In a surprising move, the non-profit Stellar Development Foundation has burned more than 50% of their Stellar Lumens (XLM) cryptocurrency supply.
Stellar’s native digital asset XLM is currently the world’s 10th biggest digital asset based on its market capitalization of over $1.5 billion. The CoolWallet S, the world’s leading Bluetooth hardware wallet, recently added support for Stellar Lumens (XLM) on its cold storage solution.
Stellar’s foundation destroyed a total of 55 billion XLM, dropping the total supply of XLM from 105 billion to a round 50 billion. Currently, there are only 20 billion XLM in circulation.
Why did Stellar burn 50% of XLM (lumens)?
The Stellar Foundation explained the burn during the Stellar Meridian conference by stating that the coin burn was not intended to inflate the market but to trim the supply down to what the community required.
“We didn’t start by wanting to burn. We started by asking, ‘What do we need? As much as we wanted to use the lumens that we held, it was very hard to get them into the market.”SDF CEO Denelle Dixon
The immediate community and market reception to the news of Stellar’s burn were largely positive.
How much XLM does Stellar own?
Stellar now manages 30 Billion XLM, split into the following funds:
- Direct Development fund ( 12 Billion XLM)
- Investment fund (10 Billion XLM)
- User Acquisition fund (6 Billion XLM)
- Ecosystem support (2 Billion XLM)
As XLM supporters will know, the Stellar network operates on a decentralized Proof-of-Stake blockchain which requires no actual mining to generate new assets. Stellar created 100 Billion lumens when the network launched, which were distributed amongst their community and other cryptocurrency investors in order to stimulate its adoption. The remaining 5 Billion XLM per its previous total supply of 105 billion were generated as part of Stellar’s annual 1% inflation strategy.
At the end of October 2019, the Stellar community voted to cease its inflation policy. This means that Stellar’s total XLM supply is now hard-capped at 50 billion lumens, which should translate into renewed interest and confidence in the project.
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