The 2022 bear market tested the resilience of the crypto market to the limit, leading naysayers to question the sustainability and demand for blockchain technologies. However, the rally since early 2023 has piqued the curiosity of businesses and governments, who want to capitalize on the technology’s potential to drive transparency and efficiency. This is where the Stellar Consensus Protocol comes into the picture.
Aside from networks working on proof-of-work (PoW) and proof-of-stake (PoS) consensus algorithms, another technology to look out for could be the Stellar Consensus Protocol (SCP) on which the payment-focused layer- 1 solution , Stellar is based.
Read Stellar (XLM) Price Forecast 2023-24
The Stellar Development Foundation (SDF) recently awarded her Q1 2023 report, an overview of its performance and statistics of some of its key performance indicators (KPIs) that measure overall network usage. One of the biggest areas of growth was total operations processed on the network, which exceeded 1 billion during the quarter, reflecting 21.7% year-over-year (YoY) growth. The total number of accounts also saw a significant increase of 15.8% from the first quarter of 2022.
Of concern, however, was the sharp drop in total payments across the chain, more than 60% year-on-year. For a technology that positions itself as a viable alternative for facilitating cross-border payments, this decline is alarming.
What is SCP?
Stellar is an open-source, decentralized network and protocol that enables the exchange of any kind of currency, including fiat money like USD and cryptocurrencies like Bitcoin [BTC]. Stellar allows people to send and receive money nationally and internationally, regardless of the currency type.
Like other blockchains, Stellar also relies on a consensus algorithm to verify the validity of transactions. The SCP is an open source system that provides a unique way to reach consensus without relying on a closed system to accurately record financial transactions. This approach does not require validation of all miners in the network. Rather, it relies on the cooperation of trusted nodes.
Using the Federated Byzantine Agreement (FBA), nodes select other nodes they believe to be trustworthy, then work together to create and validate a series of transactions to change the state of the ledger. This technique results in faster transaction processing, making Stellar an attractive medium for sending money across borders.
However, the network has yet to realize its full potential as it was processing just 38 transactions per second (TPS) at the time of publication, according to Block chair facts.
Stellar’s Roadmap for 2023
As part of his strategy for expansion in 2023, Stellar stated that the main focus will be on utilities. This is to attract real users, developers and companies that want to exploit the growth potential of blockchain technologies.
The ecosystem plans to focus its efforts on three key components to increase network utility: making innovation simple and scalable, attracting developers who want to solve real problems, and building trust with stakeholders.
And Stellar seemed committed to making its network more attractive to potential builders. It recently integrated with AI-powered cybersecurity company AnChain.AI to improve the security of its cross-border payments. Security is one of the foundations on which the architecture of decentralized solutions rests. Therefore, better security will undoubtedly attract more developers.
Safety is important! @AnChainAIStellar’s integration provides developers with accessible security tools for a more secure ecosystem. https://t.co/feAZd00PUD
— Stellar (@StellarOrg) May 9, 2023
However, a look at Stellar’s development activity indicator didn’t inspire much optimism. After climbing to its highest point in 2 months in the first week of May, it dropped suddenly during the month. Development activity is a measure of a project’s efforts to polish and improve its features. A significant drop could potentially deter new players from entering the system.
Source: Sentiment
Measure the performance of XLM in 2023
Stellar’s proprietary cryptocurrency called Lumens, or XLM, is one of the mainstays of the payment network. In addition to paying transaction fees on the network, XLM also acts as the intermediary currency through which Stellar users can transact.
How much are 1,10,100 XLMs worth today
At the time of writing, XLM was exchanging hands for $0.08831, according to CoinMarketCap, representing a year-to-date (YTD) growth rate of 21%. While this is an impressive achievement, the coin experienced a significant price correction over the past month, driven by broader market conditions. On a monthly basis, it is down nearly 17%.
Apparently, this has affected demand, as transaction volume has declined since the massive surge in late March, according to data from Santiment. The price drop has eroded investor confidence in the token as weighted sentiment plunged into the negative zone.
Source: Sentiment
