Stellar is a decentralized, open-source platform for currency transfers and payments. Launched in 2014 by Jed McCaleb, co-founder of Ripple, Stellar aims to facilitate fast, secure, and low-cost cross-border transactions between any pair of currencies. It operates on a unique consensus protocol that significantly differs from traditional Proof of Work (PoW) or Proof of Stake (PoS) mechanisms, focusing on efficiency and inclusivity in the global financial landscape. Stellar's network is designed to connect individuals, financial institutions, and payment systems to create a more accessible global economy.

Consensus Mechanism

The Stellar Consensus Protocol (SCP) is the backbone of the Stellar network, offering a flexible and efficient consensus mechanism without relying on a closed system to record transactions. SCP uses the Federated Byzantine Agreement (FBA) algorithm, which allows for fast and secure transaction validation by leveraging quorum slices—sets of nodes chosen by each participant. This method ensures that the network reaches consensus without needing a central authority, maintaining decentralization and security while enabling high transaction throughput and low fees.

Stellar Protocols

Stellar's network supports a range of financial services and applications through its built-in protocols. One of its core features is the distributed exchange functionality, which allows users to trade assets on the network, including fiat currencies and cryptocurrencies, directly without needing a central exchange. Stellar also facilitates the issuance of custom assets, enabling organizations and developers to tokenize real-world assets or create new digital currencies with ease.

Use Cases

Stellar's architecture makes it particularly well-suited for cross-border payments and remittances, offering a solution to the high fees and slow processing times associated with traditional banking systems. Its ability to support multiple currencies and provide near-instant transactions at a fraction of a cent makes it ideal for microtransactions and financial services in underbanked or unbanked regions. Additionally, Stellar's platform is used for asset tokenization, allowing for the creation and exchange of digital representations of real-world assets, enhancing liquidity and accessibility in various markets.

Stellar aims to connect and empower individuals, financial institutions, and payment systems globally, creating more open and inclusive financial infrastructure.