Social encounters

Anshuman Mehta and Brian Koralewski, General Partners, Austere Capital analyze the XLM token model in context of Stellar’s vision of developing a new financial system for the world. They unpack the sources of returns and determine whether these are attributable to token holders.

Four sources of revenues for the Stellar ecosystem — and not all of these accrued value to XLM holders.

Operation Fees — write to the Stellar network’s distributed database:

At a market price of $0.36 (as of Feb 8, 2018) this stream only contributes c. $115,000 revenue to token holders. This makes intuitive sense — Stellar wishes to keep network near free to use to enable micropayments. However, it does not bode well for Lumen holders. XLM as Medium of Exchange — Lend or sell Lumens as a ‘step-through’ currency instead of dollar:

To align the INR/XLM and XLM/NGN trades above, the protocol will require, for a brief period, an adequate supply of XLM. For 4.5 seconds to be precise, which is the time required to settle a transaction. Purchasing or leasing XLM from holders, perhaps for a small fee, can fulfill this temporary requirement for XLM. Banks run similar businesses in their Equities Finance and Repo desks. The economics are well understood and subject to market dynamics.

In theory, anchors purchasing XLM from the public to maintain trading reserves would represent an excellent source of revenue to token holders. However, the Stellar Whitepaper provisions for airdrops to anchors. It is not clear if these airdrops will suffice for the anchor’s requirements, thereby eliminating any market transaction in XLM. This presents a substantial risk to token returns.

3. Asset-pair Trading

Each leg of an asset-pair transaction (e.g. INR/XLM and XLM/NGN in our example) will require market makers — anchors that take the opposite side of each trade leg. In the FX world, these are usually entities that have a natural position in that currency (e.g. Indian or Nigerian banks or corporates). Such market making activities are a well-established business model across traded markets. Dealers generally make markets for a small bid / offer margins — i.e. the difference between buy and sell prices.

Similarly, we expect Stellar anchors to take small margins for this service. The revenue thus earned is attributable to trading operations, not to public XLM holders.

4. Commercialization of the Protocol

In 2017, the Stellar Foundation assigned some core team members to Lightyear (www.lightyear.io). The Stellar — Lightyear relationship is based on the Linux Foundation — Red Hat model. Lightyear will be tasked with commercializing the Stellar protocol — generating revenue through consulting, customization, implementation and maintenance contracts from its enterprise clients. In an oblique sense, Lightyear’s success may lead to increased demand for XLM tokens subject to the constraints described in Revenue Streams 1, 2 and 3 above. However, whilst Lightyear’s business activities represent significant revenue potential, this revenue will be attributable to Lightyear’s own corporate structure, it’s employees and common stock shareholders. None of this revenue will funnel back to XLM holders.

Jed McCaleb. Businessman. After escaping the Mt. Gox debacle mostly unscathed, Mr. McCaleb didn’t waste time. In 2011 he founded Ripple, left it three years later to found Stellar. Stellar has been making steady progress and has firmly entrenched as one of the “blue chips” of the crypto universe.

Upcoming events:

The next Stellar Cluster will be in New York on March 4. Featuring presentations by Konstantin Richter, CEO of http://Blockdaemon.com and Lisa Nestor, the Stellar’s partner. Community clusters are a great place to learn how to build on Stellar.

Source: lp.money2020.com

The workshop is addressed to:

- crypto beginners

- business people with interest in the crypto world

- everyone who is interested in blockchain technology

* The tutorial on YouTube for people that cannot participate: How to make a custom token on Stellar.

The agenda in total:

Introduction of Stellar (20 min) Stellar Usecases (30 min) Topic three open Discussion and networking

Come meet and mingle with fellow Stellar builders and entrepreneurs at the beautiful AWS Loft in SoHo listening to a fantastic line up of speakers.