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Stellar is opening a dedicated fund for professional investors! “That sounds boring,” I hear you say. Well actually, it kind of isn’t!
So, what is Stellar and what does this nonsense mean?
Stellar, the brainchild of ex-Ripple founder Jed McCaleb, is seeking to dethrone payment provider SWIFT (and Ripple, if it comes to it) as the global provider of cross-border payment services. Stellar’s software is designed, per its website, to “[expand] access to low-cost financial services to fight poverty and maximize individual potential.” It does this by deploying its native cryptocurrency, “Lumens,” as a so-called “bridge currency” between foreign banks—forgoing the need to screw around with exchange rates.
Stellar was originally built on a copy of Ripple’s open source code, and its new algorithm is based on a design by Stanford professor David Mazieres. Its market cap is $2.04 billion—putting in a respectable sixth place if measuring by market cap.
Now stalwart crypto-asset firm Grayscale Investments, a subsidiary of industry giant Digital Currency Group—the VC firm that funded Coindesk, Ripple, and BitPay among others—is adding Lumens to its crypto-asset portfolio, a move that will apparently broaden its reach among professional, accredited investors (those earning upwards of $200,000) rather than the rabble that usually pitch in to this stuff. It would be Grayscale’s ninth such listing, following the likes of Bitcoin and Ripple.
As Redditor u/matthewryancase put it, “This ain't some Mom and Pop retail shop... These guys are legit!”
The best part? Grayscale managing director Michael Sonnenshein opened the fund not on a mad whim, but because of actual “investor interest”!
“I think the theory is a sound one,” Sonnenshein told Fortune. “An American bank may be keeping large amounts of currencies in foreign banks, and to be able to bring those balances of foreign currencies onto a balance sheet as working capital is valuable. Financial institutions won’t be required to hold balances all over the place. This will improve efficiency and shore up balance sheets for other uses.”
Inevitably, the investors themselves seem to care little about Stellar’s actual real-world use, and mainly hope the influx of accredited dough will pump the price. As such, news of the investment fund has already been greeted with another round of hype. On Cryptopanic, a write-up of the news earned thirteen “bullish” upticks, which for Cryptopanic’s reclusive community amounts to critical acclaim.
We at Decrypt, on the other hand, have zero Stellar investments. But Stellar is crypto’s likable underdog, and its “use cases” extend beyond facilitating “Lambo” acquisition. Unlike Ripple, which largely courts the banking elite (with mixed results), Stellar has partnered with IBM to focus chiefly on helping those in need, the so-called “unbanked,” in developing countries. Those in need of Lambos.