Stellar platform in Ukraine.

Testing of the digital hryvnia began in Ukraine. The digital currency will work on the XLM platform (all information about the functionality of the platform you can find by clicking on the link). The first institutions to test CBDC were fintech startup Bitt and Tascombank – one of the oldest banks in the country, founded in 1989. One of the bank’s features is that it is the only financial market player allowed by the National Bank of Ukraine (NBU) to participate in the removal of insolvent banks from the market. Since 2019, Taskombank is included in the list of systemically important institutions. The owner is Serhiy Tigipko, former presidential candidate, head of the NBU in 2002-2004, and co-owner of Monobank online banking.

Startup Bitt acts as a solution provider for Tascombank’s secure storage and distribution of digital hryvnia.

The National Bank acts as the curator of the trials. The project is implemented with the support of the Ministry of Digital Transformation. The deputy head of the ministry – Oleksandr Bornyakov – confirms: a successful pilot will lay the foundation for the issue of electronic hryvnia, or eUAH.

The digital hryvnia is based on the Stellar (XLM) platform. Denelle Dixon – head of the Stellar Development Foundation – confirms: tests have already started. During the testing, salaries in eUAH will be accrued to employees of the “Dia” service, a Ukrainian platform for access to public and social services built on the blockchain.

The XLM exchange rate has not yet reacted to the news. The cryptocurrency is fluctuating within the normal range, which corresponds to the market average.

Content:

• • Performance and scalability
  • Built-in mechanisms and features
  • Underlying software
  • Integration capabilities

Performance and scalability

Depending on hardware and network configuration the performance is around 1000 transactions per second. Transaction validation time is 3 to 5 seconds.

Built-in mechanisms and features of Stellar

In Stellar, special network members, gateways (more details in the Architecture section), can issue their own assets tied to any assets in the real world. The assets are distributed in the form of credits, which the gateway agrees to redeem if necessary. Thus, in the XLM protocol, a token tied to, for example, USD can be issued and participants can transfer it freely to each other with minimal fees, regardless of their location.

In addition to assets tied to real-world assets, common custom assets can be created on the Stellar network.

To have its own liquidity between the issued assets in XLM created a decentralized exchange StellarX, which is convenient for currencies that do not have their own direct market. 

The network’s registry holds bids to sell or buy assets within the network. An order is a public commitment to exchange one credit for another at a set price. The order book for each asset/gateway issuer is formed from the orders. Any user can create a new order, execute an existing order or cancel his own order added earlier.

To facilitate asset transfers between users, Stellar has implemented multi-currency transactions that can automatically convert assets between themselves at the most favorable exchange rate at the time. Thus, a user can send a transaction in an asset of his convenience, and the other side will receive the currency of his convenience. In the process of performing a transaction, an entire series of exchanges of one currency for another can take place.

Thanks to the ability to issue its own tokens and the presence of its own built-in exchange, Stellar can be used as a tool for ICO/STO. In addition to the basic features, it is possible to take advantage of additional features: for example, to limit the range of nodes that can participate in the confirmation of transactions associated with the issued token.

The platform supports different types of multi-signatures, which can be used to implement different types of accounts, e.g. one account that can be used by multiple users. See documentation for details.

A special Federation protocol allows you to link user accounts (a string of characters) with convenient account addresses that can, for example, have a look similar to an email.

The Stellar protocol supports the creation and execution of simple, incomplete smart contracts and decentralized applications.

XLM continues to support the Stellar Community Fund program, which annually distributes 12’000’000 XLM to community members who have created projects to grow the ecosystem. The selection is made by quarterly voting and XLM tokens are distributed among the winners. It is worth noting that in this way, the program encourages projects that already have a working component, rather than being solely at the concept stage. Thus, it should be perceived as a program for encouraging users and distributing tokens, rather than as a funding tool within the Stellar ecosystem.

Underlying Software – Stellar wallet

The Stellar core network was launched in 2014. The source code is available on github.

The following are among the many wallets to store XLM:

• The official lightweight online wallet Account Viewer with minimal functionality.
• Online wallets from third-party developers: Stellar Wallet, Lobstr, Blockchain Info, BlockEQ, etc.
• InterStellar wallets for all types of devices.
• Desktop wallets from third-party developers: Foxlet, BlockEQ, etc.
• Hardware wallets: Ledger Nano S.

Developers can take advantage of detailed documentation, dedicated SDKs to simplify the development process, and APIs for integration. Including libraries supported by the XLM team are available for languages: JavaScript, Java, Go, and community supported for languages: Ruby, Python, C# .NET Core 2.0, C#, C++.

Integration capabilities

The primary integration tool with Stellar is the Horizon API.

Integration with large organizations and financial service providers is one of the main directions of Stellar. From a technical point of view, the open source code allows you to create your own clients and plugins based on XLM to integrate with the platform. The official site has all the necessary tools, documentation and detailed manuals for this. Stellar is integrated with companies such as Deloitte, Tempo, and others.

The history of Stellar began in 2014 when its founder – Jed McCaleb – left the Ripple platform, on which he had been working since 2011, for a new project. More precisely, he decided to do the same thing, but with a different vector.

The thing is that in its concept Stellar is almost identical to Ripple – both systems:

• Do not support mining: unlike bitcoin, their tokens cannot be mined, all coins are immediately put into circulation by the system itself.
• Provide virtually free instant transactions.
• Designed to allow users to buy and sell different currencies at minimal cost.

The key difference is the audience: while Ripple is aimed at large banks and consortiums, Stellar is designed for individuals and businesses – including those from developing countries. In essence, McCaleb took the off-the-shelf Ripple model and then created a more affordable clone of it.

This decision looks ambiguous: on the one hand, Ripple is incomparably superior to Stellar in scale, but on the other hand, Stellar does not attract as much attention from regulators. While Ripple is suing the SEC, Stellar is developing, and that is a big plus.

In addition, Ripple’s successes play into the hands of its junior counterpart, confirming the system’s reliability and potential. Practice shows that market players care about this:

• In the first year of its existence, Stellar received 3 million users, and the capitalization of the project came close to $15 million.
• In 2015, the company released integration with Vumi, the popular messenger of the Praekelt Foundation (South Africa).
• In 2016, integration with Deloitte took place, and then Coins.ph, ICICI Indian Bank and several other large companies joined the Stellar payment network.
• In 2017, KickEx and IBM, interested in facilitating cross-border transactions in the South Pacific region, became partners of the project. During this period, Stellar’s token, Lumens, ranked 13th by market capitalization – 30 banks confirmed their cooperation with the platform.

And so on. By now, Stellar Lumens is among the top 30 altcoins, and does so quite deservedly. At the moment, the market capitalization of XLM is $8.3 billion, and the daily trading volume is around $700 million – more than impressive figures. But where is the demand coming from?

If Lumens can’t be mined, why are they needed?

The demand for XLM token is caused by the peculiarities of the marketplace itself. In fact, it is Lumens that allows Stellar users to trade currencies with minimal fees, tokens are indispensable for cross-border transactions.

For example, you need to transfer money from China (yuan) to the United States (U.S. dollars). If you use a regular bank transfer with currency conversion at the exchange rate, the commission can be up to 7%. In the case of transfer via Stellar you technically perform two operations:

1. First, you buy Lumens for yuan;
2. Then you buy dollars for those Lumens, which go to the recipient (you or another person).

The final commission will be less than a percentage, and the transaction itself will take seconds. Direct savings.

With its own tokens, the platform does not allocate any currency as the main one. Stellar financial system includes money from most countries of the world, their availability to users – in the form of digital tokens, the rate of which is pegged to the real currency – is exactly the same. Transparency, decentralization, independence, reliability and universality: Stellar’s success is based on the fact that this financial system is extremely convenient for all its participants. And this is a very powerful foundation.

Is this a good time to invest in Stellar?

The position of the coin is very strong at the moment – since the beginning of the year Lumens grew almost three times: if on January 1 the coin was trading at $0.132, at the moment of writing this article the value of altcoin is $0.34. In May, at its peak it was offered $0.73 for one XLM.

However, such a sharp upsurge is unlikely to happen again in the near future. Moreover, in the summer of 2021 the rate of XLM has fallen almost to $0.2 per coin. And though since that time Stellar Lumen strengthened almost 1.5 times, the predictions about the rate of $0.6-0.75 by the end of 2021 are obviously a pipe dream. As boring as it sounds, a rate of $0.33-0.39 per coin is most likely in 2022. On the other hand, it is hardly a good idea to invest in cryptocurrency at the peak of its price. Perhaps, given the relatively low rate of XLM, there is still a lucrative opportunity to buy it now.

The next question is whether there is currently a possibility of a significant loss of funds when investing in XLM? From our perspective, the likelihood of that happening is minimal. If we study the history of the coin’s prices, it becomes obvious: despite the ups and downs, there was not a single moment in the history of XLM when the token became unclaimed. This means that against the background of the general strengthening of cryptocurrency prices, which will resume sooner or later, XLM has a chance to grow.

Another important factor affecting the price of XLM is the conclusion of cooperation agreements with major players by Stellar. If there are media reports about the likelihood of a deal like the one with IBM, a sharp rise in Lumen is very likely. Therefore, when investing in Stellar, it is important to “keep your hand on the pulse”.

The same goes for investing in XRP, though. Right now, the fate of this asset largely depends on the outcome of the case with the SEC. If it ends up in Ripple’s favor, its coin has a good chance of increasing in value. 

That is the nature of all crypto assets – they rise sharply on a wave of hype and positive news, and collapse just as sharply when the wind blows in the other direction.