Stellar Lumens (XLM) with its smart contract platform, enabling compatibility with the Ethereum blockchain. If you land successfully, Stellar will be more scalable.

Abstract

Stellar’s recent moves show that it continues to engage with the financial community and bridge the gap between traditional and on-chain payments.

We can monitor Stellar and look forward to its continued development in solving global payments challenges.

What are fingerprint analytics?

Footprint Analytics is an all-in-one analytics platform for blockchain data visualization and insights discovery. It cleans and combines on-chain data so users of any experience level can quickly begin searching for codes, projects, and protocols. With over a thousand dashboard templates as well as a drag-and-drop interface, anyone can create their own custom layouts in minutes. Discover blockchain data and invest smartly with Footprint.

Footprint website: https://www.footprint.network/

Discord: https://discord.gg/3HYaR6USM7

Twitter: https://twitter.com/Footprint_DeFi

YouTube: https://www.youtube.com/channel/UCKwZbKyuhWveetGhZcNtSTg

Posted in: Stellar, Analysis

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