Stellar Lumen (XLM) reached an all-time high price of $0.88 on January 3, 2018, but its all-time high market cap of $18.366 billion only came three years later, on May 16, 2021, at a price of $0.71, due to the token’s supply inflation. XLM had a market capitalization of $17.55 billion in 2018, during its ATH.
Stellar has an unpredictable circulating supply inflation. All XLM in existence were created by October 28, 2019, according to the project’s documentation, but there are still tokens under the ‘Stellar Development Foundation (SDF) Mandates’, or in both the ‘Upgrade Reserve’ and ‘Fee Pool’, that can be added to circulation at any time.
With such an unpredictable model, Stellar is highly affected by its token’s inflation. Considering data retrieved by Finbold on September 8, with a circulating supply of around 27.496 billion XLM, one Lumen would be worth close to $0.66 — $0.22 (25%) less than its all-time high price in US dollars.
Moreover, market capitalization is usually used to measure the market’s perception of value in a given asset, as well as its speculative demand in a given moment. This means that Stellar constantly needs an increased demand to meet historical prices with a previously much lower supply.
Stellar (XLM) price analysis
Meanwhile, XLM is trading at $0.12 at the time of publication, which would potentially offer the possibility for Stellar investors to gain 450% for purchases made at this moment if this cryptocurrency ever meets previous demand.
Comparatively, the current price is -85.78% lower than the all-time high price.
Stellar token burns and governance
According to its paper, 100 billion XLM were created on September 30, 2015, when the network went live. On November 4, 2019, the SDF burnt over 55.44 billion Lumens from their own stash, in order to reduce the negative impacts of the supply inflation to its holders.
Notably, this massive burn happened one month after the validators voted on a proposal to end the yearly 1% supply inflation, adding up to the initial 100 billion — which made Stellar have a total supply of 105.44 billion XLM, not yet in circulation.
Right now, with close to 55% of the resting supply circulating, there are idle tokens in three different stashes:
- ‘Upgrade Reserve’, which can be redeemed by users from the old network;
- ‘Fee Pool’, which can be voted by validators to be redeemable;
- ‘SDF Mandate’, which can be arbitrarily added to circulation by the Foundation.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
