Lumens (XLM) are the native asset of the Stellar network.
This means that XLM is different from all other Stellar assets. While all other assets on Stellar represent IOUs by a specific issuing account, XLM is not issued by a specific account. Instead, it is native to the network and plays a central role in the operation of the network:
- XLM helps prevent the network from attackers. Each transaction has a minor fee attached to it of 0.00001 Lumens. This fee prevents users with malicious intent from performing DoS attacks, or flooding the network. Additionally, each piece of data that is stored on the network, requires a reserve amount of XLM be held in the account that wants to store the data on the network. As of now, all accounts need a base reserve of 1 XLM to exist on the network. Additionally, offers, trustlines, custom data, additional signers etc. cost 0.5 XLM each. This reserve policy prevents malicous actors from overloading the ledger with spam data.
- XLM can act as a bridge currency where it facilitates multi-asset transactions. For instance, if the trading pair MOBI to SLT (two ICO tokens currently trading on the Stellar decentralized exchange) does not have a liquid market, Lumens can act as a common denominator between the two assets (MOBI to XLM, and XLM to SLT).
As with all stellar assets, XLM can easily be transferred between two parties in a decentralized manner (no central controlling actor).