WHAT ARE LUMEN
What are lumens?
One lumen (XLM) is a unit of digital currency, like a bitcoin.
Lumens are the native asset of the Stellar network.
Native means that lumens are built into the network. Asset is how the network refers to an item of value that is stored on the ledger.
One lumen is a unit of digital currency, like a bitcoin.
While you can’t hold a lumen in your hand, they are essential to the Stellar network—they contribute to the ability to move money around the world and to conduct transactions between different currencies quickly and securely.
WHERE DID LUMENS COME FROM?
In 2014 the Stellar network launched with 100 billion stellars, the original name of the network’s native asset.
In 2015, with the launch of the upgraded network, the name of the native asset changed from stellar to lumen to distinguish it from 1) the Stellar network itself and 2) Stellar.org, the nonprofit organization that contributes to development of the network.
NATIVE ASSET
The Stellar network offers the innovative features of a shared public ledger on a distributed, global database—often referred to as blockchain technology. The Stellar network’s built-in currency, the lumen, serves two purposes:
First, lumens play a small anti-spam role.
Lumens are needed for transaction fees and minimum balances on accounts on the Stellar network in order to prevent people from overwhelming the network and to aid in prioritization.
Each transaction has a minor fee—0.00001 lumens—associated with it. This fee prevents users with malicious intentions from flooding the network (otherwise known as a DoS attack). Lumens serve as a security measure that mitigates DoS attacks that attempt to generate large numbers of transactions or consume large amounts of space in the ledger.
Similarly, the Stellar network requires all accounts to hold a minimum balance of 0.5 lumens. This requirement incentivizes users to declutter the ledger by eliminating abandoned accounts, thereby that ensuring that all accounts are likely to have economic utility on the network.
Second, lumens may facilitate multi-currency transactions.
Lumens sometimes facilitate trades between pairs of currencies between which there is not a large direct market, acting as a bridge. This function is possible when there is a liquid market between the lumen and each currency involved.