What is Stellar and XLM?

Stellar is a nonprofit organization that maintains an open source and globally decentralized transaction platform that clears payments in 2–5 seconds with extremely low transaction fees. The digital asset for participating in the Stellar Network is the Lumen (XLM).

Current Events and Sentiment

Several promising events have occurred for the Stellar Network in the past few weeks including a large ICO issuance, new decentralized exchange, interesting developments with partnerships, and price stability (~ breakeven year to date).

*coinmarketcap.com

User Growth and Fundamentals

Stellar and its native asset, XLM, is positioned within two of the hottest areas in blockchain — global payments and fundraising. The recent sharp rise in accounts, transfers, and trades on the Stellar Network seems to be providing some price resiliency for XLM in an otherwise down year for cryptomarkets. If the majority of this fundamental growth is via payment providers and banks, then XLM’s price may be consolidating before a push higher in 2018.

Stellar Network Future Utility Value

Currently, the cryptomarkets are driven heavily by hype and speculation, which means there is very little signal and a lot of noise. Thus, the present value methodology listed below should not be taken as price prediction, but rather what XLM’s intrinsic value might resemble under normal circumstances if network fundamentals continue to strengthen.

Food for Thought

The viability of the Stellar Network relies on users seamlessly exchanging digital currency to local fiat; and vice versa. In the short term, financial institutions must be involved which presents “frenemy” situation because these “partners” may look to replace XLM with permissionless blockchains in the future. Thus, Stellar may need to continually innovate new add-on functionalities and services in order to stay one step ahead.

Summary

Stellar’s partnerships and technology make it a candidate for winning some portion of the future global payment market. As competition intensifies, the lumen token may begin to act more like oil for a car rather than its fuel, which may be reflected in prices via depreciation and then gradual plateau. Only time will tell if Stellar’s long term innovation will make the aforementioned scenario obsolete.

*coinmarketcap.com

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Disclaimer: Neither the author of this article, nor Pugilist Ventures, provide investment, financial, or legal advice. The content provided is for informational purposes only and should not be construed as any kind of solicitation for investment in any investment opportunity.