Sustainability Disclosure - XLM

Quantitative information

S.1 Name
Digital Currency Services B.V.

S.2 Relevant legal entity identifier
724500QZRWKCU8D2L569

S.3 Name of the crypto-asset
Stellar [XLM]

S.6 Beginning of the period to which the disclosure relates
2024-06-14

S.7 End of the period to which the disclosure relates
2025-06-14

S.8 Energy consumption
52560 kWh/a

S.10 Renewable energy consumption
N.A. (consumption < 500000 kWh/a)

S.11 Energy intensity
N.A. (consumption < 500000 kWh/a)

S.12 Scope 1 DLT GHG emission - Controlled
N.A. (consumption < 500000 kWh/a)

S.13 Scope 2 DLT GHG emission - Purchased
N.A. (consumption < 500000 kWh/a)

S.14 GHG intensity
N.A. (consumption < 500000 kWh/a)

Qualitative information

S.4 Consensus Mechanism

The Stellar Consensus Protocol (SCP) is a decentralized, energy-efficient consensus mechanism based on Federated Byzantine Agreement (FBA) that allows nodes to reach agreement on transactions in approximately 5 seconds. It uses quorum slices (trusted peers) to achieve consensus without mining, ensuring high security and fast, low-cost transaction finality. Key Aspects of the Stellar Consensus Mechanism:

  • Federated Byzantine Agreement (FBA): Unlike Proof-of-Work, FBA allows for decentralized, open participation where nodes (validators) choose which other nodes to trust, forming "quorum slices".
  • Quorum Structure: A quorum is a set of nodes sufficient to reach an agreement. Quorums are built from smaller "quorum slices," allowing for flexibility, trust, and decentralization.
  • Two-Phase Process: SCP operates through a nomination protocol (converging on candidate values) and a ballot protocol (committing the values to a ledger).
  • Safety Over Liveness: SCP prioritizes safety, meaning it will not finalize conflicting transactions. If consensus cannot be reached, the network may briefly pause rather than produce an inaccurate ledger.
  • Efficiency: Because it does not require energy-intensive mining, it is sustainable and faster than traditional blockchains.

S.5 Incentive Mechanisms and Applicable Fees

I) Incentive mechanism

Stellar’s incentive structure focuses on network utility, spam prevention, and ecosystem growth rather than paying validators with transaction fees.

  • No Direct Validator Rewards: Validators in the SCP do not receive transaction fees or block rewards. They are typically businesses (e.g., MoneyGram, Circle, SDF) that benefit from a secure, fast, and reliable network, aligning their incentives with the network's health.
  • Deflationary Fee Burn: All transaction fees are burned (destroyed). This removes XLM from circulation, potentially increasing the value of remaining tokens.
  • Spam Prevention: The minimal fee requirement makes it economically unviable for actors to flood the network with junk transactions.
  • Stellar Community Fund (SCF): The Stellar Development Foundation (SDF) incentivizes development through grants, such as the SCF Build Award, which offers up to
  • in XLM for projects on the network.
  • Liquidity Incentives: The SDF funds market-making programs to ensure liquidity on the Stellar Decentralized Exchange (SDEX) and for asset issuers.

II) Applicable Fees

Stellar fees are designed to be negligible, with a base fee typically set at 0.00001 XLM per operation.

  • Transaction Fees (Base Fee):
    • Rate: 100 stroops (0.00001 XLM) per operation.
    • Structure: A transaction can contain multiple operations, but most simple payments are a single operation.
  • Surge Pricing: When network activity exceeds 1,000 operations per ledger, the network enters "surge pricing," where transactions with higher fee bids are prioritized.
  • Account Reserves:
    • To prevent spam, new accounts must maintain a minimum balance. The minimum balance is currently 1 XLM (calculated as two base reserves of 0.5 XLM each).
  • Smart Contract Fees (Soroban):
    • Smart contract transactions involve a "resource fee" based on computational consumption, including CPU instructions, transaction size, and storage, known as Fees & Metering.
  • Smart Contract Rent:
    • To keep the ledger efficient, smart contract data that is not frequently used can be archived. Rent is paid to keep data active on the ledger, based on the size of the entry.
  • Fee-Bump Transactions:
    • A mechanism that allows a separate account to pay the fees for another, enabling user-friendly applications where the app covers the transaction costs.

S.9 Energy consumption sources and methodologies

For the calculation of energy consumptions, the so called "bottom-up" approach is being used. The nodes are considered to be the central factor for the energy consumption of the network. These assumptions are made on the basis of empirical findings through the use of public information sites, open-source crawlers and crawlers developed in-house. The main determinants for estimating the hardware used within the network are the requirements for operating the client software. The energy consumption of the hardware devices was measured in certified test laboratories. When calculating the energy consumption, we used - if available - the Functionally Fungible Group Digital Token Identifier (FFG DTI) to determine all implementations of the asset of question in scope and we update the mappings regulary, based on data of the Digital Token Identifier Foundation.

S.15 Key energy sources and methodologies

N.A. (consumption < 500000 kWh/a)

S.16 Key GHG sources and methodologies

N.A. (consumption < 500000 kWh/a)