There are a couple of reasons and catalyst to the move. The most important among them is the end of the inflation program in Stellar. Stellar announced a new update to its protocol to increase the viability of cross-border payments using XLM.

The earlier model added 1% to XLM supply every year, the XLM was distributed to the stakeholders weekly after a voting process.

However, the Stellar Organization observed that the model was reaching an impasse. The new XLM was simply being stacked and the voting was also insignificant. Hence, instead of distributing the fees, it will begin burning the fees paid for conduction transactions on Stellar.

While this weakens the economic model as stakeholders are left with no earning opportunity, it curbs the supply of XLM. From November, the supply of XLM will remain constant which until now was increasing at a rate of 1% annually. During bearish altcoin sentiments, inflation acts as a strong force of devaluation.

The amount circulation supply of Stellar is 20,054,779,554 XLM, while the total supply of Stellar is at 105,443,902,087 XLM. About 80% supply of pre-mined XLM is yet to release. Moreover, the update which disabled inflation can be switched back on. Hence, after considerable growth of the network, the stakeholders can expect inflation to resume.

For now, Binance has ended the XLM staking support on its Exchange from November. Recently, Travala.com, the crypto-focused travel, and hotel booking website also added support for Stellar and Cardano.

Do you think Stellar Organization made the right decision? Please share your views with us.

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