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Cryptocurrency

Stellar is airdropping $125 million to Blockchain Wallet users

Quick Take

  • Stellar is giving away $125 million in XLM to Blockchain Wallet users
  • It will be the largest airdrop in cryptocurrency history
  • The airdrop represents 2.6% of lumens in circulation but just 0.47% of the total supply
  • The top 100 holders of lumens hold 94.5% of the total amount of tokens in circulation

Stellar Development Foundation, the nonprofit organization behind Stellar, announced Tuesday a partnership with Blockchain, a popular cryptocurrency wallet provider, to airdrop $125 million worth of Stellar lumens (XLM) to Blockchain’s customer-base. 

The first batch of lumens will be distributed this week to all Blockchain Wallet users that sign-up. Stellar is hoping Blockchain’s 30 million wallets will help with its adoption compared to rival cryptos, including XRP and Ethereum. Airdrops have become increasingly popular as a method to give away tokens in order to widen distribution and spur development in the community. Giving away $125 million in XLM will mark the largest airdrop in the history of cryptocurrency. Dfinity facilitated the second largest airdrop, distributing $35 million in June.

Stellar co-founder Jed McCaleb, who also founded Mt. Gox and co-founded Ripple, said: “We believe that airdrops are central to creating a more inclusive digital economy. Giving away lumens for free is an invitation to communities to design the services they need. By working with Blockchain to increase the availability and active use of lumens on the network, we will increase the network’s utility by many orders of magnitude.”

Airdrops have increased in popularity as an attractive alternative to the initial coin offering process, creating a shortcut to unleash a token into the market. Some market participants, however, don’t agree that the novel method necessarily spares token projects from the purview of U.S. securities laws

Blockchain propelling Stellar

Blockchain is also partnering with a number of initiatives to further the adoption of lumens through the airdrop, including charity: water, Stanford d.school’s emerging tech initiative, code.org, and Network for Good. The company said that they would reveal specific details of each initiative in the coming weeks.

At the genesis of Stellar, 100 billion lumens were created. Stellar Development Foundation’s custodial mandate is to oversee that 95 billion lumens are distributed. The lumens held by Stellar Development Foundation are required to be distributed in the following manner:

  • 50% for distribution via the Direct Sign-up Program
  • 25% for distribution via the Partnership Program
  • 20% for distribution via the Bitcoin Program
  • 5% held by SDF to support operational costs

Lumens are also often awarded to developers and partners. IBM, for instance, holds a large number of lumens. At press time, there are 19 billion lumens in circulation and more than 104 billion in total supply. The sum is higher than 100 billion lumens that were initially created because there is a built-in inflation of 1% each year. A large portion of the circulating supply was airdropped in June 2017 to users who hold bitcoin

The distribution of top 100 holders of the total supply is:

When all the Stellar Development Foundation’s wallets are excluded, this is the distribution of top 100 holders of lumens in circulation:

In other words, the top 100 holders of lumens represent 94.5% of the total amount of tokens in circulation. For comparison, the top 100 holders of Bitcoin represent 19%, Ethereum 34%, and XRP 81%. Despite Stellar supposedly doubling the number of accounts to 1.6 million in the last three months (see chart below), the distribution of funds is heavily skewed to the largest holders.

Will it have an impact?

The airdrop would move 490 million lumens from “SDF World Giveaway” wallet, which holds 44.6 billion tokens and distributes it to several million people. The airdrop represents 2.6% of lumens in circulation and a mere 0.47% of the total supply, which raises questions about the degree to which this move will help distribute XLM tokens.

The distribution data can be browsed in The Block’s data or by looking at this list of XLM holders.

This post has been updated to reflect a revised press release from Blockchain.