Market Feels the Burn After Total Stellar (XLM) Supply Is Reduced to 50 Billion

On Monday (November 4), the Stellar Lumen ($XLM) price surged over 27% after Danelle Dixon, the CEO and Executive Director of the Stellar Development Foundation (SDF), announced that the non-profit organization had burned 55 billion of the $XLM it owned, thereby reducing the total $XLM supply from 105 billion to 50 billion.

The initial total supply of lumen ($XLM), the native token of the Stellar network, was 100 billion when Stellar went live five years ago. However, the Stellar network's built-in inflation mechanism, which had the task of adding new lumens to the network at the rate of 1% each year, caused the total $XLM supply to increase from 100 billion to 105 billion.

Back on September 30, SDF proposed disabling Stellar's inflation mechanism. SDF's blog post said that it was "a good idea to disable the current inflation mechanism for the following reasons:

• Inflation isn’t helping apps built on the Stellar platform.
• Inflation leads to scalability issues.

GitHub data shows that a change to the code for the Stellar Protocol for disabling inflation for version 12 and above was submitted on September 30; Stellar got upgraded to version 12 four weeks later (i.e. on October 28).

Dixon's comments about Stellar's total $XLM supply and the decision by SDF to burn almost 65% of the $XLM tokens it previously controlled were made during the keynote talk ("SDF's Next Steps") she gave yesterday in Mexico City at the two-day Meridian conference (Stellar's first conference).

Before the SDF CEO's talk began, this was how Stellar's total supply of 105 billion $XLM tokens was distributed:

• 20 billion "out in the world";
• 17 billion "in SDF's operating fund"; and 
• 68 billion "reserved for giveaway programs administered by SDF"

It seems as though the crypto market liked what it it heard. Just before Dixon started her talk (around 22:00 UTC on November 4), according to CryptoCompare, $XLM was trading at $0.0702. Within one hour, the price of Stellar lumens had surged over 27% to $0.0895. Since then, the $XLM price has come down, but it is still up over 16% in the past 24-hour period:

$XLM-USD 24 Hour Chart - 5 Nov 2019.png" src="https://cnews24.ru/uploads/5d3/5d38ff3554212c00215f4e54b4ef474c232dd557.png" size="700x430">

Featured Image Courtesy of the Stellar Development Foundation