Stellar’s XLM token prepares to rebound in 2022 as last month we saw the Development Foundation taking part in the crypto hearing hosted by the US House Committee on Financial Services. But how can we see XLM skyrocket? Let’s find out today in our latest stellar news.
The CEO Denelle Dixon presented the technology of the Stellar decentralized payment system and the applications so with the news that Mexico and Ukraine will use it to run their digital currencies, Stellar entered the spotlight again. Launched in 2014, Stellar is a platform that supports cross-border transactions between currency pairs that can solve global payments problems via blockchain technology. The global payments and settlement system are quite complicated with plenty of fiat currencies and each country’s regulatory and financail system.
Stellar aims to solve this issue by making transfers between the different currencies much more efficient and also low cost through decentralized transaction validation. In the seven years of development, Stellar used to have quite an interesting history. It was once among the top 10 blockchain projects in terms of Market Cap and set a record for a 100x increase in the token price before the DeFi projects emerged. Unlike projects in the crypto world, Stellar built a lot of partnerships with the traditional financial community like IBM and other national financial institutions. However, as per the reports, Stellar is now growing much more slowly.
After years of growth, it has a TVL of $1.5 billion to date and ranked it 40th among the public chains which rate is far less than that of the up-and-coming public chains which are just starting. Stellar’s ecosystem is still underdeveloped with only two projects at present which is quite homogeneous. At the time of Stellar’s creation, the inflation mechanism was set to present a reduction in the XLM circulation. Each year the inflation scheme generates tokens equal to 1% of the Stellar total supply and accounts for more than 0.05% of the total share of XLM coins.
The purpose of this mechanism is to incentivize. However, the analysis shows that about 98% of the XLM incremental coins went to the Stellar Development Foundation which was not really beneficial for the project. One reason for this was that the foundation was involved since the early days and can take part in the annual distribution of the newly generated tokens. The second reason is that most of the participants joined during the 2017 burst and are speculative users that have no involvement in the ecosystem. As most DEFI projects surged, cross-chain transfers became the main point in blockchain and Stellar offers one of the solutions that can define the new standard for global payments and is one of the reasons why Stellar’s XLM token prepares to rebound.
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