In the fast-evolving world of cryptocurrency, Stellar and Ripple stand out as two pioneering blockchain platforms that have shaped the digital finance landscape over the past decade. While both aim to revolutionize cross-border payments and global financial infrastructure, their journeys have taken different paths—marked by shared origins, divergent philosophies, and high-profile legal and technical developments.
At the heart of both ecosystems is Jed McCaleb, a visionary programmer and entrepreneur whose influence extends far beyond these two projects. McCaleb co-founded Ripple in 2011 alongside Arthur Britto and David Schwartz, serving as its CTO until 2013. He later went on to launch Stellar, citing philosophical differences with Ripple’s centralized direction. This dual legacy has created a unique rivalry—one rooted not just in technology, but in vision and governance.
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Origins and Evolution
The XRP Ledger was first developed in 2011 as a decentralized payment protocol designed for fast, low-cost transactions. By 2012, the project had evolved into OpenCoin, later renamed Ripple Labs, and eventually shortened to Ripple. Under CEO Brad Garlinghouse, Ripple began focusing on institutional adoption, partnering with banks and financial institutions to streamline international payments.
In contrast, Stellar emerged in 2014 as an open-source, nonprofit initiative led by the Stellar Development Foundation (SDF). Co-founded by McCaleb and supported by tech giant Stripe through a $3 million grant, Stellar was built with inclusivity in mind—aiming to connect underbanked populations and enable asset issuance for any currency or commodity.
While Ripple targets enterprise clients, Stellar emphasizes accessibility and decentralization, allowing anyone to become a network participant or "anchor" that issues tradable assets.
Technology and Consensus Mechanisms
Both networks rely on unique consensus protocols that differ significantly from traditional proof-of-work blockchains like Bitcoin.
Ripple uses the XRP Ledger Consensus Protocol, a form of Federated Byzantine Agreement (FBA), where trusted validator nodes agree on transaction validity without mining. This allows for rapid settlement—transactions clear in under 5 seconds with minimal fees (around 0.00001 XRP). The network can handle over 1,500 transactions per second (TPS), making it highly scalable for financial institutions.
Stellar employs the Stellar Consensus Protocol (SCP), invented by Professor David Mazières. SCP also operates on FBA principles but prioritizes decentralization and low barriers to entry. Nodes form quorum slices—trusted groups that collectively validate changes—enabling secure, fast, and energy-efficient operations. Like XRP, Stellar settles transactions in seconds and supports multi-currency exchanges natively.
Tokenomics: XRP vs. XLM
Understanding the economic models behind XRP and XLM reveals key differences in supply, distribution, and utility.
- XRP: Total supply capped at 100 billion tokens. All were pre-mined at launch, with Ripple initially holding 60 billion in escrow. As of now, approximately 52 billion XRP are in circulation. Ripple releases up to 1 billion XRP monthly from escrow for operational use, though unused amounts are returned.
- XLM: Initially launched with 100 billion tokens, Stellar reduced its supply in 2019 when over 55 billion XLM were burned—cutting the total to around 50 billion. Current circulating supply is about 26.8 billion. Unlike Ripple, Stellar does not use escrow; instead, inflation was originally programmed but later disabled via community vote.
Market performance reflects investor sentiment and macro trends:
- As of 2025, XRP trades around $0.507 with a market cap of $26.26 billion—ranking sixth among cryptocurrencies.
- XLM trades near $0.09 with a market cap of $2.47 billion—placing it around 28th globally.
Year-to-date (YTD), XRP has gained 49.5%, outperforming XLM’s 27% rise. However, both remain well below their all-time highs: XRP down ~85% from its 2018 peak of $3.40; XLM down ~89.5% from its high of $0.93.
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Legal Challenges and Market Impact
One of the most significant factors affecting Ripple's trajectory is its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). In 2020, the SEC filed a lawsuit alleging that Ripple conducted an unregistered securities offering by selling XRP, raising $1.38 billion.
This case has had profound implications:
- Major U.S. exchanges delisted XRP temporarily.
- Institutional adoption slowed during litigation.
- However, recent court rulings favoring Ripple have reignited investor confidence.
In contrast, Stellar has avoided major regulatory scrutiny, partly due to its nonprofit structure and broader focus on open access rather than institutional fundraising.
David Schwartz, Ripple’s CTO, has publicly criticized McCaleb’s post-Ripple actions, suggesting that his departure stemmed from rejected proposals and frustration over restricted XRP sales. On Quora, Schwartz described McCaleb as having “a long list of bad ideas” and accused him of undermining Ripple after failing to gain internal support.
McCaleb himself has dismissed such claims as biased, maintaining that Stellar was created to fulfill a more decentralized vision—one where financial access isn’t limited by geography or wealth.
Adoption and Real-World Use Cases
Despite regulatory headwinds, both platforms have secured meaningful partnerships:
- Ripple collaborates with American Express, Santander, Standard Chartered, and others through its RippleNet network. Its xRapid product leverages XRP for on-demand liquidity, reducing reliance on pre-funded nostro accounts.
- Stellar powers IBM’s World Wire (now part of Stronghold) and works with financial firms like Deloitte and MoneyGram (in past pilots). Its anchor model enables local institutions to issue digital representations of fiat currencies or commodities.
These integrations highlight how blockchain-based payment rails can reduce costs and settlement times—from days to seconds.
Frequently Asked Questions (FAQ)
Q: Are XRP and XLM considered securities?
A: The SEC alleges XRP is a security, but this is still under litigation. No such claims have been made against XLM.
Q: Can I stake XRP or XLM?
A: You cannot stake XRP directly on the XRP Ledger. However, some exchanges offer staking-like rewards. XLM can be staked via validators to earn inflationary rewards (though inflation is currently disabled).
Q: Which network is more decentralized?
A: Stellar is generally viewed as more decentralized due to its open validator model and nonprofit governance. Ripple maintains control over a portion of validator nodes.
Q: What happens if Ripple loses the SEC case?
A: A negative outcome could lead to stricter regulations on XRP trading in the U.S., potential fines, and reduced exchange listings—though global adoption may continue unaffected.
Q: Why did Jed McCaleb leave Ripple?
A: McCaleb cited disagreements over Ripple’s centralized approach. He wanted a more open system focused on financial inclusion—leading to the creation of Stellar.
The Road Ahead
As the crypto market evolves, both Ripple and Stellar face challenges in staying relevant amid rising competition from DeFi protocols, central bank digital currencies (CBDCs), and AI-integrated fintech platforms.
Yet their core strengths remain: speed, scalability, and real-world utility in cross-border payments.
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While XRP currently leads in market performance and institutional traction, Stellar holds promise for grassroots adoption and emerging markets. Ultimately, their success will depend not just on technology—but on trust, regulation, and widespread acceptance.
For investors and developers alike, monitoring these long-term rivals offers valuable insights into the future of digital money.
Core Keywords: Ripple, Stellar, XRP, XLM, blockchain payments, cross-border transactions, decentralized finance, cryptocurrency adoption