Cryptocurrency

Stellar Lumens
XLM

Stellar Lumens (XLM) / Buy Recommendation / 2018 target: $1.25 billion

What are Lumens?

Lumens are the native asset of the Stellar network. Native means that lumens are built into the network. Asset is
how the network refers to an item of value that is stored on the ledger. One lumen is a unit of digital currency,
like a Bitcoin. While you can’t hold a lumen in your hand, they are essential to the Stellar network -- they
contribute to the ability to move money around the world and to conduct transactions between different
currencies quickly and securely.
Where did Lumens come from?
In 2014 the Stellar network launched with 100 billion stellars, the original name of the network’s native asset.
In 2015, with the launch of the upgraded network, the name of the native asset changed from stellar to lumen to
distinguish it from the Stellar network itself, and Stellar.org, the non-profit organization that contributes to
development of the network.
What is XLM?

Stellar Lumen Price and Market Cap chart since inception, Since May-17 there has been a significant increase in volume and a sharp rise in
price. In fact, the market valuation jumped 20% to $750 mln as this report was being prepared.

Note: The price of Stellar Lumens jumped by more than 25% since I called this to subscribers’
attention in October – mainly as this report was being prepared. The current valuation, as of
November 26, was $827 million, and the coin price was $0.04672. Trailing 24 hours, the volume was
~US$20,000,000 … or approximately 425 mln lumen.

XLM is shorthand for lumen. Most currencies have three-letter codes (USD, EUR, AUD, BTC) as an international
standard. The technical term for these shorthand codes is ISO 4217. Lumens are available for purchase on
several known markets and exchanges. 95% of the lumens created when the Stellar network began will be given
away to the world. 5% remains with Stellar.org for operational costs. Stellar.org designed the giveaway program
to ensure that lumens are given away to diverse groups: 50% to individuals who want lumens; 25% for non-profits
to reach under-served populations; and 20% to bitcoin holders.

SEE IMPORTANT NOTE ON PAGE 20

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Why is Stellar.org giving away lumens?

 To achieve a more inclusive digital economy: As per its mission, Stellar.org works to connect people to
low-cost financial services. Giving away lumens for free is an invitation to communities to design the
services they need.
 To expand the reach of the network: The availability and active use of lumens on the network will increase
the network’s utility by many orders of magnitude.

Why should you buy lumens if the network is giving them away for free?

As an integrator or anchor (an integrator that is trusted to accept deposits and honor withdrawals, usually a licensed
money services provider), people may need lumens to cover base fees for transactions on the network. As a
supporter or community member, people may wish to support the work of Stellar.org and invest in future success.
In the future, after organizations have given away all the lumens -- which will happen over the next 10 years --
everyone will need to procure lumens from exchanges.

Stellar Network platform

Investment thesis
IBM and KlickEx Choose Stellar to Power the Future of Cross-Border Payments

On October 15, 2017, Stellar announced that Stellar is partnering with IBM and KlickEx to develop a blockchain-
based cross-border payments solution proven to significantly reduce transaction costs and increase transaction
speeds.

This solution will help financial institutions and consumers eliminate inefficiencies and frustrations in current cross-
border payment systems, including high fees, slow processing, error-prone transactions, and inefficient capital
utilization. Stellar technology serves as the core backbone of this cross-border payments solution. The Stellar
network enables frictionless, scalable, and virtually-free cross-border payment transactions, and has been proven
to be able to securely process more than 1,000 transactions per second with one billion unique user accounts.

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IBM has convened an initial group of diverse banking leaders as part of the development and deployment process,
including Banco Bilbao Vizcaya Argentaria, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank
Permata, Bank Rakyat Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, Rizal
Commercial Banking Corporation (RCBC) Philippines, Sumitomo Mitsui Financial Group, TD Bank, Wizdraw (HK) of
WorldCom Finance, and other financial institutions.
This new innovation and collaboration represents a significant milestone for Stellar as well as the financial
technology industry as a whole -- said Jed McCaleb, co-founder of Stellar. For the first time, public blockchain
technology is being used in production to facilitate cross-border payments in multiple integrated currency corridors.
Currently, cross-border payments take up to several days to clear. This new implementation is poised to affect a
profound change in the South Pacific region, and once fully scaled by IBM and its banking partners, could potentially
change the way money is moved around the world, helping to improve existing international transactions and
advancing financial inclusion in developing nations.

So what does the IBM deal bring to the table?

After several months of minimal news and low community activity, Stellar Lumens blind-sided everyone when IBM
released news that it has an ongoing partnership with Stellar and has successfully used the public Stellar blockchain
to settle cross border fiat transactions in near real-time. This project involves a network of Pacific and Oceania
banks (including Australian and New Zealand banks) and encompasses 12 currency corridors. The new inter-bank
payments network is planned to process up to 60% of all cross-border payments in the South Pacific’s retail foreign
exchange corridors by early next year. This deal is not only good for Stellar, it is validation for blockchain
technology.

Examples of public blockchains being picked up for substantial use cases are rare; banks and other large
companies are often only in research groups or experimenting with the technology and rarely commit to using a
public blockchain for a production system, let alone a production system as large as cross-border payment
settlements over many currency corridors.
The significance of the news, which IBM announced, is that merchants and consumers will be able to send money
to another country in near real-time, accelerating a payments process that typically takes days. The banking
network includes twelve currency corridors that encompass Australia and New Zealand, as well as smaller countries
such as Fiji and Tonga. It will reportedly process up to 60% of all cross-border payments in the South Pacific’s retail
foreign exchange corridors by early next year. The news also comes as an important validation of blockchain
technology, which has long promised enormous efficiencies for the financial sector, but has been slow to move
from the concept stage to the real world. Blockchain, which relies on a disparate network of computers to create
an indelible, tamper-proof record of transactions, is most famously associated with the digital currency bitcoin. But
it can be used in many other applications such as tracking shipments or, as in this case, to record a series of cross-
border transactions.
As an example, IBM said a farmer in Samoa will soon be able to contract with a buyer in Indonesia, and use the
blockchain to record everything from the farmer’s collateral … to letters of credit … to payment.
This is the next step in the evolution of blockchain technology. It is live money moving around a network -- Jesse
Lund, IBM’s VP of Blockchain, told Fortune.

Stellar Core is the software that acts as the backbone of the network. Stellar Core nodes do the hard work of
keeping the network running by validating transactions through SCP. The nodes also allow owners to issue new
assets in the network or submit transactions to the network. Anyone can download Stellar Core and start running
a node. Horizon is a server application that connects to Stellar Core nodes and allows applications to interact with
the Stellar network through a restful HTTP API interface.

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The anchor side of the network (remember anchors serve as fiat gateways to the Stellar network) is also fully developed and
well-documented. Bridge servers are capable of sending and receiving regulatory compliant payments. Compliance is achieved
through compliance servers that the bridge servers communicate with using the Stellar compliance protocol every time a
payment is sent or received. The Stellar network also has its own DNS-like system where human readable addresses are
mapped to account IDs. This mapping is stored in federation servers. In order for bridge servers to determine the account ID
from a human readable address, it has to communicate with federation servers through the Stellar federation protocol. Stellar
provides downloadable implementations of bridge, federation, and compliance servers, though an anchor could implement
custom federation and compliance servers that adhere to their respective protocols.

 Like Bitcoin, the Stellar network is a decentralized and distributed ledger. Bitcoin is the native currency of the Bitcoin
network, while lumens are the native currency of the Stellar network. There is no mining equivalent in the Stellar network
-- you can run a Stellar Core validator node but validating transactions will not reward you with newly minted lumens. While
Bitcoin uses proof of work as its consensus model, Stellar uses a consensus model called the Stellar Consensus Protocol
(SCP). SCP is an implementation of the federated Byzantine agreement (FBA) consensus model.

 SCP does not require much computational power and has a theoretical maximum transaction throughput of 1000
transactions per second. Median confirmation time for a Stellar network transaction is five seconds. Although lumens is the
Stellar network’s native asset, the network supports many different kinds of assets and anyone can issue a new asset. Assets
backed by external currencies (i.e. fiat or external blockchains) are supported by the Stellar network’s anchor system. The
Stellar network has a built-in decentralized exchange where assets can be exchanged for different assets based on orders in
the decentralized order book. Stellar transactions can contain order book exchanges.

 Anchors serve as entry and exit points for fiat currencies into the Stellar network. They maintain both fiat currency accounts
and Stellar wallets for their users. If the user deposits money into their fiat currency account, the anchor is expected to
deposit an equivalent amount of the appropriate Stellar network asset to the user’s Stellar wallet. Vice versa for withdrawals.
Most anchors are financial institutions like banks and remittance companies. Stellar has a fixed, nominal lumen inflation
rate of 1% per year. There also exists a fee pool where the lumen fees for network transactions are sent. Each week, the
new lumens created from inflation and the lumens from the fee pool are distributed to Stellar wallets. The amount of lumens
each wallet receives is based on a voting system. Every wallet gets to vote for another wallet to receive lumens; each lumen
in a wallet counts as one vote.

 As of October 29th, 2017, there exists 103 billion lumens, with approximately 96 billion lumens held by the Stellar
Development Foundation. The annual inflation rate of lumens is 1%. Big corporate donors: Stripe, Google, and BlackRock.

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These are the companies that are using the Stellar network

 Deloitte created a payment network prototype using the Stellar network. The project was completed in
4 weeks and reduced transaction costs by 40%. Each transaction resolved in five seconds.

 TEMPO facilitates remittances from Europe to the world, a $150 billion market. Using the Stellar network,
Tempo can power 600,000 transactions for $0.01 in fees. Tempo launched the EURT token on the Stellar
network in April 2017. EURT is valued at full parity to the EUR by TEMPO and its partners. The token can be
traded for PHP (Philippine Pesos), XLM (lumens), and JPY (Japanese Yen) on Stellar. The EURT is the first
step by TEMPO in integrating the Stellar network as its primary payments settlement platform.

 Parkway is a licensed mobile money operator in Nigeria that uses the Stellar network to connect Nigeria’s
5 major telcos, enabling customers of different mobile money services to send money to one another.

 IBM and a network of South Pacific and Oceania banks have successfully deployed a cross-border
payments platform that uses the Stellar network. This new Stellar-based solution allows the banks to send
money in real time whereas the old process typically took days. Although the platform is currently limited
to cross-border payments involving British pounds and Fiji dollars, it is expected to scale up to 60% of all
cross-border payments in the region once all seven currencies are added. IBM’s vice president of global
blockchain development, Jesse Lund, has cautioned that the use of lumens as an exchange bridge between
currencies is temporary but this does not mean that the Stellar network will not continue to be used.

These are a few companies companies operating Stellar anchors

 TEMPO Money Transfer (40 countries, EUR)

 Coins.ph (Philippines, PHP)
 Parkway Projects (Nigeria, NGN)
 NaoBTC (international, BTC)
 RippleFox (China, CNY)
 ICICI Bank (India, INR)
 Additional names can be found here www.stellar.org/about/directory

ICICI Bank and Stellar: Using Blockchain to Reach the Base of the Pyramid in India

ICICI Bank and Stellar are combining forces to enable them to reach clients with a free blockchain-backed mobile wallet that they could not
sustainably offer on their own. The story of ICICI Bank and Stellar began when an ICICI Bank senior executive read a book about new
technologies. The book mentioned a blockchain company in Silicon Valley called Stellar. Fast forward to today, Stellar now provides ICICI
Bank with an open-source online ledger, or blockchain, designed to oversee the movement of money. ICICI Bank customers in India and
abroad can transfer money through a free mobile wallet over Stellar’s platform. These transfers are made in real fiat currency, but internally
they are documented in cryptocurrency. While the transfers are recorded on Stellar’s ledger in a cryptocurrency (lumens), ICICI Bank holds
the value for these transactions in Indian rupees in a pooled account. Due to the open nature of Stellar’s platform, ICICI Bank customers
can transfer money to customers at any other bank on the platform. Stellar’s open platform has allowed ICICI Bank to easily connect with
financial institutions that it might not have connected with otherwise. The partnership is expected to help transform the way value is
transferred -- both within the bank and between the bank and other institutions. Following the establishment of 300,000 accounts, the bank
will pay Stellar a fee for each additional account. This low pricing allows ICICI Bank to provide the wallet free to customers, enabling the bank
to serve lower-income segments than it can reach with more traditional money transfer services. Currently, ICICI is piloting the mobile
wallet on university campuses in India. The bank envisions that it will become a core product for under-served banking customers in the
future. India represents fabulous fintech territory, with a massive population and a growing tech infrastructure and culture. McCaleb said
ICICI Bank understands blockchain remittance quite well. There are millions of remittances that go in-and-out of India, thus cross-border
payments are quite important for India. ICICI is about to go live with a Stellar enabled mobile wallet with plans to expand to cross-border use
cases after that. Raj Chowdhury, head of the blockchain initiative, ICICI Bank said: With blockchain technology we are able to conduct
business seamlessly with parties with which we had no prior relationships. Blockchain platforms such as Stellar.org are providing us with
an automated technology solution to establish trust without the need for an intermediary.

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ICICI Bank and Stellar Partnership for better financial inclusion

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The Stellar Network can be utilized for Initial Coin Offerings (ICOs)

While there may be various regulatory, financial, and technical issues littering the current ICO landscape, there is no
denying that the ICO model is a boost for the growth of strong, decentralized networks and mainstream blockchain
adoption. Additionally, the ICO model promotes global financial inclusion by democratizing fundraising, investment, and
network participation. Traditionally, ICO tokens have been issued on the Ethereum network in the form of ERC20 tokens.
ERC20 tokens are easy to issue and are infinitely customizable using Ethereum’s smart contracting language. However,
recent events have highlighted and exacerbated some weaknesses of the network, including slow transaction processing
times for the network during ICOs and increasingly expensive gas prices (by fiat standards) for transactions and smart
contract execution. Many organizations require only basic tokens; they adopt the risk of Ethereum’s Turing complete
programming language without taking advantage of many of its benefits. While Ethereum has the most expressive
programming capabilities, programmers believe Stellar is the best choice for ICOs that do not require complex smart
contracts. Stellar’s primary goal is to facilitate issuing and trading tokens, especially those tied to legal commitments by
known organizations, such as claims on real-world assets or fiat currency. First, there is a simple, easy-to-use built-in
token issuance system that is accessible to anyone. Second, Stellar offers built-in token capabilities that can support
multi-signature authorizations, generate dividends, limit who can hold tokens, and more. Perhaps most importantly,
Stellar features a decentralized exchange where any Stellar network token can be instantly traded without relying on a
third party exchange to list the token. This means newly issued tokens can be traded on the first day.

Stellar is an excellent choice for any ICO that does not require Turing-complete smart contracts and can benefit
from immediate creation of a secondary market. There are multiple reasons to consider Stellar for an ICO:
Built-in decentralized exchange -- There will be more than 1000 new tokens issued this year. Each one will have to
find some exchange to list them. Users will have to open accounts at random exchanges to be able to buy certain
tokens and, inevitably, many of these tokens won’t get listed. Stellar was designed from the ground up to support
efficient trading. Any token created on Stellar can be bought and sold immediately on Stellar’s decentralized
exchange by means of Stellar’s native offer mechanism. An organization does not have to rely on a third party
exchange like Bittrex or Poloniex to list or make a market. This is one less unknown as you no longer have to trust
someone to list your token.

Decentralized Stellar Network

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A decentralized network consists of peers that can run independently of each other. The power to transmit
information is distributed among a network of servers, instead of being driven from one primary source. This means
that the Stellar network does not depend on any single entity. The idea is to have as many independent servers
participate in the Stellar network as possible, so that the network will still run successfully even if some servers fail.

Greater security

The simplicity of its transaction model creates fewer pitfalls and hence can improve the security of
applications that do not require the full generality of Turing-complete smart contracts. Simply put,
Stellar’s model of atomic multi-operation transactions leads to more auditable code, limits uncertainty,
and decreases the risk of harm from bad actors who may exploit program vulnerabilities. Moreover,
Stellar optionally allows issuers to reserve the ability to freeze tokens in the event there is misuse. Hence,
recovery from compromise need not rely on the willingness of validators or miners to execute an irregular
state change to bail them out. An additional security feature is that organizations have the option to
choose which nodes can validate their transactions. This is particularly helpful if there are malicious
validators on the network or if the organization’s tokens represent some real-world asset that cannot be
double-redeemed. For example, suppose some token represents a pound of gold. If the token were
issued on Ethereum or Bitcoin, any fork could sow confusion and risk double-redemption. However, on
Stellar, organizations can pre-select which validators have the “legitimate” version of their token.

Create custom ICOs

No two ICOs are the same, just as no two companies are the same. Stellar enables tailor-made ICOs by providing
base abstractions such as accounts, tokens, payments, offers (to exchange one token type for another), and atomic
transactions consisting of multiple operations. Users can combine these simple abstractions in complex ways to get
a wide array of behaviors, similar to building custom structures with simple Lego blocks.

For instance, issuing dividends, bonds, escrow, collateralized debt, inflation, and the Lightning network are all
possible on the Stellar network. Because of primitive support for atomic transactions, it is trivial to code
something that says A sends to B if B sends to C. Using Stellar leads to faster development time since it has
already built-in common ICO features such as creating a token and whitelisting eligible contributors (e.g. to
enforce know-your-customer requirements and limit activity in some jurisdictions). Stellar is a particularly good
choice for organizations that have KYC requirements.

Significantly cheaper and faster

As ether (ETH) obtains higher valuations, computation and transactions are becoming increasingly expensive. Even
at the current order of magnitude of price ($200-$300), gas prices are costly. Stellar does not require any “gas” to
execute programs and only requires a negligible transaction fee (.00001 XLM) that is a fraction of a fraction of a
penny, to discourage users with malicious intent from flooding the network with transactions. The median
transaction time on Stellar is five seconds, compared to approximately 3.5 minutes on Ethereum.

Bottom line for ICOs leveraging off the Stellar platform: The network will gain more acceptance, and each
transaction has a built-in small transaction fee which needs to be paid in XLM. This will increase acceptance of
Lumen and lead to more demand for this crypto. Remember they are promoting the network, which in turn
supports the demand for the currency.

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The Philippines is now connected to Stellar

In December, 2016, Stellar announced that one can send money to anyone in the Philippines over the Stellar
network -- for free. In Stellar wallet, one can create a payment to any phone number in the Philippines with the
amount of Filipino pesos you want to send that person. Funds are received in 3-5 seconds. The recipient can cash
out at any of coins.ph (22,000) locations. This will make a significant difference in the lives of millions of people.
Overseas Filipino workers around the world sent ~$26.92 billion back to the Philippines in 2015, making the
Philippines the third largest remittance market in the world. Why this is powerful is that, by integrating with
Stellar, organizations will immediately gain access to all the other institutions on the Stellar network, enabling their
customers to send and receive low-cost and instant money transfers. And likewise, any new financial institution
that joins the Stellar network will also be able to transact directly with coins.ph, ICICI, Flutterwave and Tempo --
accessing their large and diverse customer bases.

New emerging partnerships at Stellar

LeFinance & Stellar Partner to Improve Efficiency for Billions

LeFinance, a division of LeEco, the technology and content titan out of Beijing, has partnered with the Stellar
Development Foundation to improve the connectivity and reach of various LeEco businesses. Stellar is a key part
of their “LeFinance Blockchain Lab” strategy, launched in March 2016. LeFinance Blockchain Lab focuses on
implementing distributed technology across LeEco divisions. LeFinance will not only use the Stellar network for
cross-border payments but also to monitor credits for usage across their various devices and platforms, offering
customers a faster experience while providing a reliable, scalable accounting system for content in the cloud.

As an Internet ecosystem company, we are eager to use Stellar’s cutting-edge blockchain technology to enable a
seamless experience for billions of customers -- said Mr. Wang Yongli, Chief Executive Officer of LeFinance.

With key products in mobile, virtual reality, television, and investments in connected fitness, autonomous vehicles
and a film studio, LeEco is driving innovation in many industries with its community and demand-driven approach
to product development. The agreement with LeFinance is part of Stellar’s growing presence in Asia.

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How does a transaction happen over the Stellar network?

Ledger

Like a traditional ledger, the Stellar

ledger records a list of all the
balances and transactions belonging
to every single account on the
network. A complete copy of the
global Stellar ledger is hosted on
each server that runs the Stellar
software. Any entity can run a Stellar
server. These servers form a
Ledger establishment
decentralized Stellar network,
allowing the ledger to be distributed
as widely as possible. The servers sync and validate the ledger by a mechanism known as consensus.

Consensus

The Stellar servers communicate and sync with each other to ensure that transactions are valid and get applied
successfully to the global ledger. For example, if you want to send $5 to a friend on the network, a list of trusted
servers will begin a process to agree on the validity of your $5 payment to your friend. The majority of these servers
will have to agree that you do in fact own $5 worth of credit on the network before they will mark the transaction
as valid. This entire process of coming to consensus on the Stellar network occurs approximately every 2-5 seconds.

Process of consensus establishment

Anchors, trust, and credit

Anchors are simply entities that people trust to hold their deposits and issue credits into the Stellar network for
those deposits. They act as a bridge between different currencies and the Stellar network. All (money)
transactions on the Stellar network (except the native digital currency of lumens) occur in the form of credit
issued by anchors.

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Anchors do two simple things. First, they

take your deposit and issue the
corresponding credit to your account
address on the Stellar ledger. Secondly,
you can make a withdrawal by bringing
them credit they issued.

You have to trust the anchor to honor

your deposits and withdrawals of credit
it has issued. Anchors exist in the pre-
stellar world now. For example, to use
PayPal, you deposit money (in) from your
bank account. PayPal then gives you
credit in your PayPal account. You can
now send that PayPal credit to anyone
that trusts PayPal (anyone with a PayPal
account). Someone that received your Anchor performing the role
PayPal credit can convert it to real money
using PayPal by withdrawing it to the bank. Anchors perform the same function in Stellar. The difference is, all the
“PayPals” and other anchors are operating on the same network so they can all transact with each other now -- this
makes the system way more powerful. People can now easily send and exchange all these different anchor credits
with each other.
The exchange is completely distributed

Distributed exchange of Stellar Network

The Stellar ledger is able to store offers that people have made to buy or sell currencies. Offers are public
commitments to exchange one type of credit for another at a pre-determined rate. The ledger becomes a global
marketplace for offers. All these offers form what is called an order book. There is an order book for each
currency/issuer pair. If you want to exchange Virgin Bank/EUR for Bitstamp/BTC you look at that particular order
book in the ledger to see what people are buying and selling it for. This allows people to not only buy and sell
currencies in a foreign exchange-like manner but also to convert currencies seamlessly during transactions.

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Multi-currency transactions

Stellar allows you to send any currency

you hold to anyone else in a different
currency through the built-in distributed
exchange. People can receive any
currency through an anchor they added.
For example, Amy wants to send Bob
euros, using her USD balance. Stellar
automatically submits an offer to the
distributed exchange selling USD for EUR.
The network finds the best exchange
rate for the transaction. Multi-currency transactions

Here’s a few possible ways the transaction can happen

 Conversion through an offer -- Stellar finds an offer on the internal USD/EUR exchange for someone wanting
to buy EUR for USD and automatically makes the exchange between the two parties.
 Using lumens as an intermediary currency -- Stellar looks for offers on the network asking for USD in exchange
for lumens … the native … purely digital … currency. It simultaneously looks for an offer asking for lumens in
exchange for euros. The network makes those exchanges and sends Bob the resulting euro credit.
 Chain of conversions -- If there are no explicit relationships between offers to buy and sell, Stellar tries to find
offers from the network that will lead a chain of conversions from EUR to USD. For example, EUR to AUD, AUD
to BTC, BTC to XLM, XLM to USD.

Market Statistics of Stellar Lumens

Stellar Lumen Market Data as on 11-November-2017

Source Pair Volume (24h) Price Volume (%)
1 Poloniex STR/BTC $12,761,600 $0.0344560000 48.43%
2 Bittrex XLM/BTC $6,832,810 $0.0350610000 25.93%
3 Poloniex STR/USDT $3,114,540 $0.0340050000 11.82%
4 Kraken XLM/BTC $1,653,580 $0.0347250000 6.28%
5 Bitcoin Indonesia STR/BTC $1,339,660 $0.0351950000 5.08%
6 Bittrex XLM/ETH $254,638 $0.0350670000 0.97%
7 AEX XLM/BTC $106,529 $0.0329120000 0.40%
8 Exrates XLM/USD $90,692 $0.0344660000 0.34%
9 Exrates XLM/BTC $90,561 $0.0355710000 0.34%
10 RippleFox XRP/XLM $56,021 $0.0345090000 0.21%
11 Stellar Decentralized Exchange XLM/JPY $23,842 $0.0385280000 0.09%
12 Stellar Decentralized Exchange XLM/XRP $16,648 $0.0346330000 0.06%
13 RippleFox XLM/CNY $6,860 $0.0355020000 0.03%
14 BCEX XLM/BTC $883 $0.0355310000 0.00%
15 Stellar Decentralized Exchange XLM/BTC $56 $0.0544050000 0.00%
16 Stellar Decentralized Exchange XLM/EUR $13 $0.0408310000 0.00%
17 Stellar Decentralized Exchange XLM/PHP $0 $0.0178760000 0.00%
18 Stellar Decentralized Exchange XLM/XEL $0 $0.0144820000 0.00%

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Data as on 11-November-2017
Price $0.03462200
Market Cap $574,321,908
Volume (24 hours) $26,349,000
Circulating Supply 16,588,351,568 XLM
Total Supply 103,412,659,883 XLM

Source: coinmarketcap.com/currencies/stellar/historical-data/?start=20130428&end=20171111

0.07 Stellar Lumens Price & Volume Since inception 350,000,000

0.06 300,000,000

0.05 250,000,000

unit volume
$ per XLM

0.04 200,000,000

0.03 150,000,000

0.02 Increase in demand 100,000,000

and subsequently
0.01 interest 50,000,000

0 0
Aug-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Dec-16 May-17 Oct-17
Volume Price

Price movement of Stellar Lumens

The price of Stellar Lumens jumped by more than 25% since I called this to
subscribers’ attention in October – mainly as this report was being
prepared. The current valuation, as of November 26, was $827 million, and
the coin price was $0.04672. Trailing 24 hours, the volume was
~US$20,000,000 … or approximately 425 mln lumen … a figure that would be
off the chart above.
Lumen distribution method -- At the genesis of the Stellar Network, 100 billion lumens (XLM) were created as
specified in the protocol. As part of its custodial mandate, SDF is entrusted to oversee that the vast majority, 95
billion, of the lumens are distributed to the world. SDF manages the execution of lumen distribution, with
oversight and direction provided by SDF’s Expansion Board. The initial lumens held by SDF are required to be
distributed to the world 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

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Lumen giveaway program

Direct Signup Program

The goal of the Direct Sign-up Program is to make lumens easily accessible to millions of individuals and communities across
the globe. By implementing a simple mechanism for distribution featuring a low barrier to entry, the organization hopes to
distribute free lumens to millions of individuals. The network believes the Direct Sign-up Program will help them expand the
reach of the network and, subsequently, help achieve their goal of building a more inclusive digital economy. Giving away free
lumens is an invitation for communities to learn more about Stellar’s low cost infrastructure, learn more about digital financial
assets, and design and build the financial services they need. The availability and active use of lumens on the network will
increase the overall network’s utility. For these reasons, 50% of the initial lumens are dedicated to the Direct Sign-up Program.
The Direct Sign-up Program will be conducted in rounds and with a phased roll-out to encourage learning and public awareness
throughout the distribution process.
Partnership Program

The purpose of the Partnership Program is to encourage adoption and growth of Stellar through the institutional distribution
of lumens. As institutional adoption is a primary driver for scaling usage, the Partnership Program is structured to incentivize
key institutional adopters and align their goals with the SDF’s. More specifically, the goal of the program is to reward
institutions that contribute to the Stellar ecosystem in two core capacities. First, by being an early adopter and contributor to
the Stellar ecosystem or, secondly, by extending the network’s reach to underserved or financially excluded populations. To
fund the rewards, 25% of the initial lumens will be set aside for grants to businesses, governments, institutions, or non-profit
organizations that contribute to the growth of the Stellar ecosystem.
Bitcoin Program

SDF allocated 20% of the initial lumens to be distributed for free to holders of bitcoin and XRP (19% for bitcoin
holders and 1% for XRP holders). The goal of this giveaway was to encourage bitcoin holders to explore and use
Stellar, encourage exchanges to support lumen trading, promote the development of useful Stellar ecosystem
technologies, and encourage Stellar integrations by financial institutions and service providers. With more people
holding lumens and transacting on the network, the network itself will become more useful to those who build low-
cost services on it. The Bitcoin Program was completed in two rounds -- one round was completed in October
2016 and another was completed in August 2017. SDF does not intend to conduct another round of lumen
distributions to bitcoin or XRP holders. Members and Directors of SDF were not eligible to participate in the bitcoin
program for any bitcoins or XRP that they hold during the claim period.

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Unclaimed Lumens and Stellar Build Challenge

Lumens that were not claimed during the Bitcoin program are currently going to the Stellar Build Challenge and
toward the operations of SDF. The Stellar Build Challenge rewards development, education, usage, and integrations
in the Stellar ecosystem by awarding lumen to the creators of useful technologies, resources, and applications.
Held by Foundation

In order to provide market stability to lumens, SDF founders and Stripe have voluntarily agreed not to sell any of
the lumens initially received (either via employee grants in the case of the founders, or via repayment of the Stripe
loan) for at least five years. However, Stripe may auction any of their lumens, provided the recipients also agree
not to sell their lumens for five years, and net profits will be returned to the Foundation.
Inflation

The Stellar Network has a built-in, fixed, nominal inflation mechanism. New lumens are added to the network at
the rate of 1% each year. Each week, the protocol distributes these lumens to any account that gets more than
0.05% of the votes from other accounts in the network. The network also collects a base fee for each operation in
a transaction. The funds from base fees are added to the inflation pool. As a balancing measure for the ecosystem,
anyone who holds lumens can vote on where the funds in this pool go.

Lumen distribution Statistics

Note: The price of Stellar Lumens jumped by more than 25% since I called this to subscribers’ attention
in October – mainly as this report was being prepared. The current valuation, as of November 26, was
$827 million, and the coin price was $0.04672. Trailing 24 hours, the volume was ~US$20,000,000 … or
approximately 425 mln lumen.
SEE IMPORTANT NOTE ON PAGE 20

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Why does the Stellar network need a native asset?

The Stellar network offers all of the innovative features of a shared public ledger on a distributed database -- often referred to
as blockchain technology. The Stellar network’s built-in currency, the lumen, serves two purposes: First, lumens play a small anti-spam role.
Each transaction has a minor fee -- 0.00001 lumens -- associated with it. This fee prevents users with malicious intentions from flooding the
network (otherwise known as a DoS attack). Lumens work as a security token, mitigating DoS attacks that attempt to generate large numbers
of transactions or consume large amounts of space in the ledger. Similarly, the Stellar network requires all accounts to hold a minimum
balance of 20 lumens. This requirement ensures that accounts are authentic, which helps the network maintain a seamless flow of
transactions. Second, lumens may facilitate multi-currency transactions. Lumens sometimes facilitate trades between pairs of currencies
between which there is not a large direct market, acting as a bridge. This function is possible when there is a liquid market between the
lumen and each currency involved.

Do you need lumens to use the Stellar network?

The Stellar network is free to use. The code is open source, with an Apache license. If you plan to transact on the live network, you will need
lumens to cover the base fees for those transactions. By design, transactions on Stellar are very low cost. As of 2016, one lumen will cover
100,000 transactions. You may choose to purchase lumens as a supporter of the Stellar.org mission. Lumens are also available for purchase
on markets and exchanges.

What is the base fee? Who profits from those lumens?

There is a nominal fee, referred to as a base fee, associated with each operation in a transaction. The sender of the transaction incurs the
fee. The fee functions as a deterrent: Though nominal, it discourages users with malicious intentions from flooding the network (otherwise
known as a DoS attack). The base fee is currently set to .00001 XLM. The fee will increase if the system suspects an account is submitting
transactions with the malicious intent to bring down the network. No one profits from the base fee. The ledger collects those funds and
redistributes them in the process of inflation.

What is the lumen auction and how does it work?

The Stellar.org mandate reserves 5% of the original lumens to support the operations of Stellar.org. Auction: Network periodically offer
portions of the reserved lumens at auction. They refer to this public process as the lumen auction. The initial auction launched in March
2015 on Poloniex, Kraken, and Haste. Lumens entered these exchanges at the 30-day trailing average price. The current auction began
December 2015 on the Kraken exchange. Network offers lumens in small amounts at the market price on the exchange at time of placement.
As an ethical safeguard, no one formally associated with Stellar.org—e.g., Stellar.org employees, consultants, or board members—will
participate in the auction.

Stellar consensus protocol

SCP is the first (proven) safe consensus mechanism to enjoy four key properties simultaneously

 Decentralized control: Anyone is able to participate and no central authority dictates whose approval is
required for consensus.
 Low latency: In practice, nodes can reach consensus at timescales humans expect for web or payment
transactions -- a few seconds at most.
 Flexible trust: Users have the freedom to trust any combination of parties they see fit. For example, a small
non-profit may play a key role in keeping much larger institutions honest.
 Asymptotic security: Safety rests on digital signatures and hash families whose parameters can realistically
be tuned to protect against adversaries with unimaginably vast computing power.
Stellar has published a whitepaper (authored by Professor David Mazières) detailing how the Stellar Consensus
Protocol (SCP) works. The whitepaper is listed on Google Scholar and cited more than 40 times. The paper is 32
pages long and extremely technical, containing elaborate mathematical proofs on the correctness of the
federated Byzantine agreement (FBA) consensus model.

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In FBA, each participant knows of others it considers important. It waits for the vast majority of them (others) to
agree on any transaction before considering the transaction settled. In turn, those important participants do not
agree to the transaction until the participants they consider important agree as well, and so on. Eventually, enough
of the network accepts a transaction that it becomes infeasible for an attacker to roll it back. Only then do any
participants consider the transaction settled. FBA’s consensus can ensure the integrity of a financial network. Its
decentralized control can spur organic growth.

The SCP has two key properties that make the Stellar network a powerful asset transfer system. To start, it has an
extremely low computational power requirement, especially when compared to Bitcoin’s proof of work. Second, it
has a super high transaction throughput and can theoretically reach up to 1000 transactions/second.

Lumen Network Status as on 11-November-2017

Smartlands -- the Platform for Agriculture announces that it will integrate with the Stellar Network

Smartlands, the worldwide Platform for ICOs of low-risk future-proof tokens secured by agricultural assets, has
announced that it will be integrating with Stellar, an open source blockchain network, to support its cryptocurrency
platform for agricultural projects. The decision to integrate with the Stellar network -- rather than build its own
standalone blockchain solution -- greatly accelerates the development of the Smartlands token and its goal of
transforming agricultural investments worldwide.

Smartlands recently announced that it would be hosting its Initial Coin Offering (ICO) on the Stellar network,
which is beginning on November 2, 2017.

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Our initial strategy was to build what we needed from the ground up, said Victor Yermak, Chief Technology Officer
for Smartlands. But our discussions with Stellar regarding the ICO showed us that they had already created the
operational environment we had envisioned.
The Stellar network is an open source protocol that enables the seamless transfer of value and allows developers and
entrepreneurs to create innovative financial products. Depending on hardware and network configurations, a conservative
estimate of Stellar’s processing rate is 1000 operations per second. Smartlands is designed to promote investments in the
agricultural sector by allowing investment in individual projects, agricultural companies or indexes of groups of projects. These
investments will be fully collateralized by agricultural real estate, other productive assets such as fruit or nut trees or, in some
cases, the actual crop. By giving small farmers, who are responsible for 80% of worldwide food output, access to capital at
attractive rates, Smartlands intends to measurably increase global food output while improving environmental results. This
goal is promoted by the creation of stable value cryptocurrency investments designed to improve investment performance in
a diversified portfolio. Smartlands decision to use the Stellar network also demonstrates its commitment to provide the agri-
tech community with the best technological practices. Smartlands believes that information technology will lead the next
advancement in agricultural production. Integrating with the Stellar network is a perfect example of how Smartlands intends
to use existing information technology to become more efficient.
Blue Star's SatoshiPay selects Lumen as preferred cryptocurrency

Technology-focused investing company Blue Star Capital announced that its investee company, SatoshiPay, has
agreed to partner with the Stellar Development Foundation (SDF) as the underlying cryptocurrency ledger for
SatoshiPay's settlement system. The AIM-traded Blue Star owns approximately 31% of the equity in SatoshiPay. It
said that, since its 2015 initial product launch, SatoshiPay has relied on the Bitcoin network to settle ‘nano
payments’, adding that initially Bitcoin transaction fees were negligible, however due to Bitcoin's rising popularity
in 2017, combined with stalling scalability improvements, it had become clear that Bitcoin's original vision of a
peer-to-peer electronic cash system was “no longer viable” for everyday transactions.

To sustain and enhance SatoshiPay's business model based on frequent low-value payments, SatoshiPay has been
exploring alternatives to replace Bitcoin with a more suitable distributed ledger technology -- Blue Star’s board
explained in the statement.

During the process of designing the software architecture for a switch to a new ledger technology, it said it had
become evident that hardwiring a new cryptocurrency to SatoshiPay's updated system was “potentially inefficient”,
and instead they started abstracting all cryptocurrency ledger operations - like wallet creation - into a layer between
SatoshiPay's business logic and the underlying ledger.
SatoshiPay's decision to choose Stellar was based on their extremely low fees -- currently 0.00003 cents per
operation -- and fast settlement -- approximately five seconds to confirmation -- allowing SatoshiPay to settle all
transactions in real-time and directly on the distributed ledger -- the Blue Star board explained.
Stellar Announces Partnership Grant Program for Blockchain Development

Stellar has announced a new initiative called the Stellar Partnership Grant Program. The program aims to promote
the development of high-impact projects in the Stellar ecosystem -- Stellar explained in a statement. Jed McCaleb,
Stellar co-founder and CTO, told Bitcoin Magazine … our over-arching mission is to use the Stellar network to
increase financial access globally and in particular to the more than 2.5 billion unbanked people in emerging markets
across the world. The Stellar Development Foundation (SDF) works mainly with licensed and regulated partners,
such as banks, fintech start-ups and remittance companies. However, the Stellar protocol is a foundational and open
technology usable by anyone.
As for the partnership program, itself, Stellar will be accepting proposals from leading organizations that are
interested in building upon Stellar's technology to improve the financial landscape and promote financial inclusion
-- Stellar stated. Stellar will then grant select partners up to US$2,000,000 per grant. This sum will be paid in Stellar
Lumens coin, XLM, ensuring the recipients are co-beneficiaries of network growth.

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As for who the program’s target will be, McCaleb said, We are currently working with corporate entities like Deloitte
and ICICI Bank, but with our partnership grant program, we are really excited about tech-forward money transfer
operators, and more generally, tech-forward non-bank financial institutions.

Stellar has a history of encouraging development on its platform. The Stellar Build Challenge has been actively
seeking out and funding new developments using their technology including wallets, ICOs, remittance applications,
and more. So far it has held four Build Challenges and awarded prizes to dozens of projects. Submissions for the
final Build Challenge of 2017 are due on November 15.

Credits

 https://www.stellar.org/blog/IBM-KlickEx-Partnership/
 https://www.stellar.org/blog/understanding-initial-coin-offerings/
 https://www.stellar.org/blog/using-stellar-for-ico/
 https://www.stellar.org/blog/global-partnerships/
 https://www.stellar.org/blog/lefinance/
 https://dashboard.stellar.org/
 https://www.stellar.org/how-it-works/stellar-basics/explainers/
 https://bitcoinmagazine.com/articles/stellar-announces-partnership-grant-program-blockchain-development/
 https://themerkle.com/what-are-stellar-lumens/
 https://storeofvalue.github.io/posts/stellar-lumens-what-is-it-and-should-you-invest/
 http://fortune.com/2017/10/16/ibm-blockchain-stellar/
 https://cfi-blog.org/2017/08/08/icici-bank-and-stellar-using-blockchain-to-reach-the-base-of-the-pyramid-in-india/
 https://cfi-blog.org/2017/07/31/how-financial-institutions-and-fintechs-are-partnering-for-inclusion-lessons-from-the-
frontlines/
 https://cfi-blog.org/2016/07/21/new-cfi-and-iif-report-reveals-banks-are-leading-financial-inclusion/
 https://cfi-blog.org/2016/09/08/the-new-wave-of-partnership-models-between-banks-and-fintech-startups/
 http://www.ibtimes.co.uk/stellar-connects-icici-bank-offers-cross-border-payments-india-africa-philippines-1595052
 https://amp.ibtimes.co.uk/ibm-brings-blockchain-cross-border-payments-world-stellar-klickex-banking-partners-
1643242
 https://news.bitcoin.com/pr-smartlands-the-platform-for-agriculture-announces-that-it-will-integrate-with-the-stellar-
network/
 http://smartlands.io
 https://amp.reddit.com/r/Stellar/comments/7cmoit/how_is_stellar_lumen_decentralised_currency_when/
 https://www.reddit.com/r/Stellar/comments/7d3n38/thought_id_share_a_super_detailed_article_on/?utm_source=am
p&utm_medium=top_post
 https://www.stellar.org/stories/adventures-in-galactic-consensus-chapter-1/#30
 https://www.coindesk.com/fading-star-stellar-rally-fizzles-lumen-losses-luster/
 https://www.cryptocoinsnews.com/stellar-lumens-invade-top-10-with-131-percent-growth-rate/
 https://www.digitallook.com/news/aim-bulletin/blue-stars-satoshipay-selects-lumen-as-preferred-cryptocurrency--
2968326.html
 http://boxmining.com/stellar-lumens-nutshell/
 http://www.trustnodes.com/2017/10/16/stellar-lumens-skyrocket-ibm-partnership
 http://rocktrader.eu/p/4086887052/2017/10/16/ibm-s-stellar-move-tech-giant-uses-cryptocurrency-in-cross-border-
payments-coindesk-lumen-crypto?utm_medium=social&utm_source=twitter
 https://twitter.com/stellarorg?lang=en

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I have been asked by many people how they should diversify their crypto money outside of Bitcoin. In my view, you should
have 40%-60% of your money in Bitcoin with part of that money in the fork coins Bitcoin Gold (BTG) and Bitcoin Cash
(BCH). You should also have 10%-20% of your money in Ethereum and approximately 10%-20% of your money and Litecoin
(LTC). Then what you must do, is spread out whatever is remaining among a dozen (or two dozen) names in the top hundred at
www.coinmarketcap.com/all/views/all -- I will be giving you those names during the course of the next few months.

The first name I gave you was Monero XMR back in late September. You should have received a 29-page report from me on
Monero that can be re-sent on request. That has already jumped 70% for us.

Attached is my second ‘altcoin’ name and that is Stellar Lumens XLM -- I mentioned this to you in October. I am sorry, but it
did jump 25% while I was preparing this 21-page report. That being said, it remains undervalued with a market capitalization
below one billion dollars (although cryptocurrencies outside of Bitcoin are hard to value.

It is quite tricky to separate the weeds from the flowers in this 1000-name crypto space because 90% of these names are
overvalued and/or low quality at best … pump-and-dump scams at worst.

It is very easy to fool investors … all you need is a fancy website; a white paper that someone signs off on; and someone
fronting the company that is very good at lying to the public.

In my view, if a cryptocurrency is in the top 25 or the top 50 (out of more than 1,000 names) and has a market value of at least
several hundred million dollars, we could/should be looking at the glass half-full and give the company the benefit of the
doubt.

I advise people against putting all of their eggs in one basket with Bitcoin. I like to use the example of Facebook exterminating
myspace.com 10 years ago and the compact disc exterminating the cassette and the black vinyl record 30 years ago. There is
no guarantee that Bitcoin will remain at the top of the mountain as Amazon, Facebook and the compact disc have. It is
possible, but unlikely, that Bitcoin will be the next myspace.com … the next cassette … the next Mike Tyson … who everybody
remembers was knocked out by Buster Douglas in 1990. Yes, that was 27 years ago! There will always be someone bigger and
stronger to come along … records are made to be broken.

I believe Bitcoin will probably stay at the top of the mountain, but you must protect yourself against a worst-case scenario
where the crypto market cap goes to two trillion dollars as I expect -- more than 700% upside from where we are today -- but
Bitcoin does not participate in that move (or underperforms). As I mentioned in my November 26 notes, Bitcoin, Litecoin and
Ethereum have an extraordinary advantage right now with 250,000 people signing up for new accounts at coinbase.com every
week. Those are the only three options. So, you have hundreds of millions of dollars pouring into these three names at a time
when the people who own those coins are not willing to sell them … and that is why all three of these names keep hitting
record highs day-after-day.

Coinbase now has more than 13 million account holders … and that is more than Charles Schwab.

The market cap for crypto is now approaching 300 billion dollars -- more than triple where it was when I put out my 122-page
report in July on cryptocurrency. Do not take a bet that you can't afford to lose. That being said … if I am right in my forecast,
you have a 10:1 or 20:1 payout here by 2022-2027. If you lose the bet, unlikely, it is a few months of your salary. On the other
hand, if you win the bet, you are looking at shaving 5 or 10 years off of your retirement age. In life, you miss every shot that
you don't take (to use a basketball analogy). In my view cryptocurrencies are a shot worth taking. Bitcoin has already jumped
by more than 300% since my recommendation on the 3rd of July, 2017. Litecoin, Ethereum and Monero are also up between
50% and 100% for me. I am looking for another 1,000% upside over the next ~five years (which is what we got already year-
to-date). Remember we only have 0.5% penetration and that is probably go up by 5X in the next 18-36 months.

Bitcoin in my opinion should be valued the same as gold which would put my long-term price target above a quarter of a
million dollars. I don't know how much gold there is in the ground, but I do know how much Bitcoin there is. It is a
mathematical formula and the number of coins can’t be increased beyond 21 million. Only a few million of those coins will be
available for sale because most people like myself will not sell what we are holding on to at any price. In a couple of years
there will be 200 million people around the world with cryptocurrency accounts and they will be trying to get their hands on a
few million Bitcoin -- and that is what will drive the price here. The supply-demand imbalance is absolutely mind-boggling to
me and I think the market is starting to finally pick up on this. Bitcoin jumped from $6,000 to $9,000 in the month of November
and on a split-adjusted basis the price is now at $11,000.

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Contact Us

Standpoint Research
Flamingo South Beach / 1504 Bay Road # 2210 / Miami Beach, FL 33139
Web: www.standpointresearch.com / E-mail: ronnie@standpointresearch.com
Tel: 786.768.2317 Cell: 786.315.3853

Please assist here if you have not yet done so –

www.foodforthepoor.org/Moas
Launch Date: July 15, 2016 / Raised: $85,285 / # of Donations: 377
Please contact me if you have any questions about this charity

Food for the Poor Annual Report --

http://www.foodforthepoor.org/about-us/financial-info/files/annual-
report-2015b.pdf
More than one billion dollars in humanitarian aid distributed in 2015 to 18 countries.

Administrative expenses were only 4%. Established in 1982, FFTP is a five-star

charity headquartered in Coconut Creek, FL. 35% of the aid in 2015 went to Haiti.
25% went to Guatemala. Dominican Republic, El Salvador, Honduras, Jamaica and
Nicaragua were the other countries who each received significant assistance of
$50,000,000-$100,000,000. FFTP does not work with any country or port that taxes
humanitarian aid and five officials must sign off on each expense. $200 pays for 800
pounds of rice and beans – enough to keep a single Mom and three starving children
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takes a homeless family (of 6-8) off the street.

Standpoint Research will be the lead (Platinum) sponsor at

http://www.foodforthepoor.org/participate/events/flamingle/

November 30 in Fort Lauderdale. As a sponsor I get 20 tickets. If anybody wants to go, please advise.
It should be a very nice evening to support a fantastic cause.

We will be taking the proceeds to set up beehives in the poorest communities in Jamaica and educating the local
population on how to monetize that via the honey market.

3,000,000 children under age five starve to death worldwide every year

November 26, 2017 21 www.standpointresearch.com

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This is the legal disclaimer for my stock recommendations. I have not yet altered this to reflect my cryptocurrency
service. It should be assumed that I hold the crypto names in my portfolio that I write about. I have no
relationship with XLM and received no compensation from them for this. I do not have any money in any of my
open stock recommendations.

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End of Report / Prepared by Ronnie Moas

November 26, 2017 22 www.standpointresearch.com