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Is Stellar Lumens (XLM) really decentralized?


The Stellar network, equipped with the token XLM, was created to be the decentralized alternative of Ripple.

Ripple was born in 2012 as a centralized project, created by the private company of the same name and conceived by Jed McCaleb, although McCaleb himself left the following year to establish Stellar.

Stellar Lumens, unlike Ripple, it was born from the beginning as an open source and decentralized project, as such, not It was created by a private company but by a non-profit foundation, the Stellar Development Foundation, of which McCaleb is still CTO today.

Among other things, McCaleb had also previously founded Mt.Gox and eDonkey.

The objective with which Stellar was created was very similar to that of Ripple: allow fast and cheap cross-border monetary transactions, but as a decentralized project it would also guarantee censorship-resistant transactions.

However, over time, doubts have been raised about whether Stellar is really a decentralized network. The question concerns in particular XLM tokens, which are previously mined, that is, they were created before the platform was launched to the public, with the result that, to date, Of the 50 billion XLM tokens created, there are just under 20 billion in circulation.

The Stellar blockchain does not use mining to create blocks and does not use the Proof of Work as a consensus algorithm, so you do not need to reward miners by creating tokens for each block.

However, this means that to date there is someone who controls most of the XLM tokens created, and this may raise doubts regarding the actual decentralization of XLM. Also, this is a feature in common with the Ripple XRP and it doesn't attract much to the purists of decentralization.

As for the technical management of the Stellar blockchain, in which smart contracts can also be executed, the issue is different.

To make very fast and cheap transactions, Stellar uses its own consensus algorithm, thanks to which each node can participate in the transaction validation process. The fact that anyone can execute a Stellar node, and that no one has the majority decision power, means that the Stellar blockchain can be considered decentralized.

Thus, As long as there are many competing nodes, the Stellar blockchain will remain decentralized.

However, to be considered a decentralized network like Bitcoin or Ethereum, for example, tokens should not be so concentrated, and this is a condition that is not met today.

This means that, on the one hand, there are those who consider Stellar to be decentralized, while on the other, there are those who consider it centralized. The fact that XLM tokens are likely to remain focused for a long time means that this disagreement will not be resolved so quickly.

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