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Why Kinesis Chose Stellar as Its Blockchain

In 2018, when Kinesis set out to build a new monetary system backed by physical gold and silver, the team faced a critical infrastructure decision: which blockchain could support a globally adopted, high-velocity currency system? Kinesis chose to fork the Stellar network to form its bespoke blockchain. This decision was driven by three fundamental requirements: speed, consensus efficiency, and a fee model that could support Kinesis’s unique yield-sharing mechanism.

The choice was also shaped by the state of the blockchain industry at the time. In 2017–2018, the rapid growth of decentralized applications and token issuance exposed the limitations of first-generation blockchains. Network congestion frequently pushed transaction confirmation times higher, while fees on some networks rose from a few cents to tens of dollars during periods of peak demand. For a payments-focused monetary system intended to facilitate everyday transactions rather than occasional settlement, predictable performance was just as important as maximum throughput.

Kinesis selected the Stellar blockchain because it aligned with the company’s mission of making gold- and silver-backed digital money fast, affordable, and accessible on a global scale. Stellar was designed specifically for payments and asset transfers, making it well suited for a financial platform that aims to bridge traditional precious metals with modern digital finance.

Transaction Speed & Low Fees

For a currency system intended for everyday global use, transaction velocity is paramount. Kinesis required a network capable of processing thousands of transactions per second, far exceeding the capabilities of earlier blockchains. Test results placed Stellar at the forefront of network speed, with estimates of 3,000 to 4,000 transactions per second—outstripping competitors not marginally, but by orders of magnitude. By comparison, Bitcoin processes roughly 3.3 to 7 transactions per second, and Ethereum averaged around 15 transactions per second prior to its later scalability improvements.

Equally important was transaction finality. Stellar typically reaches ledger consensus every 3–5 seconds, allowing completed transactions to become irreversible within a matter of seconds rather than minutes or hours. Traditional international bank transfers, particularly those routed through correspondent banking networks, can require one to three business days to settle across jurisdictions. This difference makes blockchain infrastructure particularly attractive for cross-border value transfer.

In addition, Stellar’s transaction fees are extremely low, making even small-value payments economically practical. This supports Kinesis’ goal of enabling precious metals to function as everyday money.

Consensus Model

A critical distinction in Kinesis’s decision was Stellar’s consensus model versus the mining-based models of Bitcoin and Ethereum. Rather than requiring miners to compete by performing computational work, Stellar uses the Stellar Consensus Protocol (SCP), introduced in 2015 by Stanford professor David Mazières. SCP is based on the concept of Federated Byzantine Agreement (FBA), in which participating validator nodes independently choose trusted quorum slices that collectively form network consensus.

This approach eliminates the need for energy-intensive mining while allowing independent validators to reach agreement quickly without sacrificing decentralization. Unlike Proof of Work, consensus does not depend on specialized hardware or electricity consumption, making transaction processing significantly more resource-efficient. Importantly for financial applications, SCP provides deterministic settlement. Once a ledger closes and consensus is achieved, transactions are considered final rather than relying on multiple additional confirmations to reduce the probability of reversal.

The Kinesis fork further customizes this process by ensuring that only authorized validator nodes participate in consensus, supporting the operational requirements of its own monetary network.

The Fee Accumulation Advantage

Perhaps the most strategic factor was Stellar’s fee accumulation model, which aligned perfectly with Kinesis’s core value proposition: distributing yield to network participants. In mining-based models, transaction fees are allocated exclusively to miners, making it impossible to share revenue broadly across network participants. Conversely, Stellar’s model consolidates fees across entire network activity, allowing them to be accumulated and distributed within the Kinesis ecosystem.

Stellar’s fee structure was originally designed primarily as an anti-spam mechanism rather than as a source of validator income. Every transaction consumes a small base fee that discourages network abuse while remaining economically insignificant for legitimate users. Because validators are not rewarded through competitive mining, there is no incentive for bidding wars over transaction inclusion—a common cause of fee volatility on Proof-of-Work networks.

Moreover, Stellar’s fees are calculated linearly and statically based on transaction activity itself, rather than being dynamically determined by market competition for block space. This prevents the runaway fee escalation seen on other networks during periods of congestion and provides users with predictable transaction costs.

Tokenized Asset Support

Another important reason for choosing Stellar is its native support for tokenized assets. From its inception, Stellar was designed to allow organizations to issue digital representations of fiat currencies, commodities, securities, and other real-world assets directly on the blockchain.

Unlike many early blockchain platforms, token issuance is part of Stellar’s core protocol rather than requiring separate smart-contract standards. Assets can therefore be created, transferred, and exchanged using built-in functionality. The network also supports trustlines, which allow accounts to explicitly choose which issued assets they are willing to hold, adding an additional layer of control for regulated financial assets.

Stellar additionally includes a decentralized exchange (DEX) at the protocol level. Rather than operating as a separate application, the order book is embedded directly into the blockchain, allowing issued assets to be exchanged without relying on external trading infrastructure.

These characteristics made Stellar particularly well suited to representing gold (KAU) and silver (KAG) as blockchain-based assets.

The Fork Decision

While Stellar provided the ideal foundation, Kinesis ultimately chose to fork the network rather than use it unchanged. This allowed Kinesis to make two critical customizations.

First, Kinesis itself became the network’s native currency, replacing Stellar Lumens as the base asset used by the protocol. Second, and more importantly, Kinesis redesigned the fee mechanism so that fees are calculated as a percentage of transaction value rather than as a fixed network charge. This modification directly supports the system’s economic model, in which higher transaction velocity contributes to greater fee generation and yield distribution.

Forking also gave Kinesis complete control over future protocol development. Rather than depending on upgrades adopted by the public Stellar network, the platform could evolve independently while retaining the performance characteristics that originally made Stellar attractive.

Conclusion

Kinesis’s choice of Stellar was not arbitrary; it was a strategic decision grounded in technical requirements and economic design. At the time the decision was made, Stellar represented one of the few mature blockchain architectures purpose-built for high-speed payments, asset issuance, and cross-border settlement rather than decentralized computation.

By combining Stellar’s fast consensus mechanism with a fee model optimized for broad yield distribution—and then forking the network to enable percentage-based fee collection—Kinesis created a blockchain foundation capable of supporting a global, yield-bearing monetary system.

Ultimately, Kinesis chose Stellar because it combines high throughput, rapid settlement, predictable transaction costs, and native support for tokenized assets. These characteristics enable a monetary platform built around physical gold and silver to operate with the speed and efficiency expected of modern digital payment networks while remaining rooted in ownership of tangible assets.

* Full disclosure: I’m not a blockchain guy. I probably couldn’t distinguish a Federated Byzantine Agreement from a bratwurst. I hesitated before writing this one, but the topic felt too important to ignore. So I did some due diligence, enlisted outside help, crossed my fingers, and hit Publish, hoping for the best. I won’t pretend to understand every technical detail — frankly, I probably don’t understand half of them — but if this article helps even a few people grasp how Kinesis builds on Stellar, then it has accomplished its purpose.