Stellar (XLM), a blockchain platform renowned for its fast, low-cost cross-border payment solutions, is gaining significant attention in 2025, particularly from both retail and institutional investors. However, concerns are rising regarding the concentration of its token supply, which could impact the network’s decentralization and market volatility.

Concentrated Supply Raises Concerns About Decentralization

One of the key issues facing Stellar is the highly concentrated distribution of its native asset, XLM. According to data from Flipside Crypto, the top 10 wallets currently control approximately 25 billion XLM. With a total circulating supply of 30.9 billion XLM, this means nearly 80% of the token supply is held by a small number of entities. This level of concentration raises concerns about the network’s decentralization.

Such concentration can pose a threat to the ecosystem’s stability, as a few large holders, often referred to as “whales,” could significantly influence the price of XLM. Most retail investors, on the other hand, own fewer tokens and therefore have less sway in the market. In fact, around 90% of XLM holders own less than 100 XLM, underscoring the significant disparity in token distribution.

Market Volatility and the Risk of Whale Activity

The concentration of tokens in the hands of a few could lead to volatility in the market. If the major holders decide to sell a significant portion of their XLM holdings, the price of the asset could experience sharp fluctuations. As the price of XLM is heavily influenced by the actions of a small group of investors, the network may struggle with stability.

Additionally, data from Stellar.expert shows that the balance of XLM on cryptocurrency exchange Binance has risen dramatically since late 2023. Binance’s XLM balance surged from 180 million to over 1 billion XLM, which points to growing trading activity and, potentially, higher sell pressure. This increase in exchange balances further compounds concerns about market volatility if unfavorable news impacts investor sentiment.

Despite the concerns about the token supply concentration, some XLM investors believe this is part of a deliberate and well-managed strategy. They argue that the measured growth of the circulating supply, coupled with rising adoption, suggests that the Stellar network is on a steady growth trajectory. “This isn’t a random distribution — it’s a deliberate strategy… Supply growth is measured and controlled while adoption surges,” one investor commented.

Adoption of XLM and the Real-World Asset Sector

On-chain data further supports the view that the Stellar network is experiencing steady growth. The number of active accounts on the Stellar network has grown from 7.2 million in 2023 to 9.5 million in May 2025. With an average of about 5,000 new wallet addresses being added each day, demand for XLM continues to increase, which may help absorb the growing circulating supply.

Additionally, Stellar’s role in the Real-World Asset (RWA) tokenization market has been gaining traction. In 2025, Stellar became the third-largest blockchain for RWA market capitalization, following Ethereum and ZKsync Era. Notable partnerships include Franklin Templeton’s OnChain US Government Money Fund, valued at $497 million, and Circle’s USDC stablecoin, which holds $345 million on the Stellar network.

The total value of RWAs on Stellar has surged by 84% in 2025, growing from $275 million to more than $500 million by May. This growth reflects the increasing appeal of Stellar’s network for tokenizing real-world assets, adding further credibility to its long-term potential.

Conclusion: A Delicate Balance

While the concentrated supply of XLM presents potential risks, Stellar’s growing adoption and strategic positioning in the RWA sector are helping to bolster its appeal. Institutional interest and increasing partnerships could provide the network with the stability needed to balance its supply and demand, ultimately driving long-term value for XLM holders.

As the market continues to evolve, the key challenge for Stellar will be to navigate the tension between token distribution and decentralization while capitalizing on emerging opportunities in the broader financial ecosystem.