Stellar is a blockchain network optimized for payments and asset tokenization. It operates on the Stellar Consensus Protocol (SCP), which relies on a system of trusted nodes ("quorum slices") rather than mining to reach agreement. This design allows the network to finalize transactions in seconds with fees costing fractions of a cent. A key feature is the built-in Decentralized Exchange (DEX), which allows any asset issued on Stellar (such as tokenized stocks or stablecoins) to be traded natively at the protocol level.

Explore The Anatomy of a Smart Contract: Breaking Down the Code

The ecosystem has evolved from simple payments to a programmable smart contract platform with privacy features:

Protocol 25 ("X-Ray") Announcement (Nov 2025): The Stellar Development Foundation unveiled Protocol 25, codenamed "X-Ray." This major upgrade introduces native cryptographic primitives for Zero-Knowledge (ZK) proofs. This infrastructure allows institutions to issue compliant, privacy-preserving assets (where transaction amounts are hidden but validity is proven publicly), positioning Stellar for deeper adoption by regulated financial entities.

State Archival (Protocol 23): In September 2025, the network activated Protocol 23, implementing "State Archival" for its Soroban smart contract layer. This mechanism automatically moves old, unused contract data to cheaper storage (archives), preventing ledger bloat and keeping gas fees low for active users.

PayPal PYUSD Expansion: Throughout 2025, PayPal fully integrated its PYUSD stablecoin into the Stellar ecosystem. This integration allows users to move funds between PayPal and self-custody Stellar wallets, utilizing the network as a high-speed settlement rail for global commerce.

The XLM token is the "glue" that holds the Stellar financial network together:

Bridge Currency: When liquid markets do not exist between two assets (e.g., Nigerian Naira to Mexican Peso), the protocol can route the trade through XLM to facilitate the swap.

Anti-Spam Fees: Every transaction requires a nominal fee paid in XLM. This cost is negligible for legitimate users but makes spam attacks prohibitively expensive.

Account Reserves: To maintain an active account or open a "trustline" for a new asset, users must lock a small amount of XLM (base reserve). This prevents the ledger from being filled with redundant data.

Consensus: Stellar Consensus Protocol (FBA)

Smart Contracts: Soroban (Rust-WASM)

Settlement Time: ~5 Seconds

Token Standard: Native XLM (No minting function)

Key Feature: Native DEX & Path Payments