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Stellar Blockchain

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Stellar is an open-source, decentralized global exchange network for digital currency to fiat money low-cost transfers which allows cross-border financial transactions between any pair of currencies. Jed McCaleb acted as the co founder of Stellar, like other cryptocurrencies, it operates using blockchain technology. Stellar relies on blockchain to keep the network in sync, but the end-user experience is more like cash cash - Stellar is much faster, cheaper, and more energy-efficient to financial access and inclusion than any typical blockchain-based system.

A Stellar blockchain explorer will provide you with live insights on recently mined blocks on the Stellar blockchain and a live feed of all the blocks added to the blockchain. Furthermore, it presents detailed statistics, pricing history, and insightful reports for all the assets and the market cap on the Stellar network, which helps better decision-making. Stellar Lumens (XLM) is the Stellar's cryptocurrency used by the network, which facilitates cross border payments.

How Does the Stellar Blockchain Network Work?

Stellar's basic operation is similar to that of most decentralized servers with a distributed ledger that is updated every 2 to 5 seconds among all nodes. Stellar works like technologies like Bitcoin, its key distinguishing feature is the stellar consensus protocol.

For example, a bank in Japan might use Stellar to send money to a bank in Mexico. Stellar would automatically convert yen to XLM, send the payment via blockchain, and reconvert XLM to pesos at the current exchange rate.

Stellar's consensus method allows for fast and cheap transactions, with everyone on the network reaching an agreement about transaction validity within a few seconds. Stellar's consensus protocol does not rely on the entire minor network to approve transactions. Instead, it uses the Federated Byzantine Agreement (FBA) algorithm, which enables faster processing of transactions. This is because it uses quorum slices (or a portion of the network) to approve and validate a transaction.

Each node in the Stellar network chooses another set of 'trustworthy' nodes. Nodes select other nodes that they deem trustworthy, and work with them to craft and ratify a set of valid transactions to apply to change the state of the stellar ledger. The shortened process as many as 1,000 network operations per second.

Transactions that take place on the Stellar blockchain network are added to a shared, distributed, public ledger, a database accessible by anyone in the worldwide. In order to reach consensus on transactions so quickly and accurately, Stellar blockchain uses its own unique consensus method.

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How does the Stellar Expedite Cross Border Transfers?

The current process for cross-border transfers is a complicated one. It requires domestic banks to maintain accounts in foreign jurisdictions in local currencies. Their correspondent banks must operate a similar account in the original country.

The Nostro-V0stro process, as it is known, for cross-border transactions with fiat currencies is a lengthy one involving conversion and reconciliation of accounts. Because it enables simultaneous validation, Stellar's blockchain can shorten or eliminate the delays and complexity involved.

Stellar lumens xlm cryptocurrency can also be used to provide liquidity and streamline the process. According to some reports, banks will use their own cryptocurrencies to facilitate such transfers in the future. The protocol has 'modest' computing and financial inclusions. This enables even organizations with minimal IT budgets, such as nonprofits, to participate in its network.

Ecosystem

Stellar is a platform that connects the world's financial infrastructure by making it easy for regulated financial institutions to issue assets that represent real-world currencies. But you don't have to be a regulated financial institution to build on Stellar! You can build an app right now — no matter who you are — that takes advantage of those assets to settle real-world payments for real-world users, no permission required.

Stellar has an active community ecosystem and supports projects that utilize the Stellar Network with the Stellar Community Fund.

Stellar Consensus Protocol

The Stellar Consensus Protocol SCP is the underlying consensus algorithm of the Stellar Network that functions as a provably safe construction of Federated Byzantine Agreement (FBA). Stellar's consensus mechanism implements many similar mechanisms for distributed fault tolerance across a financial network as other cryptocurrencies with some distinct variations.

The SCP is derived from the concept of Byzantine Agreements (BA) and tailored towards a decentralized and permissionless network using quorum and quorum slices.

The SCP was first described in a whitepaper by David Mezieres in 2015. It is a "Federated Byzantine agreement system" that allows decentralized, leaderless computing networks efficiently to reach a consensus algorithm on some decision. The Stellar payment network uses scp that provide a consistent view of the network's transaction history to all participants.

Understanding the SCP requires a brief history of BAs and how they compare to FBAs followed by a description of quorum and quorum slices, the federated voting model, and finally the commit/abort ballot system of the SCP protocol itself.

Byzantine Agreements and Federated Byzantine Agreements

Byzantine Agreement is Byzantine fault tolerance of distributed computing systems that enable them to come to consensus despite arbitrary behavior from a fraction of the nodes in the network. BA consensus makes no assumptions about the behavior of nodes in the system, Practical Byzantine Fault Tolerance (pBFT) is the prototypical model for Byzantine agreement, and it can reach consensus from resources (i.e. financial state in PoS or electricity in PoW).

However, BA (pDFT) does not scale well and requires a large communication overhead between all the participating nodes. Further, the system needs unanimous agreement on membership of the network to mitigate Sybil attacks.

Federated Byzantine Agreement was introduced by the SCP white paper and explicitly addresses the limitations of BA by fostering a consensus protocol that guarantees the following:

  • Decentralized Control
  • Flexible Trust
  • Low Latency
  • Asymptotic Security

One of the primary consequences of FBA compared to BA is that FBA system is open to nodes joining in a permission less setting rather than through a closed (permission) membership list.

FBA comes to agreement on state updates using a unique slot where update dependencies between nodes are inferred. Nodes must agree on the slot update in each round of consensus. However, since the system is open to nodes joining and leaving the network at will, a majority based quorum consensus mechanism will not work. Instead, the FBA in the SCP employs quorum slices that are subsets of quorums that are capable of convincing particular nodes of an agreement. The key difference between a byzantine agreement system and a federated Byzantine agreement system (FBAs) is that in FBA each node chooses its own quorum slices.

The main takeaway here is that individual nodes can independently decide which other nodes (other trusted participants) they agree to share information with.

Quorums and Quorum Slices

A quorum is defined as a set of nodes needed to reach an agreement in a distributed system. When nodes attempt to reach an agreement, they communicate with each other (under the assumption no messages are forged - cryptography comes in here) and concur that an update on the state is valid once a specific threshold of nodes in the agreement is met.

The subsets of a quorum are called Quorum slices, which are capable of convincing particular nodes of an agreement, meaning that a node can rely on multiple sets of nodes asserting statements. A node can depend on numerous slices for information from outside of the system. Notably, trust is set up within the node's config file, allowing for the dynamic formation of quorum slices and subsequent decentralization.

Node A can determine that it does not trust banks, resulting in the need for another quorum slice that Node A trusts to come to an agreement with banks. Traditional BA requires that all nodes accept the same slices, rather than discerning the sources of trusted information for themselves. As such, there is no way to distinguish slices and quorums, requiring a closed and permission member access to the network.

The FBA model relies on individual nodes to choose their own sets of quorum slices, effectively enabling the organic and more decentralized formation of quorums that rely on individual decisions, hence the name 'federated'. In discussing safety and liveness in the FBA protocol, we need to evaluate quorum intersection and disjoint quorums.

According to SCP white paper: "A protocol can guarantee agreement only if the quorum slices represented by function Q satisfy a validity property we call quorum intersection."

Quorums intersect if they share a node. Good quorums share nodes and lead to overlapping quorums. Nodes are responsible for ensuring that their selection of quorum slices does not violate quorum intersection and typically requires that nodes select slices that are conservative and lead to large quorums.

When quorums do not intersect, they are known as disjoint quorums. Disjoint quorums are bad quorums that can lead to contradictory statements that undermine consensus. To ensure a proper slice selection process, nodes need to balance safety and liveness.

Nodes lack safety when they externalize values that contradict other nodes. Nodes lack liveness when they are blocked on the way to agreement. The Federated Voting model plays a critical role in the nodes coming to an agreement on a statement.

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Federated Voting

Federated Voting is the method by which the SCP agree on statements made by participants. Overall, there are two sets of messages exchanged between nodes, and the two message rounds can be subdivided into agreement states of unknown, accepted, and confirmed. Notably, voting in a federated environment must accommodate open membership, which makes the process more complicated than a closed system.

The federated voting process consists of 4 phases:

  1. Initial Voting
  2. Acceptance
  3. Ratification
  4. Confirmation

Initial voting is where nodes vote for a specific statement that they assert is valid and that they will not vote for contradictory statements. However, this still leaves open the possibility for the node to change its vote if enough of the other participating nodes — that a node trusts — vote for another valid message. Votes in this stage are technically preliminary votes.

Acceptance is the stage where a node accepts a statement based on whether or not that specific node has accepted a contradictory statement or a v-blocking set of nodes that are in quorum slices with that node (quorum intersection) accept a statement. If the node has not accepted a contradictory statement or a v-blocking set of nodes vote to accept a statement, then the statement is accepted by the node.

Ratification is where all members of a quorum vote to accept a statement. If they do, then the statement is ratified by the nodes. Going back to the Node A that does not trust banks, if the nodes that Node A shares a quorum slice with in addition to other nodes that it trusts vote to accept a statement, then it is ratified by Node A.

Confirmation is system-wide agreement on a statement. The system agrees on a particular statement once a sufficient threshold of messages is processed across the network. Nodes propagate acceptance messages across the network from nodes within their quorum. These messages can influence other nodes to accept the message even if they had accepted a different initial message. Finally, a round of confirmation messages is broadcast to confirm the message, concluding the round of voting.

The voting mechanism is complicated, but Stellar offers some excellent resources on how to map it out more effectively. They provide a “Galactic Consensus” graphic for a broader overview as well as a useful blog post using the Lunchtime Example. For a technical deep dive, you can read the Federated Voting section of the SCP paper.

SCP as the implementation of FBA agreement

The stellar consensus protocol SCP is the implementation of the Federated Byzantine Agreement Protocol designed to minimize the instances of blocked agreement and to neutralize them through a ballot system. The SCP protocol is comprised of 2 primary sub-protocols, the nomination protocol, and the ballot protocol.

For each consensus slot, the nomination protocol produces candidate values. Eventually, every node can deterministically generate a convergence value for each slot. However, they cannot know when the convergence occurs, and malicious nodes may be able to reset the nomination process.

The ballot protocol is executed once nodes agree that the nomination protocol has converged. In the ballot protocol, a ballot is tied to the candidate value, and a node must commit or abort the value tied to that ballot. To avoid agreement blocking, des can abort certain votes and move on to another. Conversely, nodes can vote to commit a ballot, which externalizes the value associated with that ballot to the consensus slot.

At a high-level, the way in which the SCP treats each slot independently is similar to single-slot consensus in Paxos, just with many separate instances.

There are no blocked states in the SCP with quorum intersections. Befouled nodes — nodes that rely heavily on bad nodes — can even be bypassed through a dispensible set mechanism where good nodes can ratify statements without the cooperation of befouled nodes. Befouled nodes also cannot undermine the consensus.

Both the nomination protocol and ballot protocol contain some highly complex details for specific scenarios such as split votes. These details are available in the SCP paper as well.

One of the limitations of the SCP is that it can only guarantee safety if nodes choose adequate quorum slices. Additionally, security issues in federated systems such as widely trusted nodes leveraging their positions for unethical advantages is a possibility. For instance, if banks are relied on by a vast swathe of nodes, then they may have an information advantage not available to other nodes in the network.

Stellar Development Foundation

The Stellar protocol is supported by a Delaware nonprofit corporation; the nonprofit Stellar Development Foundation was created in collaboration with Stripe CEO Patrick Collison founded in 2014 to support the development and growth of the open-source Stellar network and contributes to financial inclusion. The Foundation maintains Stellar's codebase, supports the technical and business communities building on the network to unlock the world's economic potential through blockchain technology.

Stellar Development Foundation is a decentralized nonprofit organization, fast, scalable, and uniquely sustainable network for financial products and services. It is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world's financial infrastructure. Dozens of financial institutions worldwide issue assets and settle payments on the Stellar network, which has grown to over 4 million accounts.

SDF has no shareholders, no dividends, and no profit motive. The Foundation is funded by stellar lumens generated at Stellar’s inception, and the Foundation’s current lumen holdings can be viewed below. All of the lumens held by the Foundation will eventually be used to enhance and promote Stellar and to pay taxes as we do so.

What the foundation is building?

The foundation is building a new stack for digital assets. Though Stellar is an open-source and decentralized, SDF leads the development of the network The foundation supports both the codebase and the people building on it.

Let's build on stellar together

Transaction Fees

To prevent ledger spam and maintain the efficiency of the network, Stellar requires to pay transaction fees and minimum balances on accounts other than the companies that charge high fees. No single entity can process transactions or stop someone from onboarding or off-boarding into Stellar, and the network can still run successfully even if some servers are turned off or fail. The fees are also used to prioritize transactions when the network enters the surge pricing model.

Fee Formula

Stellar transactions can contain anywhere from 1 to a defined limit of 100 operations. The fee for a given transaction is equal to the number of operations the transaction contains multiplied by the base fee for a given ledger. Fees, which are set by the protocol, are burned because they exist only to deter bad actors

Stellar deducts the entire fee from the transaction’s source account, regardless of which accounts are involved in each operation or who signed the transaction.

Base Fee

The base fee for a given ledger is determined dynamically using a version of a VCG auction. When you submit a transaction to the network, you specify the maximum base fee you’re willing to pay per operation, but you’re actually charged the lowest possible fee based on network activity.

When network activity is below capacity, you pay the network minimum, which is currently 100 stroops (0.00001 XLM) per operation.

Surge Pricing

When the number of operations submitted to a ledger exceeds network capacity (currently 1,000 ops/ledger), the network enters surge pricing mode, which uses market dynamics to decide which submissions are included. Essentially, submissions that offer a higher fee per operation make it onto the ledger first.

If there’s a tie — in other words multiple transactions that offer the same base fee are competing for the same limited space in the ledger — the transactions are (pseudo-randomly) shuffled, and transactions at the top of the heap make the ledger. The rest of the transactions, the ones that didn’t make the cut, are pushed on to the next ledger, or discarded if they’ve been waiting for too long. If your transaction is discarded, Horizon will return a timeout error. For more information, see transaction life cycle.

The goal of the transaction pricing specification, is to maximize network throughput while minimizing the transaction fee.

Fee Stats and Fee Strategy

The value of stellar derived from the general rule of thumb: to choose the highest fee you’re willing to pay to ensure your transaction makes the global ledger. Wallet developers may want to offer users a chance to specify their own base fee, though it may make more sense to set a persistent global base fee multiple orders of magnitude above the market rate — 0.1 XLM, for instance — since the average user probably won’t care if they’re paying 0.8 cents or 0.00008 cents. The current network fee is 100 stroops, equivalent to 0.00001 XLM or 1/10,000th of a cent.

Fee Pool

The fee pool is the lot of lumens collected from the transaction fee. SDF does not retain these lumens. They go into a locked account and sit there unused by anyone.

Summary of the Stellar Network

Stellar is an open network global financial infrastructure for making money, sending payments by exchanging money or tokens using the SCP. The platform's source code is hosted on GitHub.

Stellar is a self-serve distributed ledger that you can use as a backend to power all kinds of apps and services. It has built-in logic for creating accounts, signing transactions, and tracking balances, and anyone can use it to issue, store, transfer, and trade assets. Since many of those assets connect to real-world currencies, and since there are open protocols for integrating deposit and withdrawal of those assets, a Stellar-based app can take advantage of real banking rails and connect to real money.

Currently, developers use Stellar to power cross-border payment apps, currency exchanges, micropayment services, and platforms for in-game purchases, but what you build — and how you build it — is up to you. At its core, though, any app built on Stellar relies on the same basic functions: key storage, account creation, transaction signing, and queries to the Stellar database.

Servers run a software implementation of the protocol, and use the Internet to connect to and communicate with other Stellar servers. SCP facilitates fast transactions at lower costs, with everyone on the network reaching an agreement about a transaction's validity within a few seconds. Each server stores a ledger of all accounts in the network. Three nodes are operated by the Stellar Development Foundation, in conjunction with 21 other organizations, providing a total supply of 66 validator nodes. Transactions among accounts occur not through mining but rather through a consensus process among accounts in quorum slice. The current network fee is 100 stroops, equivalent to 0.00001 XLM or 1/10,000th of a cent.

The top cryptocurrency exchanges for trading in Stellar stock are currently Binance , OKX , FTX , Huobi Global , and CoinTiger.

Let's build on stellar together

Conclusion

Stellar is a cryptocurrency that tries to act as a cross-border payment system for any digitized asset or currency. Most people look at it as a decentralized XRP aimed towards consumers, rather than institutions. Exchanging between cryptocurrencies and/or fiat currencies can be a lengthy and expensive process; Stellar makes exchanging swift and cheap. Overall, the SCP is the first provably safe consensus protocol that can provide decentralized control, low latency, flexible trust, and asymptotic security. Unlike a qualified professional it can not provide you investment advice, trading advice, guide you through payment systems or assist you on financial decisions. Different forms of consensus all come with their trade-offs, but the SCP maintains a high level of effectiveness for quickly coming to a consensus in a distributed, permissionless network without sacrificing safety.

Given above is a whole overview of the Stellar blockchain development, you will find the article helpful in not only the typical stellar information but also about stellar lumen, it's native coin, the total supply of mini networks it offers, and all the different mini network it facilitates.

Frequently Asked Questions

Stellar is an open-source network that supports currency and payments. Stellar allows you to create, exchange, and send digital representations of every kind of money: pesos, dollars bitcoin, and pretty much everything else. It’s designed in a way that all the world’s financial systems be integrated into one network.

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