Stellar

XRP ETF

Billion

Franklin

<a style="text-decoration:none" href="https://bsc.news/post/stellar-xlm-cross-border-payments" rel="noopener noreferrer nofollow">Stellar</a> and Ripple split because Jed McCaleb, a founding member of Ripple, left the company in 2013 over its for-profit direction and its control of the&nbsp;<a style="text-decoration:none" href="https://bsc.news/post/xrp-ledger-unveiled-ripple-s-blockchain-innovation-and-key-updates" rel="noopener noreferrer nofollow">XRP Ledger</a>, then co-founded Stellar in 2014 as a nonprofit alternative built on a forked version of Ripple's own code. The two networks have since diverged in tokenomics, governance, and customer base, even while running similar consensus designs underneath.&nbsp;
<h2 id="span-span-strong-who-built-ripple-and-why-did-mccaleb-leave-strong-span-span">Who Built Ripple, And Why Did McCaleb Leave?</h2>
Ripple's early history runs through one person before splitting into two networks.
<h3 id="span-span-strong-the-ripple-protocol-consensus-algorithm-strong-span-span">The Ripple Protocol Consensus Algorithm</h3>
Jed McCaleb, David Schwartz, and Arthur Britto launched the XRP Ledger in 2012, using a consensus method now called the Ripple Protocol Consensus Algorithm (RPCA). It is a form of federated Byzantine agreement: each validating node consults a Unique Node List (UNL), a list of other validators it trusts, and roughly 80% of that list must agree before a transaction settles.&nbsp;
All 100 billion XRP were created at genesis, with no mining and no ongoing issuance, and Ripple initially held about 80 billion of that supply.
<h3 id="span-span-strong-a-split-over-direction-and-control-strong-span-span">A Split Over Direction And Control</h3>
McCaleb helped build XRP's early framework before leaving his active role at Ripple Labs in July 2013. Multiple accounts describe the same underlying disagreement: Ripple was becoming a for-profit company selling settlement software to banks, while McCaleb wanted a network built around financial inclusion rather than enterprise sales. His large personal XRP holdings from that departure became the subject of a multi-year legal dispute with Ripple over how quickly he could sell them.
<h2 id="span-span-strong-how-did-stellar-take-a-different-path-strong-span-span">How Did Stellar Take a Different Path?</h2>
Stellar's founding differed from Ripple's on structure as much as on mission.
<h3 id="span-span-strong-a-nonprofit-instead-of-a-company-strong-span-span">A Nonprofit Instead Of A Company</h3>
In 2014, McCaleb co-founded the Stellar Development Foundation with Joyce Kim as a nonprofit, funded partly by a $3 million loan from Stripe. Stellar's codebase began as a literal fork of Ripple's software before moving to its own consensus mechanism entirely.
<h3 id="span-span-strong-the-stellar-consensus-protocol-strong-span-span">The Stellar Consensus Protocol</h3>
Stellar's chief scientist, David Mazieres, published the Stellar Consensus Protocol (SCP) in 2015, also a federated Byzantine agreement system, but built around quorum slices: each node independently chooses which other nodes to trust, rather than relying on lists Ripple or the network curates by default. Academic surveys describe this as looser and more open than Ripple's UNL model, though both remain what researchers classify as permissioned rather than fully permissionless systems.
<h2 id="span-span-strong-how-do-xrp-and-xlm-tokenomics-compare-strong-span-span">How Do XRP And XLM Tokenomics Compare?</h2>
Both tokens fixed their total supply early, then handled distribution very differently.
<h3 id="span-span-strong-xrp-s-escrow-system-strong-span-span">XRP's Escrow System</h3>
In December 2017, Ripple locked 55 billion XRP, more than half the total supply, into 55 separate on-ledger escrow contracts, each releasing up to 1 billion XRP on the first day of a given month. Ripple typically returns 60% to 80% of each monthly release back into new escrow contracts rather than selling it, which is why the schedule has stretched years beyond its original design. As of mid-2026, roughly 62 billion XRP were in circulation, with about 38 billion still held in escrow.
<h3 id="span-span-strong-stellar-s-2019-supply-burn-strong-span-span">Stellar's 2019 Supply Burn</h3>
Stellar took the opposite approach. In November 2019, the Stellar Development Foundation destroyed 55 billion XLM in one transaction, worth about $4.7 billion at the time, cutting total supply from 105 billion to roughly 50 billion. That burn accompanied a separate decision to remove Stellar's 1% annual inflation mechanism, which had been diluting holders since launch.&nbsp;
Ripple's own chief technology architect, David Schwartz, has since cited Stellar's burn as evidence that destroying XRP's remaining escrow would likely have little lasting effect on price, since Stellar's burn produced only a brief rally.
<h2 id="span-span-strong-are-either-network-s-validators-fully-decentralized-strong-span-span">Are Either Network's Validators Fully Decentralized?</h2>
Independent researchers have raised similar concerns about both.
<h3 id="span-span-strong-the-unl-centralization-debate-strong-span-span">The UNL Centralization Debate</h3>
Academic surveys describe Ripple's default UNL as originally composed entirely of Ripple-run validators, with third-party validators, including universities and private companies, added over time.&nbsp;
Ripple says it now operates fewer than 10% of validators, and only one appears on the default list of roughly 35 trusted nodes; anyone can run a validator, but one only gains real influence by being included in enough other operators' lists. Ripple's own architects argue this design prevents any single party from rewriting history or inflating supply, since operators are always free to choose a different UNL.
<h3 id="span-span-strong-stellar-s-comparable-question-strong-span-span">Stellar's Comparable Question</h3>
Stellar's SCP is often described as more open because trust decisions are distributed across every node individually, rather than converging on one recommended list.&nbsp;
But Stellar has faced its own scrutiny. One widely cited analysis grouped Stellar alongside Ripple, Hedera, Algorand, and Canton. It classified all five as networks whose validator sets remain permissioned or shaped by a foundation-published list. The analysis argued that institutional users gravitate toward this kind of structured governance rather than fully open systems.&nbsp;
<h2 id="span-span-strong-what-do-xrp-and-xlm-do-differently-today-strong-span-span">What Do XRP And XLM Do Differently Today?</h2>
The two networks have grown toward different customers over the past decade.
<h3 id="span-span-strong-ripple-s-enterprise-and-legal-track-strong-span-span">Ripple's Enterprise And Legal Track</h3>
Ripple Labs sells cross-border settlement products to banks and payment companies, with XRP used to bridge currencies. Its five-year lawsuit with the U.S. Securities and Exchange Commission ended in August 2025, when both sides dropped their appeals.&nbsp;
Courts found that XRP sold on public exchanges is not a security. Ripple's institutional sales were found to violate securities law, and after a proposed $50 million reduction was rejected by the court, Ripple withdrew its appeal, leaving the original $125 million civil penalty in place.
<h3 id="span-span-strong-stellar-s-nonprofit-and-tokenization-track-strong-span-span">Stellar's Nonprofit And Tokenization Track</h3>
Stellar has stayed nonprofit-run while building tokenization infrastructure. Franklin Templeton's BENJI money market fund has operated on Stellar since 2021, and MoneyGram launched its MGUSD&nbsp;<a style="text-decoration:none" href="https://bsc.news/post/understanding-stablecoins-how-they-work-guide" rel="noopener noreferrer nofollow">stablecoin</a> on the network in June 2026. Stellar reported about $4 billion in real-world asset value on the network by early September 2026, up from roughly $1 billion in January. It added smart contract functionality through Soroban, which launched on mainnet in February 2024.
<h2 id="span-span-strong-conclusion-strong-span-span">Conclusion</h2>
Stellar and Ripple trace back to the same founding team and the same consensus lineage, then diverged over ownership, supply management, and who each network should serve. Ripple built a for-profit business managing a large token escrow and selling XRP-based settlement tools to banks, resolving its SEC case in 2025 with a $125 million penalty. Stellar built a nonprofit foundation that burned half its supply outright and pivoted toward tokenized assets and payments, reporting billions in real-world asset value in 2026. Both still run federated Byzantine agreement consensus and face similar questions from researchers about how decentralized their validator sets really are.
<h2 id="span-span-strong-resources-strong-span-span">Resources</h2>
<ol>
 <li><a style="text-decoration:none" href="https://readwhitepaper.com/stories/stellar-jed-mccaleb-origin/" rel="noopener noreferrer nofollow">Report by ReadWhitepaper</a>: Stellar: Jed McCaleb's Mission to Bank the Unbanked</li>
 <li><a style="text-decoration:none" href="https://stellar.org/papers/stellar-consensus-protocol.pdf" rel="noopener noreferrer nofollow">Paper by David Mazieres (Stellar Development Foundation)</a>: The Stellar Consensus Protocol: A Federated Model for Internet-Level Consensus (2015)</li>
 <li><a style="text-decoration:none" href="https://arxiv.org/pdf/2409.18799" rel="noopener noreferrer nofollow">Survey by arXiv</a>: Drawing the Boundaries Between Blockchain and Blockchain-Like Systems: A Comprehensive Survey on Distributed Ledger Technologies</li>
 <li><a style="text-decoration:none" href="https://arxiv.org/pdf/1904.04098" rel="noopener noreferrer nofollow">Survey by arXiv</a>: A Survey of Distributed Consensus Protocols for Blockchain Networks</li>
 <li><a style="text-decoration:none" href="https://xora.finance/blog/xrpl-validator-economics-decentralization-2026" rel="noopener noreferrer nofollow">Analysis by Xora Finance</a>: XRPL Validator Economics and Decentralization by the Numbers (2026)</li>
 <li><a style="text-decoration:none" href="https://finance.yahoo.com/news/does-ripple-hold-absolute-control-141215462.html" rel="noopener noreferrer nofollow">Report by Yahoo Finance / CCN</a>: Does Ripple Hold 'Absolute Control' of the XRP Ledger? Former CTO Calls Claim 'Nonsensical'</li>
 <li><a style="text-decoration:none" href="https://chainclarity.io/blog/xrp-tokenomics-2026" rel="noopener noreferrer nofollow">Report by ChainClarity</a>: XRP Tokenomics (2026): Supply, Escrow &amp; Ripple Distribution</li>
 <li><a style="text-decoration:none" href="https://cryptorank.io/news/feed/f25cb-ripple-moves-1-billion-xrp-in-latest-monthly-escrow-release" rel="noopener noreferrer nofollow">Report by CryptoRank / TradingView</a>: Ripple Moves 1 Billion XRP in Latest Monthly Escrow Release</li>
 <li><a style="text-decoration:none" href="https://cryptonews.net/news/altcoins/236931/" rel="noopener noreferrer nofollow">Report by Cointelegraph (archived via Cryptonews)</a>: Stellar Burns Over 55 Billion Tokens Worth $4.7 Billion USD</li>
 <li><a style="text-decoration:none" href="https://changehero.io/blog/what-is-stellar-lumens-xlm-a-beginners-guide/" rel="noopener noreferrer nofollow">Guide by ChangeHero</a>: XLM Crypto Explained</li>
 <li><a style="text-decoration:none" href="https://www.sec.gov/Archives/edgar/data/2039525/000119312526117414/xrp-20251231.htm" rel="noopener noreferrer nofollow">SEC Filing by Bitwise (Form 10-K)</a>: Bitwise XRP ETF Form 10-K — final judgment and penalty details</li>
 <li><a style="text-decoration:none" href="https://www.coindesk.com/policy/2025/06/27/ripple-to-drop-cross-appeal-against-sec-ending-years-long-legal-battle-with-sec" rel="noopener noreferrer nofollow">Report by CoinDesk</a>: Ripple to Drop Cross-Appeal Against SEC, Ending Years-Long Legal Battle</li>
 <li><a style="text-decoration:none" href="https://www.coindesk.com/business/2026/06/02/moneygram-launches-stablecoin-on-stellar-joining-rush-toward-digital-dollar-payments" rel="noopener noreferrer nofollow">Report by CoinDesk</a>: MoneyGram Launches Stablecoin on Stellar (XLM), Joining Rush Toward Digital Dollar Payment</li>
</ol>

Why Did Stellar and Ripple Split From the Same Roots?

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