Stellar: what it is and how it works with Trezor

Stellar is an open-source, decentralized network for fast, low-cost payments and asset transfers. Its native currency is Lumens (XLM).

This article covers how the Stellar network works, what makes it different from other blockchains, and what you need to know before using XLM with Trezor.

How Stellar works

Stellar settles transactions in about 5 seconds using the Stellar Consensus Protocol (SCP). Fees are very low, typically a fraction of a cent, paid in stroops (the smallest unit of XLM, equal to 0.0000001 XLM).

Unlike Bitcoin or Ethereum, Stellar has no mining or staking. The total supply is 50 billion XLM. At launch, 100 billion were created, but the supply was later reduced through a community vote.

Fees are not burned. They go into a protocol pool and are redistributed or allocated to network support.

Stellar and Ripple

Stellar was created by Jed McCaleb, who co-founded Ripple and left in 2014 to start the non-profit Stellar Development Foundation. The two networks share similar technology (fast settlement, base reserves, destination tags) but differ in governance.

Ripple Labs is a for-profit company focused on banking. The Stellar Development Foundation is a non-profit focused on open, low-cost cross-border payments.

Base reserve

Every Stellar account must hold a minimum balance called the base reserve. A new account needs 1 XLM to exist (two base reserves of 0.5 XLM each). This 1 XLM is locked and cannot be spent unless you close the account entirely.

Each additional item your account holds (a trustline, an open offer, or an extra signer) adds 0.5 XLM to the required reserve. For example, if you activate three tokens, your minimum reserve becomes 2.5 XLM (1 XLM base + 3 × 0.5 XLM).

Trustlines and token activation

On most blockchains, you can receive any token at any time. Stellar works differently. Before your account can hold a specific token, you need to create a trustline for it. A trustline is your account's permission to hold a token issued by a specific issuer on the Stellar network.

Creating a trustline increases your required reserve by 0.5 XLM and costs a small network fee (typically 0.002 XLM or less). In Trezor Suite, this process is called "activating" a token.

If someone sends you a Stellar token you haven't activated, the transaction fails and the sender keeps their tokens.

Destination tags (memos)

When sending XLM to an exchange or payment processor, you may need to include a destination tag (also called a memo). The tag identifies which customer account the payment belongs to. Sending without the required tag can result in lost funds.

When receiving XLM into your Trezor, destination tags are not required.

Stellar tokens

Stellar allows anyone to issue tokens on the network. These tokens are commonly used for stablecoins (like USDC), tokenized assets, and cross-border payments.

Because of the trustline system, you choose which tokens your account can hold. This gives you control over what enters your wallet, but it also means you need to activate a token before you can receive it. You can manage token activation in Trezor Suite.

Supported devices

XLM is supported on all Trezor Safe family devices and Trezor Model T.

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Trezor Safe 7

  

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Trezor Safe 5

  

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Trezor Safe 3