The market is feeling the burn after the total supply of Stellar (XLM) has been reduced to 50 billion

On Monday (Nov. 4), Stellar Lumen (XLM) prices rose over 27% after Danelle Dixon, CEO and Executive Director of the Stellar Development Foundation (SDF), announced the nonprofit had sold 55 billion XLM. burned it, reducing the total XLM supply from 105 billion to 50 billion.

The initial total amount of Lumens (XLM), the native 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 1% new lumens to the network every year, caused the total XLM supply to grow from 100 billion to 105 billion.

On September 30th, SDF proposed to deactivate Stellar’s inflation mechanism. According to a blog post by SDF, “disabling the current inflation mechanism is a good idea for the following reasons:

• Inflation doesn’t help with apps based on the Stellar platform.
• Inflation leads to scalability problems.

GitHub data reveals that a change to the code for the Stellar Protocol to disable inflation for version 12 and later was filed on September 30; Stellar was updated to version 12 four weeks later (October 28th).

Dixon’s comments on Stellar’s entire XLM offering and SDF’s decision to incinerate nearly 65% ​​of the previously controlled XLM tokens were made during the keynote speech (“SDF’s Next Steps”) that they gave yesterday in Mexico City at the two-day Meridian Conference held (Stellar’s first conference).

The day before the SDF CEO’s meeting, Stellar’s total offering of 105 billion XLM tokens was distributed like this:

• 20 billion “out in the world”;
• 17 billion “in the operational fund of SDF”; and
• 68 billion “reserved for giveaway programs managed by SDF”

Then, just before her talk, SDF burned 55 billion lumens (5 billion lumens came from SDF’s operational joke and 50 billion lumens came from the World Giveaway Program by SDF and its 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 they could “be leaner and do the job it was created for with fewer lumens.” SDF also says it “does not burn any additional lumens”.

It seems like the crypto market liked what it heard from the Stellar CEO. Just before Dixon started her talk (around 10:00 PM UTC on November 4th), 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, 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