On Monday (November 4), the price of Stellar Lumen (XLM) rose over 27% after Danelle Dixon, CEO and Executive Director of the Stellar Development Foundation (SDF) announced that the nonprofit had burned 55 billion XLM on it owned, reducing the total XLM supply from 105 billion to 50 billion.
The initial total supply of Lumen (XLM), the indigenous 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 was tasked with adding new lumens to the network at a rate of 1% each year, increased the total XLM supply from 100 billion to 105 billion.
On September 30th, SDF proposed to deactivate Stellar’s inflation mechanism. SDF’s blog post states that it is “a good idea to disable the current inflation mechanism for the following reasons:
- Inflation doesn’t help with apps based on the Stellar platform.
- Inflation leads to scalability problems.
GitHub data shows that a change to the code for the Stellar Protocol to disable inflation for version 12 and later was filed on September 30th. Stellar was updated to version 12 four weeks later (October 28th).
Dixon’s comments on Stellar’s overall XLM offering and SDF’s decision to incinerate nearly 65% of previously controlled XLM tokens were made during the keynote speech (“SDF’s Next Steps”) they held in Mexico City yesterday held the two-day Meridian Conference (Stellar’s first conference).
The day before the SDF CEO’s meeting, Stellar’s total 105 billion XLM token offering was distributed in the following way:
- 20 billion “out in the world”;
- 17 billion “in the operating fund of the SDF”; and
- 68 billion “reserved for giveaway programs managed by SDF”
Shortly before her talk, SDF was burning 55 billion lumens (5 billion lumens came from SDF’s operational funnel and 50 billion lumens from SDF’s World Giveaway Program and Partner Giveaway Program).
According to the blog post published by the SDF, the decision to burn those 55 billion XLM tokens was made because the SDF realized that it could “be leaner and do the job it was created for with fewer lumens.” SDF also says it “doesn’t burn any extra lumens”.
It seems like the crypto market is enjoying what it heard from the Stellar CEO. Just before Dixon started their conversation (November 4th around 10:00 PM UTC), XLM was trading at $ 0.0702, according to CryptoCompare.
In an hour, the price of stellar lumens was up over 27% to $ 0.0895. Since then, the XLM price has gone down, but XLM is still up over 16% in the past 24 hours:
Selected image courtesy of the Stellar Development Foundation
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