Stellar To The Moon! What Is Behind XLM's Recent Bull Run?
Have you taken a look at the price of Stellar Lumens (XLM) in the past few weeks? If you haven't, you might want to check it out. While the digital asset's price has been falling since 2018's crypto winter, things have changed for the project in 2020. Between January 1 and November 19, XLM nearly doubled its value.
However, the cryptocurrency entered into an even larger bull run in late November, surging from $0.0834 to as high as $0.225 before correcting to $0.142. As of December 23, Stellar Lumens have generated a 223% Year-to-Date (YTD) return for investors in 2020.
Since we had created our first article about the project 11 months ago, numerous events have occurred in the Stellar ecosystem, which could have impacted the XLM price.
Stellar and XLM Recap
Before we take a look at the project's most important events, let's first recap what Stellar and XLM are and how they work.
Co-founded by Jed McCaleb and launched in 2014, Stellar is an open-source blockchain network specializing in cost-efficient and rapid cross-border payments.
Similar to Ripple (another cryptocurrency project co-founded by McCaleb, which he later left to create Stellar), Stellar's protocol also focuses on operating an efficient global payments network for businesses and financial institutions.
In addition to featuring its native Stellar Lumens (XLM) digital asset, the project features anchors, which represent regulated financial institutions and service providers that connect the Stellar blockchain with traditional banking services and fiat currencies.
As a result, non-interoperable payment schemes (e.g., ACH, SEPA) can be linked under Stellar's decentralized ledger to make transfers borderless and more efficient.
Furthermore, Stellar participants can issue fiat-pegged tokens and other asset-backed digital assets (e.g., gold- or REIT-backed coins) on the blockchain via anchors.
To reach consensus, the project uses the Stellar Consensus Protocol (SCP), which is an algorithm based on the Federated Byzantine Agreement (FBA) model.
Due to its consensus mechanism's efficiency, Stellar's blockchain is highly scalable with fast-confirming (usually within 4-5 seconds) and inexpensive transactions (for simple transfers, the fee is 0.00001 XLM or $0.000001845).
What Happened to Stellar in 2020?
Now that we have taken a look at Stellar's basics, let's see the events that could have impacted the XLM price in 2020.
Stellar-Based Project Successfully Raises Funds
In January, the Stellar-based Lightnet raised $31.2 million during a Series A funding round from prominent financial firms in Southeast Asia.
Interestingly, the Bangkok-based Lightnet has the goal to enhance cross-border transactions and challenge SWIFT's dominance in the international payments space.
New Partnerships and Investments
The Stellar Development Foundation (SDF), the non-profit organization managing the crypto project, has struck two new partnerships in 2020.
At the end of April, the SDF reached an agreement with the blockchain analytics and compliance firm Elliptic to detect and crack down on fraud as well as reduce risks for Stellar's business partners more efficiently.
In July, the SDF collaborated with Samsung to add the prior project's services in the Samsung Blockchain Keystore, which allows Stellar developers to create DLT solutions for the South Korean firm's Galaxy smartphones.
In addition to partnerships, Stellar has made multiple investments in blockchain startups this year.
While the SDF invested $715,000 in the fintech firm DSTOQ in February, it poured $5 million into the crypto investment app Abra and $550,000 into the Berlin-based instant payment platform SatoshiPay in May.
Furthermore, a few days ago, Stellar invested $3 million in the Argentina-based Settle Network, the largest asset settlement network throughout Latin America.
While it's neither a partnership nor an investment, it's important to mention that the Germany-based Bankhaus von der Heydt, one of Europe's oldest banks, has recently launched the EURB stablecoin on Stellar via the asset tokenization platform Bitbond's solution.
Protocol 15 Upgrade
Maybe the most critical Stellar event this year was the project's Protocol 15 upgrade on November 23.
Interestingly, Stellar discovered an issue that led to validators crashing when testing Protocol 14, which was the next upgrade for the cryptocurrency network after version 13.
Instead of releasing a patched version, developers decided to skip the 14 upgrade and go for Protocol 15 instead, which includes all the new features of the unreleased update along with crash fixes.
The new upgrade introduces features that create an easier, more convenient onboarding experience for users, such as eliminating the need for anchors to send freshly registered customers to third-party crypto exchanges.
It seems like the community has appreciated Stellar's efforts with Protocol 15 as XLM's price more than doubled following the upgrade.
Stellar Has an Interesting Year Ahead
With a major network upgrade, successful fundraising within the ecosystem, the launch of a stablecoin, as well as multiple partnerships and investments, Stellar has been quite productive in 2020.
We can safely assume that the project's work is now reflected in the XLM price, which has led to the coin securing the 11th place among the top cryptocurrencies by market capitalization.
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