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The Stellar Development Foundation received 98% of XLM inflation disbursements

Of the 5, 48 billion XLM paid out by Stellar as part of its inflation spread, 98 went to the Stellar Development Foundation. And although the foundation has burned the majority of the money received in this way to reduce the injustices in the network, none of it actually went into the intended community use projects.

Stellar's broken inflation distribution process

In contrast to Bitcoin and Ethereum, which distribute the new number of coins to the miners as a reward, Stellar reserves a portion of the newly issued coins for the non-profit foundation. However, the Stellar Development Foundation appears to be anything but nonprofit, as recent research has shown that it does not spend the funds it receives on community projects.


According to a recent CoinMetrics report, Stellar's inflation process has issued new tokens at a fixed rate of 1 percent per year. The surplus of the tokens would be divided among the “inflation determination accounts”, which would receive a share of the inflation pool in proportion to their total balance. The distribution of inflation would be decided by a weekly vote.

Jeb McCaleb, the co-founder of Stellar, said that this process was created to “incentivize people to work together and decide how to distribute the network's rewards”. However, after almost a year, the Stellar Development Foundation (SDF) decided to end the inflation distribution process in October 2019 because it had failed to develop and support the growth of the ecosystem.

The Stellar community saw nothing of the money it was promised

CoinMetrics found that of the four years in which the inflation process was running, only 23 unique recipients who received 5, 482 billion XLM. These recipients included some of the largest XLM holders on the market, including the Stellar Development Foundation, crypto exchanges, community projects, and inflation pools (individual inflation target accounts that were merged to get more rewards).

However, only one of these accounts actually benefited from the inflation distribution. According to the report, 98 percent of all payments made in October went 2015 to October 2019 to the Stellar Development Foundation.

CoinMetrics stated that this is most likely the result of two factors. Since the Stellar Development Foundation 80 controls percent of the total circulating XLM supply, it has determined itself as an inflation target and has therefore received most of the spread inflation.

The second factor that could explain the SDF's massive inflation equalization is the fact that they have always participated in the inflation process. Since Stellar only saw its popularity grow in the year 2017, the SDF had a two-year lead.

Although SDF did its best to correct the injustices caused by the inflation process in the network, since November 340 million XLM or about 16, $ 7 million in the development and growth of the Network, the SDF actually worsened the position of the Stellar community. With only 834.000 XLM, or approximately 41. 000 dollars that have so far been used in community projects, it is clear that the biggest loser this year is the Stellar Community was.

Proof of text: cryptoslate