Stellar's intent has been to be a fast, efficient payment system with support for digital representations of any currency. By design, the network needed its own built-in token, the Lumen. Lumens are required for opening accounts, paying fees and act as a a digital-first asset that embraces the openness of the internet and is fully independent of economic or political factors.
The initial total supply of Lumen was 100 billion, but after the Network Upgrade in 2015, the cancellation of the inflation mechanism and the reduction of supply in 2019, the total supply was reduced to 50 billion. But from the total supply, only 24 billion Lumens are what we consider to be circulating supply. This is comprised of lumens owned by individuals and independent companies. These are lumens out in the world, used to pay network fees and fund Stellar accounts. They are also used as a general medium of exchange. The remainder of 26 billion Lumens are stored in the SDF Mandate account, Network Upgrade Reserve account, or Fee Pool.
In order to raise the Network liquidity following the 18 Protocol Upgrade, a decision was made to release the unclaimed Lumens from the Network Upgrade Reserve account, which basically is an escrow for old network users to claim their old tokens at the time of the new Stellar Consensus Protocol launch in 2015. These tokens have mostly been claimed so far. From the initial balance of 82,823,331,293 Lumens, only 259,580,194 remain in escrow and have not been claimed at all. Validators voted for the distribution of these unclaimed Lumens in an accelerated staking plan, before the end of 2021.
Starting December 17th, 18:00 UTC and ending on December 31st, 23:59 UTC, the new feature is available for all network users.
The feature is a simple staking delegation but in an accelerated time-user base, which means the more users start staking, the lower the reward percentages.
This method ensures that all claimable Lumens will be distributed in the two week period and that early stakers get higher rewards. The algorithm mixes the deflationary formula with a hybrid dutch auction system.
Simply put, users are stimulated to start staking sooner and as more users start staking, the payout decreases. Increments are paid at the 24 hour cycle ending, each day at 18:00 UTC, starting December 17th.
We believe in community-based ownership of the Stellar network. Feel free to ask us questions about the lumen distribution program.
Find answers to frequently asked questions in our FAQ page.
Join the conversation at: slack.stellar.org.
And if you’re a developer interested in building applications on Stellar, explore our documentation.