Stellar Lumen Reaches All-Time High Market Cap Despite Supply Inflation
Stellar Lumen (XLM) achieved its all-time high market cap of $18.366 billion on May 16, 2021, three years after reaching its all-time high price of $0.88 on January 3, 2018. The token’s supply inflation is responsible for this delay. In 2018, during its ATH, XLM had a market capitalization of $17.55 billion. Stellar’s circulating supply inflation is unpredictable, with additional tokens potentially being added to circulation at any time from the ‘Stellar Development Foundation (SDF) Mandates’, ‘Upgrade Reserve’, and ‘Fee Pool’.
Due to this unpredictable model, Stellar is significantly impacted by its token’s inflation. Based on data from Finbold, as of September 8, with a circulating supply of approximately 27.496 billion XLM, one Lumen would be valued at around $0.66, which is $0.22 (25%) less than its all-time high price in US dollars. The current price is 85.78% lower than the all-time high price.
Stellar Token Burns and Governance
On September 30, 2015, when the Stellar network went live, 100 billion XLM were created. However, on November 4, 2019, the SDF burned over 55.44 billion Lumens from their own stash to mitigate the negative impacts of supply inflation on holders. This burn occurred after validators voted to end the yearly 1% supply inflation, resulting in a total supply of 105.44 billion XLM, not yet in circulation.
Currently, approximately 55% of the resting supply is in circulation, with idle tokens in the ‘Upgrade Reserve’, ‘Fee Pool’, and ‘SDF Mandate’ stashes, which can be redeemed or added to circulation by the Foundation based on various conditions.
How Other Cryptocurrencies Would Perform According to Their ATH Market Cap
- XRP
- Ethereum
- Dogecoin
- SHIB
- Cardano
- Bitcoin
- Solana (SOL)
Hot Take
Stellar’s supply inflation and unpredictable circulating supply have affected its market performance. Despite reaching an all-time high price, the delay in achieving an all-time high market cap highlights the challenges posed by these factors. However, the token burns conducted by the Stellar Development Foundation demonstrate efforts to address the negative impacts of inflation on holders. It will be interesting to see how Stellar and other cryptocurrencies navigate supply dynamics and governance structures to maintain long-term value.
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