Some news is like wine. They don’t become stale when a few days pass, but mature. For example the news that Stellar distributes two billion XLM tokens to keybase users and that the Stellar Foundation burns 55 billion XLM. This news only becomes really interesting when a few weeks pass and you can observe how the market reacts to it. On November 5th the Stellar Foundation announced a crazy action. In a post entitled “The Stellar Foundation’s Next Steps,” the Foundation reports shortly before a meeting of the Stellar ecosystem in Mexico City, where many different people met for the first time. This event is “the perfect setting for a long overdue update on Stellar’s give-away programs”. Everything the Foundation does has the purpose of making Stellar the global payment standard. Then the Foundation bursts a bomb:
The day before, there had been about 105 billion lumens (XLM): 20 billion in circulation, 17 billion in the Stellar Foundation’s treasury, and 68 billion reserved to be given away. The currency units of the Stellar blockchain, called lumen, are not created by mining, but were initially produced in the Foundation’s wallets. Since then, the Foundation has tried to distribute the tokens through strategic partnerships, for example with SatoshiPay, Blockchain.info or, most recently, Keybase.io (we’ll come back to this later). These partnerships have resulted in ever larger Airdrops. But now one notices that the giveaways and airdrops have “retrogressive effects” and that the amount of tokens on the wallets of the foundation is simply too big.
So what to do? “We’ve decided to reduce our distribution of lumens and focus instead on what we think Stellar needs the most.” As a result, the Foundation has burned 5 billion lumens from the company treasury, which now “only” contains 12 billion lumens. At the same time, the Foundation ends its giveaway program and burns 50 billion out of the 68 billion reserved for this program. This happened because the Foundation wrote a transaction without a signature, which in the Stellar system is probably equivalent to destruction.
A Stellar Lumen is currently worth $7 cents. If you extrapolate these numbers – you shouldn’t do this seriously – the Stellar Foundation has destroyed 3.85 billion dollars. I don’t think there has ever been such a big burning of money. Yet the Foundation is far from poor. There are currently still 50 billion lumens, of which only 20 billion are in free circulation, while the remaining 30 billion remain in the Foundation’s possession as a resource to drive Stellar forward. So even after this massive burning of money, the Foundation still has 60 percent of all available tokens, making the Stellar economy one of the most centralized distributions of coins.
Whether this step really helps a lot remains to be seen. Although the price has risen slightly for a short time, it has not been able to leave the long-lasting downward trend. But the Stellar Foundation is right about one thing: The Airdrops don’t (anymore) work properly. In September, the Foundation organized together with the chat app Keybase.io the biggest giveaway ever: 2 billion lumens – currently 140 million dollars – are distributed to users of Keybase.io in monthly intervals, as long as they fulfill a few, relatively simple conditions. At that time I described in an article how to participate in the giveaway.
But it turned out relatively quickly that people take advantage of giving so much away. Who would have thought that? Keybase had to start limiting access some time after the announcement of the Airdrop. In the beginning it was enough to register several “Paper Devices” and a sufficiently old Github account. That was one thing that could be done in a few minutes. Meanwhile more and more people complain that they can’t participate in the Airdrop, although they can fulfill all conditions. Keybase has apparently excluded numerous countries from the lumen rain because of massive abuse. Half of the registrations were withdrawn.
But even that doesn’t help to prevent the users from using the Airdrop in a way that is probably not in the sense of the Stellar Foundation. In the last weeks it started, and as it turns out, many people want to use the tokens, but only a few want to keep them. For example, someone has built a site where you can exchange your lumens for Lightning bitcoins. I also got lumens today – not so little, worth 48 Euro – and exchanged them promptly; not for BTC, but for Bitcoin SV, and gave some of them away immediately. The Airdrop becomes less an Airdrop for Stellar, but an Airdrop for the whole crypto scene.
Who participates in the Keybase-Airdrop – or who still manages to register – has a unique chance: He can pick up Stellar, exchange it for a coin of his choice, then either save the new coins, or give them away in order to bring his own favorite coin a bit more into circulation.