How to buy Stellar / XLM in Canada

by Ann deBruyn

A pile of assorted gold- and silver-coloured coins

Photo by RODNAE Productions from Pexels

Since the cryptocurrency market crash in May, smaller altcoins have been steadily stealing the march on leading digital coins. Altcoins’ relatively faster rise in value, compared to crypto heavyweights like bitcoin and ether, has sparked dramatic investor interest in some lesser-known tokens over the past year.

One of the beneficiaries of this trend has been Stellar lumens. With a price point below US$1 and annual gains equalling that of Ripple (the seventh-largest coin), Stellar is viewed by some investors as a reasonable crypto bet to achieve growth and diversification. Its low-price and high-upside potential makes it a particularly attractive proposition for those wanting to test the waters before wading deeper into the cryptosphere.

Thanks to its payment processing power and provenance, Stellar has come to be regarded as a serious challenger to Ripple, which is a considerably stronger altcoin both in terms of the unit price and market capitalization. What makes Stellar even more interesting in the short to medium term is the fact that, unlike other crypto issuers, it’s partnering with some central banks, such as the National Bank of Ukraine, to help develop their own digital currencies.

If you’re interested in expanding your crypto exposure beyond headline-making coins, Stellar might deserve a closer look. This MoneySense guide breaks down everything you need to know to make an informed choice.

What is Stellar?

Stellar is a blockchain-based, open-source global payments network for storing and transferring money across currencies at significantly lower cost than traditional means. The network’s main objective is to connect banks, payment systems and customers faster and without the high fees consumers often must fork out when transferring government-backed currencies across borders.

Stellar’s native cryptocurrency is called lumens, also referred to by its ticker symbol, XLM. These terms are interchangeably used by financial media and traders.

Stellar and XLM were created by cryptocurrency developer Jed McCaleb and former lawyer Joyce Kim in 2014. McCaleb is known for creating Mt. Gox, the world’s first bitcoin exchange (now defunct) in 2010, and the Ripple protocol with its native currency, XRP, in 2012.

Originally a fork of the Ripple protocol—hence the frequent comparisons between the two—the Stellar network is touted as a more accessible, affordable, low-cost system of financial services.

“Stellar is based on the same framework as Ripple; however, it is intended to operate as a non-profit, with a focus on helping developing economies access cheap and fast global payments,” says James Edwards, a cryptocurrency expert at

Although Ripple and Stellar were both built by McCaleb and have some technological similarities, they differ in their target markets and how they plan to achieve their goals. 

Stellar focuses on stablecoins and has a not-for-profit model, in stark contrast to Ripple’s payment network and XRP token, both of which generate revenue for the company through monthly sales, notes Edwards. In addition, Stellar is less concerned with users holding massive amounts of its native token, while Ripple attempts to make owning large amounts fundamental to the operation of certain products.

There are also differences in the networks, tokens and organizations behind the two cryptocurrencies—for example, how they validate transactions. “The XRP network is permissioned, meaning validating node participation is limited to a trusted list provided by Ripple,” says Christopher Matta, president of 3iQ Digital Assets (US), Canada’s largest digital asset fund manager. “By contrast, XLM is open, which means anyone can become a validating node.”

At the organization level, Ripple is for-profit, while Stellar Development Foundation is a non-profit that supports the development and growth of the Stellar network. Stellar has set the altruistic goal of creating a borderless blockchain payment network platform that helps people in developing economies who have no access to banking services. “Many citizens of such countries work abroad and send money back home, which can cost a lot of their already tight incomes to make a transaction with existing services,” Edwards points out. 

Lumen, like bitcoin, has a finite supply of tokens. There are about 50 billion lumens in existence, of which nearly 20 billion are in circulation. The Stellar Development Foundation retains the remaining 30 billion, which it plans to release in public markets over the next few years. (See the Lumen Accounting guide for further details.)

To keep bad actors at bay, Stellar imposes a minimum balance of 1 lumen on each account and a per-transaction fee of 0.00001 lumen. Stellar argues that the costs are small enough to keep lumens widely accessible, but big enough to discourage criminal activity.

Is XLM a good investment right now?

It’s difficult to evaluate emerging technology in its early stages of development. That said, the long-term thesis on the future of payments and all things Web 3.0 is hard to ignore. Stellar seems focused on helping to improve the payments ecosystem for individuals. For instance, there’s no intermediary bank that tacks on fees or slows down transaction validation; instead, Stellar’s network confirms transactions across borders in just a few seconds.

As for the coin’s performance, XLM’s rise over the past year has been nothing less than impressive. The virtual currency was worth a paltry $0.07 a year ago, but it skyrocketed to a peak of $0.73 (a 942% jump) in May 2021 before sliding back down to $0.37 (still up 185% on a year-to-date basis) as of Oct. 22, 2021.

“Looking at the digital asset space broadly, bitcoin’s performance tends to be a good benchmark for other cryptocurrency payment networks like XLM,” Matta says.

Stellar’s one-year performance compares well against bitcoin’s 311% gain, but it significantly lags ethereum’s 721% return for the same period. A current market cap of US$9 billion makes Stellar the 22nd-biggest cryptocurrency, as of Oct. 22, according to CoinMarketCap data.

While bitcoin and ethereum continue to dominate the cryptocurrency market due to their greater acceptance and market capitalization, owning just the leading crypto assets precludes the growth opportunities a diversified digital asset portfolio represents.

“You can diversify your core exposure to ethereum while also participating in the secular growth of the underlying technology by building out a satellite allocation to a basket of smart contract platforms,” Matta argues.

Then there are other satellite verticals, such as decentralized finance (DeFi), Web 3.0 or scaling solutions, to consider while allocating. “When thinking about XLM, it could be bucketed within the currencies/payments satellite allocation alongside others like bitcoin cash or litecoin or XRP, and used to diversify your core exposure to bitcoin,” says Matta.

Stellar is a compelling idea, but as for any early-stage emerging technology investments, investors “need to employ a long-term view and focus on right-sizing your participation,” asserts Matta.

Market timing, he cautions, isn’t a sustainable tactic given the level of volatility at this stage of XLM’s development. “This is true for all digital asset investments,” Matta says, adding that “it’s all relative to your risk tolerance, [investment horizon] and how these investments complement your other risk assets.”

Buying XLM with CAD

If you’re looking to invest in Stellar, you can buy it through leading global cryptocurrency exchanges—, Binance and Kraken—that support several fiat currencies, including CAD.

Canadian crypto investors also have a few homegrown options. You can buy XLM directly at leading crypto exchanges including Newton, Wealthsimple, CoinSmart, NDAX and Coinberry, among others. These platforms facilitate buying and selling multiple crypto assets, including XLM, in Canadian dollars.

If you plan on “HODLing” the coins for a longer term, you could consider transferring your assets to a secure software or hardware wallet—or “cold wallet” in crypto parlance—such as Ledger, Trezor or CoolWallet, for additional safety.

Investors with a high risk tolerance and a penchant for speculative bets could also trade XLM using contracts for difference (CFDs) on platforms such as AvaTrade and CFDs allow investors to speculate on short-term price fluctuations without buying the actual coins. However, CFDs are complex investment instruments that carry a high risk of financial loss due to leverage.

Regardless of how you choose to play Stellar, the usual caveats about crypto apply. Your investment in digital assets, as with other asset classes, should adhere to the fundamentals of investing, which include doing your own research, understanding risks and seeking professional advice before making any investment decisions—and never investing more than you can afford to lose.