Stellar and Ripple (now XRP Ledger) were co-created by Jed McCaleb. But that’s the only part these two blockhains are similar., They have distinct philosophies, architectures, use cases, and governance models.This article explores the consensus mechanisms, tokenomics, network design, performance, developer ecosystems, regulatory positioning, and security considerations of Stellar and Ripple to provide a clear and balanced understanding of their strengths and trade‑offs.
Underlying Consensus Mechanisms
Stellar and XRP Ledger both have fairly similar Byzantine fault‑tolerant consensus models designed for fast and secure transaction agreement without proof-of-work.
Stellar Consensus Protocol (SCP)
Stellar uses the Federated Byzantine Agreement (FBA) model known as SCP, where nodes select “quorum slices” of trusted peers. Consensus is reached when enough overlapping slices agree on transaction sets, without a centralized leader.
XRP Ledger Consensus Protocol
XRP Ledger employs a Byzantine‑fault‑tolerant consensus mechanism. Validators use Unique Node Lists (UNLs) to agree on ledger updates roughly every 3 to 5 seconds. It’s low‑latency and energy‑efficient, but relies on trust in validator selection.
Trade‑offs in Decentralization & Performance
Stellar’s flexible Federated Byzantine Agreement allows each validator to choose its own quorum slices, fostering decentralization while also generating highly complex and fragile network topologies. Here, quorum configurations can lead to cascading failures if key nodes fail and halt consensus. XRP’s UNL model, by contrast, achieves fast finality and high throughput by having servers trust a curated list of validators, yet this design concentrates decision-making power.
Tokenomics & Supply Models
Stellar and XRP manage their token issuance, circulation, and scarcity. Here’s how:
XLM: Inflation Rate, Initial Supply, and Burns
XLM initially launched with a 1% annual inflation. This mechanism was disabled in late 2019, and Stellar burned 55 billion XLM. It reduced the total supply of XLM from 105 billion to 50 billion.
XRP: Pre‑mined Supply, Escrow Release Schedule
100 billion XRP were pre‑minted, and 80 billion were allocated to Ripple Labs. The remaining are in escrow and released monthly in predetermined amounts. Recent legal and escrow updates have drawn significant attention.
Fee Models: Stroops vs XRP Transaction Burn
Stellar charges micro‑fees in stroops (0.00001 XLM) which are burned per transaction. It also requires maintaining a balance of 1 XLM before an account can make any transaction. The XRP Ledger (XRPL) charges 0.00001 XRP per transaction and also burns it, maintaining a deflationary or steady supply.
Network Architecture & Features
Stellar and Ripple structure their ecosystems to support payments and asset movement.
Built‑in DEX & Multi‑Asset Support on Stellar
Stellar natively supports multi-asset issuance and an on-ledger decentralized exchange, allowing direct trading between tokens without the need for third-party platforms. Protocol 18 introduced built-in automated market makers and liquidity pools, enabling any account to supply liquidity and earn fees alongside the traditional order-book SDEX.
RippleNet’s Payment Channels & On‑Demand Liquidity (ODL)
RippleNet focuses on institutional cross-border payments. Its ODL product uses XRP as a bridge asset to minimize pre‑funding requirements in currency corridors, enabling near‑instant international transfers. Financial institutions can integrate via APIs to tap into multiple liquidity providers, ensuring competitive exchange rates and transparent end-to-end payment status while removing the need for nostro/vostro pre-funding.
Anchor/Issuer Model (Stellar) vs Bank/Provider Corridors (Ripple)
Stellar employs an anchor/issuer model where licensed entities hold deposited fiat in traditional rails and issue a corresponding token on-chain, enabling seamless fiat-to-crypto bridges and flexible cross-border transactions. These entities could include a bank, an exchange platform, or a money transfer operator. The Stellar anchors must fulfill KYC/AML requirements and interact through Stellar Ecosystem Proposals standards (e.g., SEP-24, SEP-31), making them accountable and interoperable.
In contrast, Ripple uses bank/payment provider corridors where institutions maintain local fiat accounts and execute XRP-based liquidity transfers without on-chain token issuance. Here, they leverage RippleNet’s messaging and settlement solutions, like xCurrent and ODL, to reduce pre‑funding and speed settlement. Ripple’s corridor model focuses on institutional efficiency and connecting directly to existing banking infrastructure instead of relying on third-party anchor entities.
Performance & Scalability
Transaction Speed, Throughput & Finality
Both networks deliver fast throughput: Stellar can handle dozens to hundreds of transactions per second with finality in a few seconds, while XRPL handles around 1,500 TPS with a 3- to 5-second finality.
Cost per Transaction (Stroops vs XRP Fees)
Both platforms charge nominal fees (0.00001 of native token, equivalent to fractions of a cent). Stellar fees are modest, while XRP fees consistently burn a small amount.
Developer Tooling & Integration
SDKs, Horizon API & Soroban Smart Contracts on Stellar
Here is the developers’ stack used in Stellar:
- Horizon REST API: Acts as an intermediary and lets applications query account data, submit transactions, and subscribe to ledger events through simple HTTP endpoints. They are also supported by SDKs for JavaScript, Java, Go, Python, C#, and more.
- SDK Libraries: The JS SDK provides easy access to core operations, such as transactions and streaming. The Python, Java, and Go SDKs have native pooling for building Stellar-based apps, designed to simplify integration.
- Soroban: This is Stellar’s new on-chain smart contract platform, which allows developers to write WASM-powered contracts in Rust. This results in better performance, better safety, and scalable fees.
- Soroban SDK and RPC endpoints: These enable contract deployment, invocation, and testing via CLI tools, REST endpoints, and integrated support in Horizon-compatible infrastructure.
XRP Toolkit, Ripple API & Hooks on XRP Ledger
Here’s a list of XRP Ledger’s developer tooling:
- XRP Toolkit – A polished web-based GUI backed by ripple‑lib and JSON‑RPC/WebSockets. The XRP Toolkit allows users to execute limit orders, escrows, checks, cross-currency payments, and hardware XRP wallet integration for a full-featured interface for ledger operations.
- Ripple API – Includes ripple-lib, xrpl.js, and ripple-lib CLI. They offer all sorts of functions, such as account management, DEX transactions, and event subscriptions. Ripple APIs use languages, like JavaScript, Python, Java, PHP, and Go.
- Hooks – These are lightweight, account-level smart contracts deployed as WebAssembly modules that execute before and after transactions. Hooks enable custom logic such as payment restrictions or automated actions without introducing full Turing-complete complexity.
- RippleX Federated Sidechain SDKs – These developer tools are used to prototype and deploy federated sidechains. These sidechains are composed of standalone blockchains that interoperate with the XRPL mainnet for use cases like DeFi, NFTs, or private ledgers. All the while securely bridging assets, including XRP, between chains.
Regulatory & Compliance Landscape
XRP’s SEC Litigation and Its Implications
In May 2025, the SEC and Ripple reached a framework to settle the 2020 lawsuit, including a $125 million escrow penalty and a clarified distinction between retail and institutional sales. This reduced the regulatory uncertainty for XRP’s domestic use.
Stellar’s Regulatory Posture & Licensing Initiatives
Stellar operates via anchors that adhere to KYC/AML procedures and partners with licensed organizations for fiat bridges. Also, XLM is treated as a cryptocurrency rather than a security, reflecting its open-source, utility-focused design.
Security & Risk Considerations
Network Resilience & Attack Surface
SCP’s flexible quorum slices help resist node failures, but misconfigured trust slices can cause partitioning. XRPL’s reliance on UNLs achieves speed but may centralize trust, and some research shows targeted UNL node removal can disrupt the network.
Best Practices for XLM vs XRP Custody
- Secure key management with hot/cold segregation: Institutional crypto custody guidelines emphasize segregating hot wallets for online use and cold wallets for offline storage.
- HSMs as trust anchors: HSMs provide tamper-resistant key storage, enforce role-based access, and generate audit logs. Institutions typically deploy multiple geographically distributed HSMs to avoid single points of failure.
