Stellar Lumens: free international payments for all

OVERVIEW

PITCH

Stellar proposes a structure to develop payment systems based on decentralized ledger technology, which the same way as Ripple would. The founders, Jed McCaleb (also the founder of the sadly famous MtGox) and Joyce Lim, were also part of the creation of Ripple before leaving it to create Stellar. A disagreement on the strategic orientations of the Ripple project might be the reason of the break-off. When Ripple decided to serve only banks and major corporations, Stellar core idea is to provide all persons, and especially poor peoples, access to banking services and the possibility to transfer funds worldwide for free

Stellar allows anyone to develop applications from it API (“Horizon”) and interact with the network through the intermediary “Stellar Core”, which role is to validate transactions using the Stellar Consensus Protocol we are describing below. Once connected to the network, it is easy to exchange value all around the world for free and instantly.

The only obligation of each participant is to create an account through which he will be allocated a set of public and private keys.

INNOVATION : Stellar Consensus Protocol (“SCP”): the Federated Byzantine Agreement

Stellar Consensus Protocol has been created to solve the issue of the « Byzantine failure », by reaching a consensus without requesting the approval of all the members of the network.

The consensus works in four different steps, in the same way as a protocol like Paxos would. The nodes of the systems exchange a list of ballots to confirm and at the end agree on a value. But a ballot can only be validated if a minimum quorum is respected, i.e a certain number of nodes need to take part to the vote for the ballot to be valid. Each node chose a slice of the quorum in which it will include some nodes that it trusts. Each of these quorum slices will produce intersections with each other.

To reach an agreement, the Stellar Consensus Protocol relies on a property called “quorum intersections”. The idea behind this concept is that each node that is honest carries a network topology strong enough to reach a consensus.

BUSINESS MODEL :

Stellar is a non for profit organisation, so the use of the system and network is free and open source. Operational costs are covered by donations and the 5% of tokens retained by the founders.

THE TEAM : it is composed of 12 persons including :

Jed McCaleb : Co-founder of Stellar, he has strong background as cryptoentrepreneur since he has created the first exchange for bitcoins MtGox. He is also one of the founders of Ripple that he left for strategic reasons.

David Mazière : professor of informatic sciences at Stanford university, he has a PHD in electric engineering and informatic sciences. He is the main conceptor of the Stellar Consensus Protocol.

CONCURRENT COMPANIES :

ABRA and BITPESA are the two main concurrents that come to mind. Like Stellar, these two start-ups intend to offer poor peoples access to financial services and in particlar free international monetary transfers.

Even if Ripple’s purppose is to make international monetary transfers free, we do not see it as a current for Stellar since it only provides services for institutional clients.

LEARN MORE :

Stellar Roadmap : https://www.stellar.org/blog/roadmap/

Outside the Spotlight, Stellar is Pulling Banks Into Orbit

David Mazieres – The Stellar Consensus Protocol: A Federated Model for Internet-level Consensus – Fevrier 2016 – https://www.stellar.org/papers/stellar-consensus-protocol.pdf

Leslie Lamport – Paxos made simple – 2001 – http://research.microsoft.com/en-us/um/people/lamport/pubs/paxos-simple.pdf

Stellar Developpement Foundation – On Worldwide Consensus – Dec 2015 – https://medium.com/a-stellar-journey/on-worldwide-consensus-359e9eb3e949#.be783b5y1