Stellar is a proof-of-stake cryptocurrency designed for cross-border payments. This means holders can choose to "stake" their coins and receive staking rewards, as an alternative to mining.
Binance will distribute staking rewards to its customers based on how many Lumens they hold on a daily basis–there is a minimum requirement of 10 XLM in order to qualify. The rewards will be calculated and handed out monthly, in a similar vein to staking rewards for other coins on Binance: NEO (GAS), Ontology (ONG), and VeChain (VTHO).
Why is Binance suddenly feeling so generous towards Stellar Hodlers you might ask? Because Binance had been 'accidentally' staking its customers' lumens for nearly a year.
"Binance discovered that we had been staking Stellar Lumens (XLM) from 2018/08/31, following recommendations from the Stellar team on changing some parameters on both cold and hot wallets," the announcement stated. While technically, it's easy to overlook small changes in how a wallet works–It seems strange that nobody was aware of the staking rewards landing in the exchange's wallets.
Despite this abuse of customer funds, fans of the currency and Binance seem delighted, and the price of Lumens has, at the time of writing, surged by 10%.
The airdrop of 9,500,000 XLM ($775,000) will be held on September 1. It will be handed out proportionally among those who hold lumens on the exchange from July 20 to the distribution date.
Binance CFO Wei Zhou told Decrypt in April (which didn't make it into the article) that Binance did not stake any coins on behalf of its users beyond the coins that it had publicly announced.
An expert in the staking industry has also told Decrypt that other major exchanges are staking coins on its users' behalf—and keeping the profits, according to analysis of blockchain records. However, we have been unable to corroborate this. But strangely, no one seems to care that much.