How To Short Stellar (XLM)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting Stellar is pretty straightforward, all you need is a crypto trading platform that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US

Stellar

Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short Stellar

Shorting Stellar can be done in 4 steps:

  1. Find a cryptocurrency exchange
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short Stellar

1. Find a cryptocurrency exchange

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other crypto exchange that allows for short selling.

etoro crypto

2. Sign up with the cryptocurrency exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US

 

eToro sign up form

The sign-up process is very easy, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your eToro account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Stellar

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find Stellar by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell Stellar and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Stellar has dropped, go to your Portfolio, find the Stellar trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Stellar!

Global: Sign up with eToro

USA: Sign up with eToro US

 

Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.

 

Where to Short Stellar (XLM)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.

 

Frequently Asked Questions

Can I short Stellar on Binance?

Yes, you can short Stellar on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About Stellar

Stellar Network is an open-source distributed network, community-owned, that facilitates cross asset transfers of value. Stellar hopes to make cross-asset transfers of value as cost-effectively as possible. The network also wants to be open and accessible to all income levels. Stellar can facilitate exchanges between fiat currencies and cryptocurrencies. Stellar.org, which supports Stellar, has a centralized structure similar to XRP. It can handle cross platform transactions as well micro transactions such as XRP. Stellar.org does not have a profit structure, and the platform they use is open-source and decentralized.

Jed McCaleb started Stellar in 2014, Jed McCaleb is also a founder of Mt. Gox co-founder of Ripple, Jed McCaleb also launched the network platform Stellar with Joyce Kim (an ex-lawyer). Stellar is also a technology for payment that connects financial institutions and dramatically reduces the time it takes to transfer money across borders. Both payment networks actually used the same protocol at first.

A user can send any currency to another person using Lumens (XLM), by using its intermediary currency Lumens.

An example: Joe could send USD to Mary using his EUR. A request is made to the distribution exchange for USD in EUR. This form is known as an "order book". The order book will be used by the network to find the best exchange rates for the transaction to minimize the user's fee.

Anchors allow for multi-currency transactions. Anchors can issue credit, and are trusted entities that hold depositors' money. Anchors serve as the bridge between different currencies or the Stellar network.

Lumens can be described as the native asset (digital money) on the Stellar Network. This helps to facilitate multicurrency transaction and stop spams. XLM allows multi-currency transfers to take place at a low price.

To prevent DoS attacks (aka SPAMS) on the Stellar network, every transaction that takes place on the network will be charged a small fee of 0.01 XLM. While it does not affect the cost of transactions, it is sufficient to dissuade spammers from using the network.

Stellar used a built-in inflation mechanism prior to Protocol 12. This was designed to allow account holders, collectively, to direct inflation-generated lumins to Stellar projects.

As the network grew, inflation became less effective. Account holders were either not able to set their inflation destination or they joined inflation pools to claim it. Operational costs associated to inflation payments continued to rise. A protocol change to disallow inflation was suggested, implemented, voted upon by validators, then adopted as part the network upgrade.

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