Stellar Lumens News Today – October 2

  • Stellar Lumens (XLM) Inflation and Why It Is Not Working
  • Stellar Development Foundation Wants to Modify the Inflation Operation

Stellar Lumens News Today – There is an inflation mechanism in the protocol of Stellar Lumens (XLM), and the Stellar Development Foundation recently released a proposal to get rid of it. The Foundation announced the proposal to the community via a blog post. In the post, the Foundation said that the mechanism is not serving the purpose it is supposed to serve. The proposal to eliminate the inflation of Stellar Lumens (XLM) would be subject to a vote by the validator nodes on the network.

Stellar Lumens (XLM) Inflation and Why It Is Not Working

Inflation was perceived as a means of incentivizing the ongoing growth of the Stellar Lumens ecosystem. At the moment, the initial XLM supply of 100 billion increases by 1% every year. The increase is distributed along with transaction fees network participants every week. The recipient address to receive the distribution is determined by votes, and one XLM token represents one vote.

Stellar (XLM) Price Today – XLM / USD


To be eligible for an inflation reward, an address must receive 0.05 percent of the entire vote, and it is calculated in proportion to the number of votes submitted. Hence, if an address gets five percent of the votes, that address would receive five percent of the entire inflation reward for that week. The founders of the crypto project had a rubicund vision that XLM holders would direct their XLM inflation rewards to their favorite projects. This would boost adoption, as more developers would join the network in the hope to receive their share of the reward.

Rather, token holders found out that if they club together into pools, they could help themselves to the reward. In addition, every pool must distribute the reward they get on a weekly basis among all their members. This puts a strain on the network’s validator nodes to meet the demand for micro payouts. The XLM inflation rewards are not providing any economic benefits because they are effectively distributed among XLM holders.

Stellar Development Foundation Wants to Modify the Inflation Operation

The Stellar Development Foundation does not plan to scrap the inflation operation but to modify it in a way that it would not do anything. The foundation would put the change through as part of the normal protocol upgrade cycle, which would take place this month. The SDF cannot force it through because it is a protocol change. Hence, if the nodes reject the change by refusing to implement the upgrade, the Stellar Development Foundation would introduce a new protocol that maintains the inflation feature and submit it to the network again.

Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.


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