Ripple vs Stellar: Which Cross-Border Payments Network Is Better?

Let’s compare XRP and XLM.

Two golden coins colliding in space.
Created by Gabor Kovacs from DailyCoin

It’s easy to dismiss the Ripple vs Stellar debate as yet another pointless crypto rivalry. At first glance, XRP vs XLM looks more like squabbling twins than a titanic clash of cross-border payments networks.

Peeling back the layers of this conflict, you’ll find more to Ripple vs. Stellar than first meets the eye. While both blockchains have a common founder and aim to streamline international payments, their goals and target audiences differ vastly.

Which blockchain-based payment system wins out? Let’s compare the similarities, differences, and potential of two of the cryptocurrency market’s most popular altcoins. 

Ripple vs. Stellar Overview

At face value, Ripple and Stellar promise the same thing. Both networks transfer value across international borders as quickly as possible, with low fees and low energy consumption rates.

Diving underneath the hood, network architecture is very similar. In fact, despite evidence to the contrary, Stellar was widely considered to be a simple fork of Ripple’s original platform. Born from the same co-founder and initially sharing a common vision, these two networks have charted distinct paths. 

With its focus on partnering with established financial institutions, Ripple seeks to streamline and expedite international money transfers. Stellar casts a wider net, providing financial services like remittance payments for unbanked populations worldwide.

What Is Ripple (XRP)?

Ripple logo.
Source: Ripple

Ripple, powered by its digital currency XRP, is the original Bitcoin (BTC) alternative. Founded in 2012 by Chris Larsen and Jed McCaleb, Ripple promised to solve the challenges plaguing cross-border transactions: long delays, high fees, and a lack of transparency.

Ripple is a distributed ledger that bypassed the industry-standard Proof-of-Work consensus mechanism. The Ripple Labs team developed their own method, the Ripple Protocol Consensus Algorithm (RPCA), to ensure swift and secure transaction validations.

While many cryptocurrencies want to replace banks and existing financial institutions, Ripple wants to collaborate. Working hand in hand, Ripple offers legacy systems the tools and infrastructure to modernize and expedite international money transfers. 

Over the years, this strategy has led to partnerships with some of the world’s leading financial institutions, including American Express.

Ripple has not been without its share of controversies for all its partnerships and technological advancements, particularly concerning its degree of centralization and the company’s control over XRP’s supply. 

What Is Stellar (XLM)?

Stellar crypto logo.
Source: Stellar

Ripple’s younger sibling, the Stellar Network, was founded two years later by the very same man. At odds with the rest of the Ripple Labs team, Jed McCaleb believed that blockchain technology was best used to benefit the unbanked instead of the fat cats at the top of the financial ladder.

The Stellar Network uses similar technology to realize its vision. Secured by its native token, Stellar Lumens (XLM), the blockchain is powered by the Stellar Consensus Protocol (SCP). This powerful algorithm facilitates fast and affordable fiat currency transfers for average users like you and me without relying on a central authority.

In recent developments, the open-source network is also paying attention to smart contract development. The Soroban platform is expected to bring greater utility to the Stellar ecosystem, opening the doors to DeFi applications and a wider variety of financial transactions. 

Ripple vs. Stellar: Key Similarities

Let’s start with the basics. Given their similar use cases and Genesis stories, it should be no surprise that Ripple and Stellar have plenty of similarities. Let’s quickly examine what XRP and XLM have in common.

  • Shared Beginnings – Both Ripple and Stellar were co-founded by American programmer Jed McCaleb. While he co-founded Ripple, his vision for a more inclusive financial system led to the birth of Stellar.
  • Distributed Ledger Technology – At their technological core, Ripple and Stellar employ distributed ledger technology, ensuring transactions are recorded across multiple nodes and enhancing security and transparency.
  • Unique Consensus Mechanisms – Ripple and Stellar have developed scalable, energy-efficient consensus mechanisms that secure their respective networks.
  • Cross-Border Transactions – Both networks were designed primarily to transform cross-border transactions, making them faster, more affordable, and transparent.
  • Native Cryptocurrencies – XRP and XLM are used within their respective blockchains to pay gas fees and feature anti-spamming mechanisms to protect the network. 
  • Deflationary Tokenomics – Both networks burn a small percentage of each transaction fee, permanently removing XRP and XLM tokens from circulation.

Ripple vs. Stellar: Key Differences

Despite their common founder and similar missions, Ripple and Stellar have forged their own path in crypto over the years. What are the key differences that distinguish these digital currency networks?

  • Target Stakeholders – Ripple’s primary focus has been catering to established financial institutions to streamline cross-border transaction processes. On the other hand, Stellar champions financial inclusion globally, specifically providing solutions for the unbanked.
  • Decentralization Concerns – Stellar is often perceived as more decentralized compared to Ripple. Concerns about Ripple’s degree of centralization have been voiced, especially given the company’s significant control over XRP’s supply through the XRP Escrow protocol.
  • Partnership Strategy – In line with each project’s vision, XRP and XLM have sought different partnerships. While Ripple has broken bread with financial institutions and banking providers like Santander, Stellar has opted for platforms with similar goals like Moneygram.
  • Profit or Non-Profit? – Ripple operates with a for-profit model through its company, Ripple Labs. Stellar operates under a non-profit model with the Stellar Development Foundation.
  • Legal Dramas – Led by CEO Brad Garlinghouse, Ripple Labs has faced off against the SEC in a long-winded legal battle that has hampered XRP’s growth and development. Stellar hasn’t faced this level of regulatory scrutiny. 
  • Smart Contracts – Through the Soroban platform, Stellar works to bring smart contract compatibility to the network. Conversely, Ripple has largely avoided smart contract support. 

Ripple vs. Stellar: Blockchain Performance

Now, we’re getting into the nitty-gritty details. Blockchain theory and compelling mission statements are all good, but which network performs better in reality? Ripple and Stellar have invested heavily in ensuring their blockchains are robust, swift, and secure. 

Transaction Speed – Ripple’s XRP Ledger boasts transaction confirmation times of 3-5 seconds, making it one of the fastest in cryptocurrency. Stellar, while also impressively swift, typically confirms transactions within 5 seconds. Both outpace traditional banking systems and other cryptocurrencies like Ethereum (ETH) significantly.

  • Scalability – Ripple claims their infrastructure can handle up to 3,400 transactions per second (TPS), a figure that’s continually optimized with ongoing developments. As for Stellar, Jed McCaleb claimed on a podcast that the Stellar Development Foundation has been able to process ~4,000 TPS. 
  • Security – Both Ripple and Stellar prioritize security. Ripple’s consensus mechanism ensures protection against double-spending and other potential threats. Stellar’s Consensus Protocol, emphasizing node agreement, ensures the network remains secure and malicious actors are kept at bay.
  • Cost Efficiency – Ripple’s transaction fees are minimal, with an average transaction cost of just $0.0002 USD. Stellar’s fees are similarly low and estimated to come to 0.00001 XLM, ensuring users can conduct transactions without hefty costs.

XRP vs. XLM: Tokenomics

While sharing some similarities, Ripple’s XRP and Stellar’s XLM have distinct tokenomic structures that reflect their unique visions and operational strategies. Let’s recap the facts:

Total Supply100,000,000,00050,001,806,812
Circulating Supply53,441,027,38427,774,191,170
Market Capitalization$25.8B USD$2.8B USD

Stellar originally launched with a maximum supply of 100B XLM tokens, like XRP. However, in November 2019, Stellar announced that they would cancel their scheduled airdrop campaign and burn over 50B tokens to bring down the total supply.

The remaining locked XLM tokens are held by the Stellar Development Foundation and used to promote developer incentives and grow the network.

On the other side of the coin, Ripple Labs holds unlocked XRP tokens in the network’s escrow vaults. These tokens are periodically released and used to secure partnerships with financial institutions.

Bottom Line

You cannot deny that the Ripple vs. Stellar debate is a close call. Both networks serve very similar functions but have distinct visions and goals.

In terms of performance, Ripple and Stellar are almost indistinguishable. Each blockchain champions scalability and low transaction costs, making them well-equipped to onboard thousands of new users.

Suppose one were to have a competitive advantage over the other. In that case, it’s this: Stellar’s move to integrate smart contract technology into its network will vastly improve its utility and offer a host of new use cases for unbanked populations. XLM’s market cap is much smaller than XRP’s, suggesting greater growth potential.

Not to be overlooked, Ripple has established itself as a household name. The daunting SEC lawsuit that hamstrung XRP’s growth in the past is drawing to a close, with results looking favorable for Ripple Labs. Throwing off this cloud of stigma will do wonders for XRP’s image, making it an attractive option for financial institutions searching for blockchain solutions.

Ultimately, Ripple and Stellar are solid products with plenty of potential. It’s up to the individual to educate themselves on each digital currency’s potential and decide which blockchain is more likely to deliver on its vision.

On the Flipside

  • The cryptocurrency world moves fast, with new developments and innovative new platforms being rolled out daily. Both Ripple and Stellar are outclassed in many ways by modern networks like Cardano (ADA) and Solana (SOL), meaning that XRP and XLM still risk being outperformed in the future.

Why This Matters

Understanding the similarities and differences between XRP and XLM will help you make informed decisions in the Ripple vs Stellar debate.


How similar are Ripple and Stellar?

Stellar and Ripple feature plenty of similarities. Both networks focus on streamlining cross-border payments and making international transactions more affordable.

Is Stellar related to Ripple?

Stellar and Ripple were both founded by Jed McCaleb. The programmer created Stellar after quitting Ripple over disagreements with other team members.

Which is better, Stellar or Ripple?

In terms of performance, Ripple and Stellar are very similar. However, each blockchain has different goals. Ripple is focused on solving pain points for financial institutions, while Stellar aims to give the world’s unbanked access to financial services. Whether or not XLM or XRP is better depends on your personal viewpoint.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Finn Miller

Finn Miller is a New Zealand-based blockchain writer for DailyCoin who specializes in simplifying complex blockchain topics. He is experienced in crafting whitepapers, researching on-chain data, and advising emerging crypto projects, and uses his unconventional approach to learning and passion for knowledge to provide cornerstone educational content for readers of all levels. When not exploring the depths of DeFi, Finn can be found exploring his other passion, the great outdoors.