Stellar is an open-source blockchain network designed for payments and asset issuance. Its native token, XLM, is used to pay transaction fees and meet minimum account balance requirements. The main difference between Stellar and general-purpose smart contract platforms like Ethereum is that Stellar's core focus has always been cross-border payments, fiat on/off ramps, and asset tokenization. The Soroban smart contract platform was added on top of this payment infrastructure later, not the other way around.
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Payment Use Cases: What Problem Does It Actually Solve?
Stellar's design goal is very specific: to let fiat currencies and digital assets move quickly and cheaply on-chain. Use cases listed in the official documentation include remittances, business invoicing, global payroll, treasury management, and merchant settlement.
This process relies on a role called an Anchor. An Anchor is a licensed financial institution or payment service provider that handles fiat on/off ramps and performs KYC, AML, and sanctions screening. You exchange fiat currency for an on-chain asset (such as USDC), send it over the Stellar network, and the recipient converts it back to fiat through a local Anchor. The official claim is that the network connects to more than 475,000 cash-to-crypto on/off ramp locations.
On-chain fees are extremely low. The official description is that "100,000 operations typically cost less than 1 cent," and a Messari report cited an average transaction fee of $0.00015 in Q1 2025. Settlement speed is within seconds, and Messari data shows that the vast majority of payments on Stellar are made in USDC or XLM.
If your need is "sending a small amount of money from country A to country B without losing too much to traditional wire transfer fees," Stellar is positioned to serve exactly that kind of scenario. However, the actual cost also depends on how much your chosen Anchor or exchange charges. The on-chain fee is only one part of it.
Soroban: The Smart Contract Layer Added Later
Soroban is the smart contract platform on the Stellar network, launched around 2024. The official documentation makes it clear: Soroban is not a new chain. It is an additional feature integrated into the existing Stellar blockchain, coexisting with the original Stellar operations.
Contracts are written in Rust and compiled to WebAssembly for deployment. This choice means developers need to be familiar with Rust and cannot directly use Solidity. Soroban's Rust SDK provides a set of data structures and utility functions that act as an alternative to the standard library, including cryptographic hashing, signature verification, on-chain persistent storage, and cross-contract calls.
Soroban and the original Stellar system have several key interaction points: Stellar accounts can be used directly for identity verification in Soroban contracts; the built-in Stellar Asset Contract can interact with traditional trustlines; asset issuers retain the same control permissions on Soroban as on the mainnet, including clawback and set_auth. However, Soroban contracts cannot interact with Stellar's decentralized exchange (SDEX), claimable balances, or sponsorship features.
If your goal is simply to transfer funds or issue a token, using Stellar's original asset issuance features is more direct and offers better performance. The official token issuance guide also recommends prioritizing Stellar assets over Soroban contract tokens because the former has stronger interoperability with existing ecosystem tools. Soroban is better suited for scenarios that require custom logic, such as lending protocols, AMMs, or more complex on-chain applications.
Where Does XLM's Value Come From?
Demand for XLM mainly comes from three places. None of them are "investment narratives," but rather practical needs for the network to function.
Transaction fees. Every transaction on Stellar must pay a fee in XLM. This is designed to prevent the ledger from being filled with spam transactions and to prioritize transactions during congestion. Soroban contract transactions use a different fee structure, including a base inclusion fee and resource consumption fees (including "rent").
Minimum account balance. For a Stellar account to exist, it must maintain a minimum balance. The base reserve is currently 0.5 XLM. An account itself requires two base reserves (meaning 1 XLM), and each sub-entry (trustline, open order, signer, data entry) adds another 0.5 XLM. This means every trustline you open for an asset and every order you place locks up a portion of XLM. An account can have a maximum of 1,000 sub-entries.
State rent. Soroban contract data does not count toward the base reserve, but it must pay rent to remain on the ledger. The rent depends on the size of the entry and the duration it needs to persist.
The total supply of XLM was fixed at 100 billion at genesis. In 2019, the 1% annual inflation mechanism was removed through a validator vote. Increases in circulating supply come from the release of holdings by the Stellar Development Foundation. Q2 2026 data shows a circulating supply of approximately 33.98 billion XLM, with about 15.76 billion XLM still in SDF-authorized accounts. This release schedule is key to understanding XLM's supply pressure: new circulating supply is not produced by mining, but distributed to the market by the foundation according to a plan.
A Practical Assessment
If you are looking for a low-fee, second-level settlement on-chain payment channel, Stellar's Anchor network and USDC liquidity are its most substantial parts. Messari data shows Stellar processed $32 billion in payment volume in 2025, of which $10.6 billion was related to RWA.
If you are evaluating XLM as an asset, you need to understand this clearly: its demand comes from growth in network usage, not from protocol revenue buybacks or burns. Extremely low fees mean that even with very high transaction volume, the fee consumption of XLM provides limited support for its price. XLM's value depends more on the adoption scale of the entire Stellar ecosystem—more Anchor integrations, more asset issuance, and more Soroban applications leading to more accounts and trustlines, which in turn lock up more XLM.
For developers, if you are familiar with Rust and need payment-related scenarios, Soroban's 5-second finality and nominal performance of 150 live TPS are worth considering. However, its DeFi ecosystem TVL reached approximately $172.5 million after growing 284% in 2025, which is still much smaller than Ethereum or Solana. Composability and liquidity depth are real-world conditions you need to verify before choosing it.
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References
- Stellar·Payments, page undated; verified on 2026-10-08.
- Stellar Developer Docs·Smart Contracts Overview, published or updated 2026-07-23; verified on 2026-10-08.
- Stellar Developer Docs·Lumens (XLM), published or updated 2026-09-07; verified on 2026-10-08.
- Messari·State of Stellar Q2 2026, page undated; verified on 2026-10-08.
- Blockworks·Stellar Token Holder Report Q2 2026, page undated; verified on 2026-10-08.
- Messari·Pulse Report, page undated; verified on 2026-10-08.
- Stellar·Soroban, page undated; verified on 2026-10-08.
