Stellar Lumens is the cryptocurrency of Stellar, an open source and decentralized payment network that allows users to send different currencies such as both crypto and fiat, in a reliable and safer process than traditional methods.

Designed and programmed to support all digital transactions of cryptocurrencies, Stellar also has its own native token called the "Lumens".

Otherwise referred to as "Stellar Lumens", these digital coins play a key role in the Stellar network because it requires each account holder to hold a small value of lumens at all times.

Good news: XLM is available as a cryptoasset on the eToro online investment platform (be sure to read our detailed assessment of eToro for more information about this broker).

Ready to trade Stellar Lumens?

78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

History of Stellar

The Stellar payment network was launched in 2014 by Jed McCaleb, the co-founder or Ripple and founder of Mt. Gox—a bitcoin exchange based in Japan—and lawyer Joyce Kim.

Stellar Lumens logo
Stellar Lumens logo

Upon its release as a decentralized payment network, it also debuted its own cryptocurrency the Stellar, which would be later called as Lumens or XLM.

Why Stellar Require Lumens?

The Stellar's design of its ledger system relies on the 'lumen' coins to keep everything in order. Because the Stellar network is easy to use and almost at no cost, it runs the risk of being filled with spam transactions. Therefore, to avoid this, Stellar imposes a minimum balance on each account and charges a very low transaction fee payable by lumens.

The requirement of having lumens to pay the small transaction fees allows the Stellar network to be accessible by all while discouraging suspicious and spam transactions.

How Stellar Lumens (XLM) Operates?

The Stellar network works on the Stellar Consensus Protocol, a decentralized network consisting of peers running autonomously from one another. This network syncs altogether until it reaches a compromise, thus allowing the network's ledger to be spread openly.

The Stellar Consensus Protocol implements a procedure where participants or each node on the network chooses a smaller network of trusted mini-networks (nodes) to authenticate transactions. Before any contracts are confirmed, the SCP will confirm if the mini-network intersects. If confirmed, then this would mean that the Stellar Network has reached an agreement and the whole transaction is stored in a block that adds up to the “blockchain” of Stellar.

How Many Lumens are There?

Unlike Bitcoin and other cryptocurrencies running on blockchain technology, Lumens are not mineable nor given as a reward. However, almost 100 billion Lumens were digitally minted at the same time the Stellar network was launched.

During the first five years of Stellar, the number of Lumens rose 1% every year. A community vote among Stellar insiders, came up with an agreement to reduce the supply of Lumens to around 50 billion as a form of inflation instrument.

Of this 50 billion, 30 billion Lumens remains within the Stellar Network for use in developing and promoting the network, while 20 billion lumens are tradeable in the open market.

Reason to Buy Lumens?

You can buy Lumens for your own preferred use on merchants accepting this digital currency or use it over the Stellar Network. Another reason to buy Lumens is to simply trade it and treat it as an investment like you would do with other cryptos and company shares.

Coinbase, Kraken and Binance are the known exchanges to buy Lumens. Another option is through trading platforms like the eToro trading app.

How to Trade Stellar Lumens (XLM) on eToro?

  1. On your eToro dashboard, click “Trade Markets”.
    Clicking "Trade Markets" on eToro
    Clicking "Trade Markets" on eToro
  2. Select “Crypto”.
    Selecting "Crypto" on eToro's Markets screen
    Selecting "Crypto" on eToro's Markets screen
  3. Scroll down to look for “XLM”.
    Looking for Stellar Lumens on eToro's list of crypto assets
    Looking for Stellar Lumens on eToro's list of crypto assets
  4. Click “Buy” and set the amount you want to invest.
    Buying Stellar Lumens (XLM) on eToro's platform
    Buying Stellar Lumens (XLM) on eToro's platform
  5. Click “Open Trade”.
    Executing XLM buy order on eToro
    Executing XLM buy order on eToro

Stellar Lumens Wallets

You can save and store your XLM or Stellar Lumens on a wide range of digital and hardware wallets currently available. Some examples include the Ledger Nano S hardware wallet and the Lobstr mobile and web wallet.

eToro Wallet Supports XLM

eToro's crypto wallet supports a number of digital currencies and the good news is that one of them is XLM. Opening an XLM wallet is free and transferring the crypto to this wallet won't incur you with any fees.

eToro Wallet app
eToro Wallet app

Pros of Stellar Lumens (XLM)

  1. Very low flat fees - All transactions whether big or small are only charged with a low fee of 0.00001 XLM which is almost an insignificant amount.
  2. XLM has partnered with giant companies - Stellar Development Foundation, the company behind the development of the Stellar Network, has forged partnerships with some of the most popular companies in the world today such as IBM.
  3. XLM uses a reliable consensus process - All crypto blockchains have their own "consensus mechanisms" but what makes Stellar Lumens own rise above the rest, is not only the energy efficiency of Stellar's Consensus Protocol but also the way it allows transactions to be confirmed real fast.

Is Stellar Lumens a Wise Investment?

Even if you will not be using Lumens in the Stellar Network, you can still buy it as an investment similar to what you can also do with other cryptocurrencies.

Bear in mind that cryptocurrencies is a volatile financial instrument because it can rise and drop in extreme manner. However, it is also becoming a popular investment tool and because of this, the worth of different cryptocurrencies are seeing more increases than drops.

Take this year for example. Stellar Lumens has soared more than 80% since 2021 started and Stellar work on more partnerships with major companies, expect interest on Stellar Lumens investment to also grow over time.

Got interested about XLM trading?

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

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