Question 1

What is XLM?

Accepted Answer

XLM (lumen) is the native asset of the Stellar network. It is not issued by any issuer and does not require a trustline to be established first; the network uses it to pay transaction fees, meet account minimum balances, and pay smart contract data rent. Therefore, XLM can be transferred and also bears network-layer resource and anti-spam costs; this differs from assets on Stellar that are created by specific issuing accounts.

Question 2

What is the difference between Stellar and XLM?

Accepted Answer

Stellar is the network, and XLM is the network's native asset. Accounts, transactions, and other onchain assets operate on the Stellar ledger; XLM is used for network fees, account reserves, and contract data rent. The two are not interchangeable: using an asset on Stellar does not mean holding XLM, and holding XLM does not mean having any rights against that asset's issuer.

Question 3

How does XLM differ from other assets on Stellar?

Accepted Answer

XLM is the only asset on Stellar that can be received without an issuer or trustline. Other conventional Stellar assets are typically created by issuing accounts; recipients must establish the relevant trustline through a change_trust operation, and a trustline can also set a holding limit. A trustline is itself an account subentry and increases the minimum-balance requirement. Therefore, receiving a non-XLM asset requires not only confirming the issuer but also reserving the corresponding XLM balance; receiving XLM does not involve this trustline step.

Question 4

How is XLM used to pay network fees?

Accepted Answer

Every Stellar transaction pays a small fee in XLM. The direct effect of this fee is to raise the cost of bulk spam transactions; when transaction demand exceeds capacity, the network's surge pricing also uses fees to help prioritize transactions for processing. Ordinary transactions and smart contract transactions have different charging structures: the latter, in addition to the fee for inclusion in the ledger, are also related to resources actually consumed and associated rent. Therefore, the final XLM cost paid by users depends on the transaction type and network rules; the fee for a single transfer cannot alone be used to infer the cost of contract operations.

Question 5

Why do Stellar accounts need to retain XLM?

Accepted Answer

Stellar accounts must maintain a minimum XLM balance; currently, one base reserve is 0.5 XLM, and the account itself requires two base reserves, or 1 XLM. Each additional ordinary subentry adds one more base reserve. Available balance can be understood as: account balance minus the minimum balance, then minus selling liabilities created by outstanding sell offers. Trustlines, offers, additional signers, and data entries all add subentries; after a subentry is closed, its corresponding reserve becomes available balance again. A liquidity-pool share trustline is exceptionally counted as two subentries and requires a 1 XLM reserve.

Question 6

What is the relationship between XLM and smart contract data rent?

Accepted Answer

Smart contract data does not occupy ledger space through an account base reserve; instead, it pays rent. Rent is related to the size of the data entry and how long it is intended to remain before archival. The rent requirements for Persistent, Temporary, and Instance storage are not the same. In other words, the cost of contract data comes from the ledger space it occupies and its retention period, rather than being calculated simply from how much XLM an account holds.

Question 7

How does Stellar reach consensus, and can validators receive XLM rewards?

Accepted Answer

Stellar reaches ledger consensus through the Stellar Consensus Protocol (SCP). It is a federated Byzantine protocol: each validating node running Stellar Core independently chooses which nodes to trust and sets a threshold for agreement within its own trust set. This differs from proof of work, which relies on computing power, and proof of stake, which relies on staking weight. Anyone can run a Core node, but the network does not issue XLM monetary rewards to validators; the role of node participation is to improve the network's security and resilience.

Question 8

How is XLM supply created and calculated?

Accepted Answer

XLM is not continuously produced through mining. Official documentation states that all XLM that exist and will exist were created when the Stellar network launched; therefore, validator operation, transaction confirmation, or holding XLM should not be mistaken for sources of newly produced XLM. Supply metrics must also distinguish total supply from circulating supply: total supply includes XLM in different categories that still exist; circulating supply excludes non-circulating portions such as SDF-authorized funds, the upgrade reserve, and the fee pool. Because these balances can change, official real-time data interfaces should be used when checking quantities.

Question 9

How did the 2019 inflation halt and burn affect XLM?

Accepted Answer

Stellar increased XLM by 1% annually for approximately its first five years; after a validator vote, the network's inflation mechanism stopped on October 28, 2019. Stopping inflation means supply no longer increased under that rule afterward; it did not automatically remove XLM produced previously. In November of the same year, the SDF sent a large amount of XLM to accounts with no signers, making it permanently inaccessible and counting it as burned. Burned amounts are deducted from the supply that still exists; this differs from transfers to ordinary addresses or non-circulating SDF funds.

Question 10

What is XLM's upgrade reserve?

Accepted Answer

The upgrade reserve is a one-to-one claim reserve prepared for holders of tokens on the old Stellar network. When Stellar changed its consensus algorithm and relaunched the network in 2015, this portion of XLM was set aside separately; it was not regular mining or a daily reward. Holders eligible through their old-network token relationship can claim the corresponding XLM at a one-to-one ratio; before being claimed, this reserve is not counted as circulating supply. This historical arrangement applies only to old-network token relationships and should not be applied to XLM later purchased or transferred in.

Question 11

What is the relationship between the SDF and XLM?

Accepted Answer

The SDF is the nonprofit organization that supports Stellar and its ecosystem. It is not the issuer of XLM and has no shareholders. In 2014, the SDF received authorization to use its entrusted XLM to advance Stellar and ecosystem development. Its authorized funds are used to build public goods, advance policy and regulatory support, and promote the network to developers, users, businesses, and institutions. XLM held by the SDF should be distinguished from circulating XLM held by individuals or independent companies for paying fees and maintaining accounts.

Question 12

What should be checked before transferring XLM?

Accepted Answer

Before sending XLM, confirm that the recipient address belongs to the correct Stellar network, and retain enough XLM after the transfer to cover the account minimum balance and subsequent fees. If the account holds trustlines, offers, or other subentries, its minimum balance will be higher than the 1 XLM required for the account alone. If the recipient actually needs a non-XLM asset on Stellar, also confirm that it has established a trustline for the relevant issuer; XLM does not require a trustline. Whether a transaction can be executed depends on signatures, balances, and network rules; a correct address does not remove these conditions.

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