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Stellar vs. Ripple: Evaluating Performance of Long-Time Rivals





In the ever-evolving landscape of cryptocurrencies, Stellar and Ripple are two prominent players who have been in the industry for a decade now.

These two blockchain-based platforms aim to revolutionize the global financial system and shape the future of digital transactions, but that's not the only similarity they have. Ripple and Stellar share a common link in the form of Jed McCaleb.

McCaleb is an American programmer and entrepreneur. He is the founder and CEO of aerospace startup Vast, which announced its plan to launch the world's first commercial space station, Haven-1, on a SpaceX Falcon 9 rocket to low-Earth orbit in August 2025.

He founded Ripple and served as its CTO until 2013, only to then co-found competitor Stellar. But this is not all. McCaleb is also known for creating the now-defunct Bitcoin exchange Mt. Gox.

As of March 2023, McCaleb is worth $2.4 billion according to Forbes' Billionaires List. Back in 2018, he donated to the artificial intelligence research group OpenAI, which is behind the popular chatbot ChatGPT.

McCaleb is actually one of the biggest whales of XRP and has been systematically selling its holdings. He has made more than $3 billion from the sale of 5.7 billion XRP tokens over the period of the last eight years. McCaleb sold the last batch of his XRP holdings in July 2022.

As we stated, McCaleb played a key role in both the crypto projects, so today, we'll delve into the realms of Stellar and Ripple, exploring their performance, innovations, and the implications of McCaleb's exit.

Click here to learn how to invest in Ripple (XRP).

The Beginning of Ripple and Stellar

XRP ledger was originally developed in 2011 by developers Arthur Britto, Jed McCaleb, and David Schwartz. The next year, the protocol was officially launched. A team was formed to create a new company called OpenCoin that then-CEO Chris Larsen led.

The following year, the company changed its name to Ripple Labs, which was shortened to Ripple in 2015. The same year, former Yahoo executive Brad Garlinghouse was appointed as Ripple's first chief operating officer, who was then promoted to the role of CEO a year later.

In 2020, the company came under hot waters when Ripple was charged by the U.S. Securities and Exchange Commission (SEC) for allegedly raising $1.38 billion in unregistered securities offerings. The case is yet to conclude.

McCaleb left Ripple in 2013 due to a disagreement about the company's proposed direction and then went on to start a rival payments platform, Stellar. In 2014, he launched the Stellar Development Fund (SDF) in collaboration with Stripe CEO Patrick Collison, which invested $3 million in Stellar.

SDF is a non-profit organization that manages XLM supply and steers the development of the protocol. It was revealed earlier this year that the Foundation is owed $13.2 million by the bankrupt crypto lending firm Genesis.

Click here to learn all about investing in Stellar Lumens (XLM).

The Foundation: How Do They Work?

XRP is the native cryptocurrency of XRP Ledger, a public blockchain designed to facilitate faster and cheaper payments. Using XRP as a bridging currency, people can settle cross-border transactions in less than five seconds on the XRP Ledger blockchain at a fraction of the cost of the more traditional methods.

Ripple's other product is xRapid, which is an on-demand liquidity solution. Here, financial institutions can also use XRP to exchange value between multiple fiat currencies.

All the XRP tokens were pre-mined at the time of the project's launch, and Ripple kept 80 billion tokens to fund future operations and development while the remaining 20 billion were divided among themselves.

In 2017, the company transferred 55 billion XRP tokens into an escrow account from which it could sell 1 billion tokens max per month on the secondary market. Currently, 42 billion XRP are held in the escrow account.

The XRP Ledger is a permissionless network that uses the Federated Consensus algorithm, where network participants are known and trusted by other participants. Once these validators agree, a new block is created. The block's content can't be changed, allowing servers in the network to store a complete history of the ledger state.

According to XRPL's documentation, the ledger settles payments in under five seconds and can handle more than 1,500 transactions per second (TPS) while costing only about 0.00001 XRP.

As for Stellar, it is an open-source payments network that allows anyone to issue new assets in the network and exchange for other assets through built-in exchange features.

Verified financial institutions are known as “Stellar Anchors,” which act like banks and hold deposits for non-crypto assets like gold, stocks, and currencies. These Anchors issue and redeem assets.

Stellar uses the “Stellar Consensus Protocol” (SCP), which was invented by its chief scientist David Mazières in 2015. It has a set group of “trustworthy” nodes responsible for validating transactions and blocks. These nodes are voted on periodically, and anyone on the network can participate by running a node.

In 2014, Stellar raised $35 million in an ICO. At its launch, 100 billion XLMs were created with an annual inflation rate of 1 percent, which has since been removed. In 2019, over 50% of XLM supply was burned and removed from the supply cap.

Price Performance: XRP and XLM

As of writing, XRP has a market cap of $26.26 billion and is trading at $0.507 while managing $1.5 billion in trading volume, which makes it the 6th largest cryptocurrency.

XLM, on the other hand, is exchanging hands at $0.09 while recording $66 million in 24-hour trading volume. With a market cap of $2.47 billion, XLM sits in 28th place in the crypto market.

XRP has a total supply of 100,000,000,000, and currently, almost 52 billion tokens are circulating in the market. In comparison, XLM has a total supply of 50 billion, out of which just over 26.8 billion are currently in the market.

The price of XRP is currently up 49.5% in 2023 so far, while XLM is up a mere 27% year-to-date (YTD).

In the past week, meanwhile, the XRP price is up 12.3%, 9.3% in the last month, and 21.7% in the past year. The crypto asset is currently down just over 85% from its all-time high (ATH) hit in Jan. 2018.

When it comes to XLM, the crypto asset's price is in the green by 6.8% and in the red by 0.2% in the last month and 36.8% in the past year. The crypto asset also hit its ATH in Jan. 2018, much like the rest of the crypto market, and is down 89.5% since then.

McCaleb left Ripple in 2013, and in December of the same year, XRP experienced a significant jump when its price almost pulled an 11x in a fortnight. A year later, the price soared 454% in just about a month. After that, XRP's price remained under $0.01 until the market gained momentum in the 2017 bull market.

XRP hit its all-time low at $0.00268621 in May 2014 and is still up 18,748% since then. Meanwhile, XLM's low came in at $0.000476 in March 2015, and it is still up 19,262%.

During the bull run of 2021, XRP only managed to hit almost $2, just about half of its peak. XLM, on the other hand, pumped to $0.80, not far off from its ATH.

The Bad Blood

In Feb. 2015, the New York Observer published a story that detailed the alleged historical “bad blood” between Ripple Labs and Stellar and the impact of this relationship on events in the wider crypto ecosystem.

At the center of this story was McCaleb. Reportedly, he had a personal relationship with Stellar executive director Joyce Kim that complicated McCaleb's relationship with other senior executives and board members at Ripple Labs.

Ultimately, this led McCaleb to leave that company and found competitor Stellar. A major sticking point, however, was Ripple's leadership team holding massive amounts of XRP. McCaleb and Ripple co-founder Chris Larsen both owned nine bln XRP. McCaleb, on his part, called the article inaccurate and biased.

Last year, David Schwartz, the current CTO of Ripple, also shared his views on Quora regarding why McCaleb left the company.

“Jed had a long string of bad ideas that Ripple's Board of Directors refused to implement. So Jed started Stellar based on those ideas,” he wrote.

He further explained that McCaleb tried to dump his XRP quickly, but Ripple jumped in and stopped him through a series of lawsuits.

“Thanks to Ripple's refusal, Jed's XRP will probably be worth more than $1 billion. He will probably be the only person to become a self-made billionaire despite his best efforts,” Schwartz continued.

He further stated that in reaction to not getting his way, McCaleb publicly said “bad things about the company” and started a competitor. In Schwartz's opinion, “unless you think the company is doing something illegal or severely immoral, betraying your investors and employees that way is unconscionable,” only to conclude that “there are things that I suspect that is even worse.”

Recently, when discussing the differences between Ripple and Stellar, Schwartz referred to McCaleb as a “crazy fool holding a live grenade.”

Back in Aug. 2022, McCaleb noted in a tweet that the Stellar threatens XRP. Talking indirectly about the ongoing case between Ripple and the SEC, McCaleb further stated that the SEC chair should intervene to “set things straight.”

Final Note

In terms of adoption, while Stellar has collaborated with the likes of IBM and Deloitte, Ripple has formed notable partnerships with American Express, Santander, and Standard Chartered.

When it comes to price, XRP has managed to perform a bit better than XLM, but not much. For now, progress in XRP's legal battle against SEC is helping prop up digital currency prices.

Most importantly, both crypto assets are influenced by broad market sentiments and trends. Currently, the focus is Decentralized Finance (DeFi), Non-Fungible Tokens (NFT), GameFi, Metaverse, and Artificial Intelligence (AI).

The fact is, both Ripple and Stellar are struggling to find their position in the rapidly advancing crypto market, which has grown significantly over the last decade.

Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.