There is no way to stake XLM, the only way to earn a return on your XLM is to lend them out to custodial providers. For the best security and control over your funds, we recommend using a Ledger Hardware Wallet.

Stellar utilizes its own Stellar Consensus Protocol (SCP), which differs from other well-known consensus mechanisms like Proof of Work and Proof of Stake. Stellar doesn't have a staking mechanism and you can't stake XLM directly. In addition, there are no monetary rewards for being a validator on the Stellar network.

XLM holders can earn rewards by depositing their assets into custodial service providers.

Custodial Staking: Centralized third-party providers mostly utilize strategies where assets from each plan and type are consolidated and allocated for yield in various on-chain opportunities. Some of the avenues for yield generation are mining, staking, liquid staking, proprietary market-neutral algorithmic trading, and collateralized on-platform lending.

You do not need to choose validators as there is no staking mechanism for XLM.

You do not need to choose validators as there is no staking mechanism for XLM.

Custodial Staking: Centralized third-party providers mostly utilize strategies where assets from each plan and type are consolidated and allocated for yield in various on-chain opportunities. Some of the avenues for yield generation are mining, staking, liquid staking, proprietary market-neutral algorithmic trading, and collateralized on-platform lending.

Custodial staking, while offering opportunities for passive income, also comes with certain risks that users should consider before participating:

Platform Security: It's important to choose a reputable and secure platform for custodial staking to mitigate the risk of potential security breaches or hacks. Consider the platform's track record and reputation within the cryptocurrency community to gauge its reliability.

Counterparty Risk: When staking funds with a custodial provider, users are essentially lending their assets to the platform. This introduces counterparty risk, where there is a possibility that the custodial provider may default on their obligations or become insolvent.

Regulatory Risk: Regulatory uncertainty and evolving legal frameworks surrounding cryptocurrency lending and staking can pose risks to participants. Before engaging in custodial staking, users should familiarize themselves with the regulatory environment in their jurisdiction and any potential legal implications.

Transparency and Accountability: Lack of transparency regarding the custodial provider's operations, financial status, and risk management practices can increase the risk for stakers. Look for platforms that prioritize transparency and regularly provide updates on their activities, financial performance, and risk management strategies.

Liquidity Risks: Depending on the terms and conditions of the custodial staking arrangement, users may face liquidity risks, especially if there are lockups or restrictions on withdrawing staked funds. Evaluate the platform's withdrawal policies and lock-up periods to assess the potential liquidity risks.

No, if you do choose to use a custodial provider, you will not need to do anything once you have gone through their platform.

No, if you do choose to use a custodial provider, you will not need to do anything once you have gone through their platform.

We strive to make staking as safe and transparent as possible, however, it’s important to consider factors that may influence whether a particular staking option is appropriate for you.

Custodial lending risks: Custodial lending means you are lending your crypto through a centralized entity (i.e., Binance, Kraken, Coinbase). The exchange is the custodian of your assets, and users entrust the management of private keys to the exchange. In addition, users relinquish control of assets to the custodian and become subject to its terms and conditions. 

Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs, this risk applies not only to staking but also the investment in XLM token.

This list is not exhaustive and other risks may apply.

We strive to make staking as safe and transparent as possible, however, it’s important to consider factors that may influence whether a particular staking option is appropriate for you.

Custodial lending risks: Custodial lending means you are lending your crypto through a centralized entity (i.e., Binance, Kraken, Coinbase). The exchange is the custodian of your assets, and users entrust the management of private keys to the exchange. In addition, users relinquish control of assets to the custodian and become subject to its terms and conditions. 

Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs, this risk applies not only to staking but also the investment in XLM token.

This list is not exhaustive and other risks may apply.

Lumens (XLM) are the native currency of the Stellar network and serve several key functions:

Transaction Fees: Lumens are used to pay small fees for all transactions on the Stellar network, helping to prevent ledger spam and prioritize transactions during times of high demand.

Base Reserves: XLM tokens are used as a unit of measurement to calculate an account's minimum balance, known as the base reserve. Currently set at 0.5 XLM per base reserve, accounts must maintain a minimum balance to exist, with additional lumens required for each subentry, such as trustlines, offers, signers, and data entries.

Minimum Balance: Lumens are required to maintain the minimum balance for Stellar accounts, with each account needing at least two base reserves (currently 1 XLM). Additional lumens are needed for each subentry, and accounts cannot exceed 1,000 subentries.

Rent: For smart contract data stored on the ledger, XLM tokens are used to pay rent instead of base reserves. The amount of rent charged depends on the size of the entry and how long it should remain on the ledger before being archived.

What is XLM?

XLM is the native token of the Stellar network that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Gas token: XLM is used for network fees, each transaction processed by the network requires a small fee to be paid.

What is XLM?

XLM is the native token of the Stellar network that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Gas token: XLM is used for network fees, each transaction processed by the network requires a small fee to be paid.

The Stellar network reaches consensus using the Stellar Consensus Protocol (SCP), which is a construction of the Federated Byzantine Agreement (FBA). FBA differs from other well-known consensus mechanisms like Proof of Work (which relies on a node’s computational power) and Proof of Stake (which relies on a node’s staking power) by instead relying on the agreement of trusted nodes.

In SCP, each participating Stellar Core node (also called a validator or validator node) decides what set of other nodes they want to trust. The flexibility of user-defined trust allows for open network membership (meaning anyone can become a Core node) and decentralized control (meaning no central authority dictates whose vote is required for consensus).

There are no monetary rewards for being a validator on the Stellar network. Instead, users are encouraged to become a validator because they are then contributing to the security and resiliency of the network, which benefits the products and services built on Stellar.

There are three desired properties of consensus mechanisms: fault tolerance, safety, and liveness.

1. Fault tolerance – the system can continue operating despite node failures or malfunctions
2. Safety – no two nodes ever agree on different values, guarantees nodes will produce the same block
3. Liveness – a node can output a value without the participation of any misbehaving nodes

Consensus mechanisms can typically only prioritize two out of three of these properties. SCP prioritizes fault tolerance and safety over liveness. Because of prioritizing safety, blocks can sometimes get stuck while waiting for nodes to agree.

The Stellar network reaches consensus using the Stellar Consensus Protocol (SCP), which is a construction of the Federated Byzantine Agreement (FBA). FBA differs from other well-known consensus mechanisms like Proof of Work (which relies on a node’s computational power) and Proof of Stake (which relies on a node’s staking power) by instead relying on the agreement of trusted nodes.

In SCP, each participating Stellar Core node (also called a validator or validator node) decides what set of other nodes they want to trust. The flexibility of user-defined trust allows for open network membership (meaning anyone can become a Core node) and decentralized control (meaning no central authority dictates whose vote is required for consensus).

There are no monetary rewards for being a validator on the Stellar network. Instead, users are encouraged to become a validator because they are then contributing to the security and resiliency of the network, which benefits the products and services built on Stellar.

There are three desired properties of consensus mechanisms:

• Fault tolerance – the system can continue operating despite node failures or malfunctions
• Safety – no two nodes ever agree on different values, guarantees nodes will produce the same block
• Liveness – a node can output a value without the participation of any misbehaving nodes

Consensus mechanisms can typically only prioritize two out of three of these properties. SCP prioritizes fault tolerance and safety over liveness. Because of prioritizing safety, blocks can sometimes get stuck while waiting for nodes to agree.

The Stellar network reaches consensus using the Stellar Consensus Protocol (SCP), which is a construction of the Federated Byzantine Agreement (FBA). FBA differs from other well-known consensus mechanisms like Proof of Work (which relies on a node’s computational power) and Proof of Stake (which relies on a node’s staking power) by instead relying on the agreement of trusted nodes.

In SCP, each participating Stellar Core node (also called a validator or validator node) decides what set of other nodes they want to trust. The flexibility of user-defined trust allows for open network membership (meaning anyone can become a Core node) and decentralized control (meaning no central authority dictates whose vote is required for consensus).

There are no monetary rewards for being a validator on the Stellar network. Instead, users are encouraged to become a validator because they are then contributing to the security and resiliency of the network, which benefits the products and services built on Stellar.

There are three desired properties of consensus mechanisms: fault tolerance, safety, and liveness.

1. Fault tolerance – the system can continue operating despite node failures or malfunctions
2. Safety – no two nodes ever agree on different values, guarantees nodes will produce the same block
3. Liveness – a node can output a value without the participation of any misbehaving nodes

Consensus mechanisms can typically only prioritize two out of three of these properties. SCP prioritizes fault tolerance and safety over liveness. Because of prioritizing safety, blocks can sometimes get stuck while waiting for nodes to agree.

100B XLM were created when the Stellar network went live, and for the first 5 or so years of Stellar’s existence, the supply of lumens also increased by 1% annually, by design. That inflation mechanism was ended by community vote in October 2019. And in November 2019, the overall lumen supply was reduced. Now there are about 50 billion lumens, total, in existence, and no more lumens will be created.

Initial token distribution:

The Initial token distribution of XLM is as follows:

• 50% was allocated to the Direct Sing-up Program
• 20% was allocated to the Bitcoin Program.
• 25% was allocated to the Partnership Program
• 2% was allocated to Stripe for its seed investment
• 3% was allocated to the Stellar Development Foundation

The Direct Sign-up, Bitcoin and Partnership Program featured an initial distribution plan over a period of 10 years. The tokens were never distributed as expected; the SDF conducted several changes to its distribution plan and treasury management over the years. 

Funding Rounds:

• $3M was raised in a Seed round in May 2014

100B XLM were created when the Stellar network went live, and for the first 5 or so years of Stellar’s existence, the supply of lumens also increased by 1% annually, by design. That inflation mechanism was ended by community vote in October 2019. And in November 2019, the overall lumen supply was reduced. Now there are about 50 billion lumens, total, in existence, and no more lumens will be created.

Initial token distribution:

The Initial token distribution of XLM is as follows:

• 50% was allocated to the Direct Sing-up Program
• 20% was allocated to the Bitcoin Program.
• 25% was allocated to the Partnership Program
• 2% was allocated to Stripe for its seed investment
• 3% was allocated to the Stellar Development Foundation

The Direct Sign-up, Bitcoin and Partnership Program featured an initial distribution plan over a period of 10 years. The tokens were never distributed as expected; the SDF conducted several changes to its distribution plan and treasury management over the years. 

Funding Rounds:

• $3M was raised in a Seed round in May 2014

100B XLM were created when the Stellar network went live, and for the first 5 or so years of Stellar’s existence, the supply of lumens also increased by 1% annually, by design. That inflation mechanism was ended by community vote in October 2019. And in November 2019, the overall lumen supply was reduced. Now there are about 50 billion lumens, total, in existence, and no more lumens will be created.

Initial token distribution:

The Initial token distribution of XLM is as follows:

• 50% was allocated to the Direct Sing-up Program
• 20% was allocated to the Bitcoin Program.
• 25% was allocated to the Partnership Program
• 2% was allocated to Stripe for its seed investment
• 3% was allocated to the Stellar Development Foundation

The Direct Sign-up, Bitcoin and Partnership Program featured an initial distribution plan over a period of 10 years. The tokens were never distributed as expected; the SDF conducted several changes to its distribution plan and treasury management over the years. 

Funding Rounds:

• $3M was raised in a Seed round in May 2014