What Is Stellar Blockchain and What’s So Special About It?

Predominantly focused on facilitating cross-border transactions, enhancing financial inclusion, and enabling digital asset issuance, the Stellar blockchain provides a lot of opportunities for various businesses and allows them to optimize financial operations, expand their reach, and innovate in the digital economy.

In this article, we will delve into the core capabilities and features of Stellar and explore why Stellar blockchain development is becoming increasingly popular.

What is Stellar blockchain?

The Stellar blockchain is a decentralized network powered by the Stellar Consensus protocol, a Proof of Agreement (PoA) consensus mechanism. It facilitates fast and low-cost financial transactions across borders, connects different financial systems, and helps people and businesses move money quickly and affordably.

Stellar also supports the creation and exchange of digital assets and serves as a versatile tool for a range of financial activities. Its primary goal is to improve the efficiency of financial transactions and broaden financial access, especially in areas that need it most.

What’s special about Stellar’s consensus and how does it work?

Stellar relies on a Proof of Agreement consensus mechanism called Stellar Consensus Protocol (SCP).

Compared to other blockchains that use energy-intensive mechanisms like Proof of Work, SCP achieves consensus through a collaborative process among network nodes.

Nodes on Stellar reach an agreement on transactions through a voting process. Each node needs to verify its identity publicly, which helps build a network of trusted participants.

When enough nodes in interconnected groups agree on a transaction’s validity, it is added to the blockchain. The agreement process happens usually within about 5 seconds.

What are the key features of the Stellar blockchain?

The Stellar blockchain boasts the following set of features:

High transaction speed

Processing transactions on the Stellar network happens at impressive speeds (5 seconds, with an all-time average ledger speed of 5.19 seconds), which allows cross-border payments to be completed much faster. Businesses and individuals benefit from this efficiency as they can handle financial transactions across different countries and time zones with ease.

Efficient consensus mechanism

The Stellar Consensus Protocol supports a high volume of transactions while maintaining network security and reliability. As a result, transactions are processed quickly and cheaply, and the network stays robust even when usage levels are high.

Low fees

With transaction fees kept at a minimum, Stellar becomes a practical option for both substantial transactions and everyday microtransactions. The low cost encourages frequent use and makes financial activities more accessible and affordable.

Global reach and financial inclusion

Connecting financial systems worldwide, Stellar bridges the gap between traditional banking and digital finance. This promotes financial inclusion and makes it easier for individuals in underserved or unbanked regions to access essential financial services.

What are the main capabilities of the Stellar blockchain?

The Stellar network caters to various use cases, with core capabilities concentrated around asset issuance, token selling and trading, and cross-currency transactions.

Let’s explore each of these capabilities in greater detail.

Asset issuance and management

One of the key capabilities of the Stellar blockchain is the creation of tokens. On Stellar, it is possible to tokenize almost any form of value, i.e. traditional currencies like dollars or euros or other assets such as real estate, gold, or even services like consulting hours.

Token selling and trading

Another standout feature of Stellar is its decentralized exchange. The blockchain connects buyers and sellers directly and facilitates token exchanges without the need for intermediaries.

Users can easily place bids or asks, and the network automatically matches and resolves trades every few seconds, thus allowing for efficient and transparent transactions.

Cross-currency transactions

Stellar enables cross-currency transactions in a single step. You can send a payment in one currency and the recipient can receive it in another, without worrying about exchange rates or delays. To further ensure compliance and reduce risks in cross-border financial transactions, our KYT solution monitors cryptocurrency transactions in real-time, helping to detect suspicious activities and maintain adherence to regulations.

Noteworthy is that Stellar’s automated market makers (AMMs) and DEX work together to provide optimal exchange rates and make international transactions smooth and straightforward.

What is Stellar token?

The lumen (XLM) is the native currency of the Stellar network.

While the network supports digital representations of any currency, the lumen has a special role within it. Each account on the Stellar network is required to hold a small number of lumens at all times. This helps maintain network integrity and prevent spam attacks.

Currently, the minimum balance needed is 1 lumen, and the per-transaction fee is set at a very small amount of 0.00001 lumen. This low fee helps establish smooth operation and security across the entire network.

What are Stellar smart contracts?

Stellar smart contracts are self-executing programs on the Stellar blockchain that automate various financial transactions and processes.

Their uniqueness lies in their simplicity and high efficiency as the Stellar Foundation aims to make them both user-friendly and versatile.

Importantly, Stellar’s approach to smart contracts is complemented by Soroban — a developer-friendly, Rust-based platform designed for scalability and practicality.

Soroban enhances the Stellar smart contracts ecosystem by providing a robust environment for creating and executing contracts with a focus on performance, scalability, and ease of use.

Why does Stellar blockchain development look promising?

Stellar blockchain development holds promise for several reasons.

First and foremost, the platform’s ability to support rapid and low-cost transactions creates opportunities for innovative financial applications. Developers can build on Stellar’s infrastructure to create high-end solutions for payments, asset management, and more.

Besides, the network’s flexibility in handling various digital assets encourages experimentation and new project ideas. With Stellar’s tools and features, a professional financial software development company can create unique financial products and services that cater to diverse needs and business niches.

And importantly, Stellar’s focus on scalability and energy efficiency makes it an attractive choice for developers who are eager to build sustainable and high-performance applications.

So, all of these factors make Stellar blockchain development a compelling choice and position it well for future growth and widespread adoption.

Closing thoughts

The Stellar blockchain is making waves in the blockchain world with its fast, affordable, and flexible approach to financial transactions and asset management.

If you are excited about what Stellar has to offer and want to take your project to the next level, our PixelPlex Stellar development services are just what you need.

With over 11 years of experience in blockchain development as well as enterprise blockchain development, we got to know the ins and outs of many different blockchains and took a deep dive into Stellar and its unique architecture, so we are well-equipped to help you make the most of it. We implement blockchain solutions across a wide range of industries, from finance and healthcare to supply chain and oil & gas software development.

Reach out to us and let’s discuss how we can turn your ideas into reality on the Stellar network.