Stellar (XLM)

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Field

Content

General information

S.1

CASP Name

BB TRADE ESTONIA OÜ

S.2

Relevant legal entity identifier

984500L05A5D0E66Q610

S.3

Blockchain network name

Stellar

S.4

Name of the crypto-asset

XLM

S.5

Consensus Mechanism

Stellar Consensus Protocol (SCP) - Federated Byzantine Agreement (FBA)

S.6

Incentive Mechanisms and Applicable Fees

The Stellar network is secured by the Stellar Consensus Protocol (SCP), which operates on a Federated Byzantine Agreement (FBA) model. This mechanism allows for decentralized, leaderless consensus without the energy-intensive processes of Proof of Work (PoW) or Proof of Stake (PoS).

Incentives: Participants in the network (nodes/validators) do not receive direct financial rewards (like mining rewards or staking rewards) for validating transactions. Instead, validators are typically run by institutions, businesses, and individuals who benefit from the network's stability, speed, and low cost for their own operations, or who have an interest in supporting an open and inclusive global financial system. The incentive is intrinsic to maintaining a secure, efficient, and reliable payment network.

Fees: Stellar requires a very small fee for all transactions to be included in the ledger. This fee is paid in the native lumen (XLM) token and is designed primarily to prevent spam and prioritize transactions during network traffic surges.

The current minimum transaction fee is extremely low (e.g., 0.00001 XLM or 100 stroops per operation), and these fees are burned (removed from supply), creating a deflationary pressure. 

For smart contract transactions, a "resource fee" is also applied based on resource consumption.

This highly efficient and low-cost design enables Stellar to process transactions quickly (around 5 seconds for finality) and at scale, making it ideal for micro-payments and cross-border remittances.

S.7

Beginning of the period to which the disclosure relates

2024-01-01

S.8

End of the period to which the disclosure relates

2024-12-31

Mandatory key indicator on energy consumption

S.9

Energy consumption

~481,324 kWh per calendar year

S.10

Energy consumption sources and methodologies

The energy consumption of the Stellar network primarily stems from the electricity used by the servers running Stellar Core (the program implementing SCP) and Horizon (the API layer that allows applications to interact with the network). As an FBA-based consensus, it requires minimal computational power per transaction compared to PoW or even some PoS systems. Methodologies for estimation typically involve:

PwC US Assessment Framework: The Stellar Development Foundation (SDF) commissioned PwC US to create a holistic framework to assess the electricity consumption and greenhouse gas emissions of the protocol.

Hardware and operational data: Calculations are based on the power consumption of general-purpose and cloud-based hardware running the core software and API services, scaled by the number of active nodes and their operational uptime. This data is rigorously assessed to provide a comprehensive view of the network's footprint.

Supplementary key indicators on energy and GHG emissions

S.11

Renewable energy consumption

n/a

S.12

Energy intensity 

~0.000173 kWh per transaction

S.13

Scope 1 DLT GHG emissions – Controlled

0 t CO2eq per calendar year

S.14

Scope 2 DLT GHG emissions – Purchased

~173,243 kg CO2eq per calendar year

S.15

GHG intensity 

~0.000062 kg CO2eq per transaction

S.16

Key energy sources and methodologies

The energy sources for Stellar's operational nodes (validators, Horizon API servers) are those of the data centers and cloud providers utilized by network participants. These sources reflect the diverse electricity grid mixes (conventional and sustainable) of their global distribution. Methodologies for assessing this, as developed by PwC US for SDF, involve:

Comprehensive framework: A holistic approach considering electricity consumption, carbon emissions, and e-waste.

Analysis of hardware: Focusing on the energy consumption of general-purpose and cloud-based hardware, which mitigates e-waste compared to specialized PoW ASICs.

Grid mix data: Correlating node locations with publicly available datasets on electricity generation mixes and their associated carbon intensity factors for those regions.

S.17

Key GHG sources and methodologies

The predominant source of Greenhouse Gas (GHG) emissions for Stellar is Scope 2 (indirect emissions from purchased electricity). Methodologies for estimating these emissions, as developed by PwC US for SDF, involve:

Energy consumption * Emission Factor: Multiplying the estimated total electricity consumption of the Stellar network (S.8) by the carbon intensity (grams of CO2 equivalent per kWh) of the electricity mix where its nodes operate.

Holistic sustainability metrics: Beyond energy, the framework addresses other sustainability concerns like e-waste (by using general-purpose hardware) and embodied carbon. Stellar's framework aims to set a benchmark for sustainable innovation, aligning blockchain technology with global decarbonization efforts.