Footprint Analytics: Stellar aims for rebound in 2022
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The “which are the most vibrant blockchain ecosystems currently” is a question that has been asked many times. The answer to this question is Stellar. It’s goal for 2022 is to rebound from its current slump and regain its position as one of the most popular cryptocurrencies.
The Stellar Development Foundation (SDF) took part in a cryptocurrency hearing conducted by the House Committee on Financial Services earlier this month.
CEO Denelle Dixon discussed the Stellar decentralized payment system’s technologies and uses. Stellar is now again in the limelight, thanks to recent reports that Ukraine and Mexico would use it to manage their digital currencies.
What is the meaning of Stellar?
Stellar, which was founded in 2014, is a platform that facilitates cross-border transactions between currency pairings and uses blockchain technology to address global payment issues.
With many fiat currencies and each country’s financial and regulatory institutions, the global payments and settlement system is difficult.
Through decentralized transaction validation, Stellar seeks to tackle this issue by making transfers between multiple currencies fast (under 5 seconds) and cheap (around 1 cent USD).
Stellar’s present situation
Stellar has a long and distinguished history throughout its seven years of development.
It used to be one among the top ten blockchain projects in terms of market capitalization. Before DeFi Summer, it even established a record for a 100x spike in token price.
Unlike other crypto projects, Stellar has established a number of relationships with conventional financial organizations, including IBM and national financial institutions.
XLM Price – Footprint Analytics
Stellar, on the other hand, is presently developing slowly, according to Footprint Analytics.
After years of expansion, it now has a TVL of roughly US$1.5 billion, placing it 40th among public chains, and at a far lower pace than the up-and-coming public chains that are just getting started.
Stellar’s ecosystem is still in its infancy, with just two projects and a rather homogenous population.
TVL in Stellar Footprint Analytics -Protocols
Stellar’s Slow Growth: Why Is It So?
Incentives for the environment are poor.
An inflation mechanism was put up at the time of Stellar’s establishment to avoid a decrease in the circulation of XLM.
The inflation system creates tokens equivalent to 1% of Stellar’s total supply each year, with more than 0.05% of Stellar’s total share getting extra XLM coins.
The inflatable mechanism’s function is to motivate. However, according to Coinmetrics, 98 percent of the XLM incremental coins went to the SDF (Stellar Development Foundation), rather than the Stellar project.
One reason for this is because the foundation has been participating from the beginning and so has access to the yearly distribution of freshly created tokens.
The second reason is that most Stellar users are speculative users with limited participation in the ecosystem, having joined during the 2017 surge.
CoinMetrics XLM Inflation
SDF is missing from the equation.
Because to inflationary processes, the foundation has a high quantity of tokens. The foundation, on the other hand, has failed to put these tokens to good use in order to improve the project’s performance. According to experts at Crypto Slate in 2019, the organization has only spent $40,000 on community initiatives. Having a huge sum of money but failing to put it to good use exemplifies the foundation’s inactivity.
The Stellar Development Foundation first addressed the token mismatch in 2019 by discontinuing its inflation strategy and deleting more than half of its coins. However, XLM’s application situation still has to be expanded.
The Next Steps for Stellar
Stellar has been trailing since its introduction, but it is expected to make a return in 2021.
Multi-currency, cross-chain transfers are a current blockchain pain point, and Stellar is one of the solutions that establish a new standard for global payments, thanks to the proliferation of DeFi initiatives.
Stellar has acquired market recognition as a worldwide solution for cross-border payments from a variety of parties and strong partners, including expanding payment firms, national banks, financial institutions, and more.
Compatibility with EVM
Because Stellar contracts are incompatible with EVM, developers will be unable to easily migrate applications from Ethereum to Stellar in February 2021.
FlareNetworks has announced the integration of Stellar Lumens (XLM) with their smart contract platform, allowing for Ethereum blockchain interoperability. Stellar will be significantly more scalable once it is successfully landed.
Stellar’s latest efforts demonstrate that the company is continuing to interact with the financial sector and bridge the gap between conventional and on-chain payments.
We may keep a watch on Stellar and anticipate its continuous advancement in addressing global payment issues.
What is Footprint Analytics, and how does it work?
Footprint Analytics is a one-stop shop for analyzing blockchain data and uncovering insights. It cleans and unifies on-chain data so that users of any skill level may begin exploring coins, projects, and protocols right away. Anyone may create their own personalized charts in minutes using over a thousand dashboard templates and a drag-and-drop interface. With Footprint, you can discover blockchain data and invest more wisely.
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