You're about to get an honest review of Stellar, or XLM. My realistic price prediction is that this is going to drift toward zero over time. I have some serious concerns, and I'm laying out the key problems I see here, problems I believe will keep this from going anywhere in the long term. In my experience, you're going to get much better gains in projects that have real technology behind them and that are far more undervalued, like the Internet Computer Protocol. So let's take a look at one of the biggest and most obvious problems first.
I'd much rather show up here and hype this up, get a bunch of likes and views from the community, and make a whole lot of money off my videos. But that's just not the truth, at least not the truth as I see it about what's going on. What I see is that Stellar is drastically overvalued. It has a $10 billion market cap, and it's basically just a copy of XRP. So if you're bullish on XRP, then to me XLM is just a copy, completely unnecessary. And if you're not big on XRP, then I see no reason to like XLM either.
The fully diluted market cap is several times bigger than the best technology I've found, the Internet Computer Protocol. Actually, just the circulating supply is two or three times bigger than ICP, and the fully diluted figure is something like five or six times bigger. This is way overvalued. And here's a huge problem that has persisted for as long as this has been out: when you compare the total supply versus the circulating supply, there are still 20 billion XLM that the Stellar Development Foundation is holding onto. That's why I see this as a big problem. There's no way I would want to invest in something like that.
Manipulated pumps and a seven-year-old all-time high
Now, I bought this before I did my research on it. And what I see on the price chart is what appear to be some very manipulated pumps. Even with those, we've never gone back to the glory days on XLM. We still have not reached the 2018 all-time high. I have to say, that's just terrible. It's terrible that the all-time high set in 2018 has never been achieved again for something that's now seven years old.
These pumps look extremely manipulated to me, especially the recent one from 10 cents. It's very easy to do this to the price. You just take some insider money from the project and buy a whole bunch of it all at once, and then the price tends to not fall back down quite as much. So this looks very bad to me.
Centralization concerns
Let me go through the criticisms that Grok has laid out in writing to help make these clearer. Grok did a great job spelling out further criticisms. Number one is centralization concerns, and I think Grok only scratches the surface here. Despite being marketed as a decentralized network, the Stellar Development Foundation, or SDF, holds significant influence over both the supply and the direction of the project.
But even worse, the blockchain itself is not capable of serving the web. It's not capable of hosting almost anything directly on chain. Almost everything in crypto can't actually hold much on chain, and the Stellar blockchain itself can really only do transactions. It can't do social media, data storage, or other things like serving a website. This means you're stuck having to go through a third party just to interact with the blockchain, and at that point it doesn't even matter how decentralized the blockchain is. So when you have one thing this powerful already cornering the market, to me there's no room for XLM, because XRP has already cornered the market on having the tech do what XLM does.
If you look further into the details, yes, the SDF originally burned a bunch of tokens, but it still holds 20 billion tokens, around $7 billion worth. There's no way I would buy into something where insiders still hold that much.
Why would you even hold XLM?
Number two: why would you hold XLM at all? You're just holding it and hoping the price goes up. You don't even have mining or staking. With XLM, you just sit there. It's purely a transactional currency, and you sit there holding it. Compare that to ICP, where you can take your ICP and stake it on the network, earn around 13.7%, and participate directly in the on-chain governance that controls the whole network. Compared to that, XLM is massively disappointing. To me it's useless in this respect: you just sit there and hope other people buy it after you. That's not a good business system.
Supply dumping and being a copy of XRP
Then you've got the supply dumping, as I already mentioned. There are huge dumps hanging over you. But one of the main things is that XRP already has more money, more tokens it can dump, and a bigger position. XRP has locked down this niche of fast transactional payments worldwide. XLM is a copy of XRP. It's just insane to me to hold a copy of something. If you love XRP, why would you also hold XLM? Just in case XRP didn't work out? In that case, you'd want to hold the Internet Computer, not XLM. So this is literally a copy, and its biggest rival is the thing it copies.
The insane part is that XLM often pumps along with XRP, but how long is that going to last? If XRP really gets the adoption everybody's talking about, XLM is unnecessary. You do not need it. The price performance has flat out been poor, and without blatant manipulation of the price, this doesn't move. These cryptos are absolutely dependent on their prices being financially engineered upward, and to me this shows clear evidence of heavy financial engineering. They've literally pushed the price up 4x, and I'd bet that's more than likely insiders directly involved with the project, along with exchanges manipulating it. I don't see any reason retail would be buying this.
Limited smart contract capabilities
Then there are the limited smart contract capabilities. When this launched, that wasn't as big of a deal. But it's now seven or eight years after the big bull run for this project. Smart contracts are the future of crypto tech, and Stellar doesn't have them in the way I'd want. Now they've built an additional platform that adds features, but there are problems with it. To me, XLM looks like a very desperate situation. Desperate people and desperate organizations will do things like sell a bunch of tokens, accumulate a bunch of cash, and then buy back in to manipulate the price up, pay people to push it, and use bots to push videos. The ecosystem development here, in my view, is very bad.
The transaction numbers don't justify the valuation
Here's another data point I find very problematic. In some ways this looks good: according to Chainspect, XLM actually has more transactions right now than almost anything except ICP and Solana, and I'll review Terra separately. Still, Solana has about 10 times as many transactions as XLM does, and Solana's market cap is not 10 times larger. If you count the fully diluted market cap, Solana still has 10 times as many transactions while its market cap is not 10 times bigger. ICP has many more transactions, almost 10 times more than XLM, and its market cap is much, much smaller.
So as a crypto investor, what I'm looking for is the best deal. If you have your money in anything besides the best deal, you lose out. When you compare Stellar's roughly 100 transactions a second to ICP's thousands and Solana's thousands, and then you compare market caps, it's just lackluster. It's disappointing, and I don't see this going very well into the future.
A business team, not an engineering team
Another problem: if you look at the Stellar.org foundation team, at least they do post their team. But what I don't see are very many actual engineers building the protocol. The way I see it, what really gives your crypto value is being able to deliver real technological utility through the protocol itself, not through the marketing team, the chief marketing officer, the finance department, or business development. It's about truly making the technology something useful to humanity. To me, that's what's going to survive in the long term. When I look at their leadership, I see very little engineering talent. It's not clear from the titles which people are engineers and which aren't, but what I see is a business team.
Contrast that with Dominic Williams, the founder of DFINITY, who has what I believe is the largest research and development team in blockchain and has built the most advanced technology in crypto so far, more advanced than anything else. It's the only thing I've found that can remove dependence on external hosting services, which you cannot do with XLM. Dominic has said that if you want to research cryptos, look at how many engineers are actually building on the protocol itself, because in the long term that's what truly creates real value for the token. Compare DFINITY's team and their deep engineering and scientists to Stellar Lumens' business squad. Keep in mind, Stellar has a bigger market cap right now, but what does the future trajectory look like? To me, in 99% of scenarios, the Internet Computer is going to vastly outperform over the coming years, and especially over the coming decade.
I don't want to buy something that I have to watch every day, sitting ready to trade it right after a manipulated pump. I want to buy something that's going to consistently increase in value because it has real technology for humanity.
Virtue signaling versus real delivery
Looking around, I see a lot of virtue signaling in Stellar Lumens. I see a lot of distractions and inaccuracies, like the claim that Stellar is "a blockchain meets the real world." No, it's not, not the way ICP is. With ICP, you can go to OpenChat and step straight into a Discord or Telegram style community building application that runs directly on the blockchain. That cuts out the middleman of Discord or Telegram, who can censor you and take everything down, and it cuts out the centralized tech like Amazon, Google, or Microsoft needed to host it. That is actually delivering on what Stellar claims on its website, and ICP is doing it with a much smaller market cap.
So when I look at XLM, this looks drastically overvalued to me. I see absolutely nothing that impresses me. That's why I've shared this with you, because I enjoy doing something that's fundamentally useful for the world. It pays to hype things up. It pays to say things are going to 100x. It gets more views and more clicks. But it does not serve you as an investor to hear that. What serves you as an investor is to hear the most brutal criticism you can about something, and then decide if you still like it. My goal is to be of service to you. If you want more of my honest take on crypto and investing, you can dig into my Money playlist.