With the value of lumens (XLM) declining since its peak at the end of April at around 45 cents, to its current value of just over 22 cents per XLM, Stellar has engaged in talks with Chain about acquiring the blockchain startup for a potential sale price of $500 million worth of lumens.
According to an article in Fortune, if the Chain backers accept the deal, they will have the option to either immediately sell the coins, or hold onto them after the transaction. This could be problematic for existing XLM holders. We are not financial advisors, and this is only an opinion, so be sure to check with a professional if you plan to make an investment. That said, a possible scenario is that news of the potential deal will drive the price of XLM back up. Then, if the Chain group decides to immediately dump $500 million of XLM back into the market, it could drive the price way down. A better deal for the community might require the people at Chain to hold the coins for a period of time, or to limit the number of coins they may sell off within a given timeframe.
If the deal works out, equity holders at Chain could do very well. The company raised over $43 million in VC funding from numerous investors, including Khosla Ventures, RRE Ventures, Blockchain Capital, Pantera Capital, Nasdaq, Visa, Citi Ventures, Thrive Capital, BoxGroup, and Haystack. These big names suggest that Chain is a serious project with serious potential, and adding it to the Stellar family could be a great move for both projects.
Chain is a San Francisco tech startup, with a mission to “enable a smarter and more connected economy.” The company plans to develop distributed ledger technology that creates foundations for fintech products and services. Its product, “Sequence” is a ledger-as-a-service that companies may use to track and transfer financial balances, through the use of digital tokens. It combines blockchain and cloud technology to securely track value. It may be used as a method for recording transactions for mobile wallets, digital exchanges, payment services and other applications. Companies may use the standard plan for free, for up to 1 million transactions per month.
This move adds to the recent listing of XLM on the itBit cryptocurrency exchange, and the exchange’s acquisition of a BitLicense in New York, presumably because the platform is targeted at institutional investors.
Stellar was founded by Jed McCaleb, one of the co-founders of Ripple. It’s a fast cryptocurrency with low transaction costs and smart contract capabilities that make it useful for IoT, ICO and other applications. The company has deals with payment processor, Stripe, as well as IBM and other companies that use it for cross-border payments. With Stellar’s deep pockets, and the fintech engineers at Chain, we may see new products developed soon, assuming the deal comes to fruition. Time will determine whether Chain products will incorporate XLM into their products, or if Chain’s technology will be used to improve the lumens platform.
Daniel is an experienced and dynamic entrepreneur with a demonstrated history of launching and operating successful businesses. Skilled in Business Strategy, Technical Consulting, Coaching, Sales, Entrepreneurship, Team Building, and Public Speaking.
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