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XLM
Stellar
Lumens

The lumen, often abbreviated XLM, is the protocol token of the Stellar network. One hundred billion lumens were created the instant Stellar went live, as part of the protocol’s design. These tokens play a unique role in the network’s operation.

Lumens are available at every major cryptocurrency exchange.

What do lumens do?

Anyone that wants to hold or move money on Stellar must also hold lumens. Per the protocol, every account must set aside a small increment of lumens for each type of asset it holds. Similarly, an account must reserve lumens for each open offer against its assets. The total holdback for a typical account is low—a few XLM.

Stellar also imposes a very small fee for each transaction, and that fee can only be paid in lumens. The median fee on the network right now is 0.00001 XLM—about a millionth of a US dollar.

Growth of the Stellar Network

2017201820191M02M3M4M0M10M20M40M30M50M Accounts Operations

Why does the network require lumens?

01

Spam deterrence

Lumen reserve requirements and transaction fees are there to minimize ledger spam. They make it unprofitable to, say, spin up thousands of fake accounts or attempt millions of pointless transactions. You often hear that Stellar helps money move like email, but spam is one part of the analogy we don’t want to live up to.

02

Liquidity

Stellar was built for cross-currency payments: you can send USD and your friend will receive MEX, with the USD<>MEX exchange happening automatically through the Stellar order books. Sometimes this exchange requires an intermediate asset—also called a bridge asset—to get the best price. XLM’s role in Stellar’s markets is similar to USD’s role in traditional forex markets. Especially for thinly-traded currencies, XLM provides liquidity. For example:

500 MEX
190.2 XLM
24.4 USD
¹ Before purchasing lumens, you should be educated on the risks of buying and holding cryptocurrencies. Please consult this consumer advisory brief on the potential risks associated with digital currencies. Note that while lumens will always have utility in the Stellar network, the price of lumens denominated in fiat currency may be volatile and could lose significant value.