Stellar is an open-source blockchain network built for moving money across borders quickly and cheaply. XLM — also called Lumens — is the native digital asset of the Stellar network.
Like XRP, Stellar was designed to solve problems in cross-border payments. The two projects share history: Jed McCaleb, who co-founded Ripple, left to create Stellar in 2014. The technical approaches and target markets diverged meaningfully from there.
What Stellar Was Built to Do
The Stellar network is optimized for a specific use case: currency conversion and transfer. At its core, Stellar is a decentralized exchange that can hold, issue, and trade any asset — USD, EUR, peso, digital tokens, or XLM — and move value between them efficiently.
A typical Stellar transaction works like this: a sender deposits USD into the network through an "anchor" (a regulated institution that issues USD-backed tokens on Stellar). Those tokens are converted to the destination currency via the network's decentralized exchange — which finds the best available path, sometimes routing through XLM as an intermediary — and the recipient's anchor redeems the tokens for local currency.
Transactions on Stellar take 3–5 seconds to confirm. Fees are a tiny fraction of a cent. The network can handle thousands of transactions per second.
XLM as a Bridge Currency
XLM plays a similar role to XRP in Ripple's On-Demand Liquidity product. When there's no direct liquidity path between two currencies, XLM can serve as an intermediate asset — a bridge that makes the conversion possible.
Unlike XRP, which is held by Ripple and released from escrow on a schedule, XLM was distributed largely through free giveaway programs to encourage widespread holding. The Stellar Development Foundation (SDF), the nonprofit that supports the network, holds a large reserve but has been deliberately reducing its treasury through partnership programs and grants.
The current circulating supply is roughly 28–30 billion XLM, with a total supply that has been reduced over time through SDF's "lumen supply framework" — which included a decision to burn roughly 55 billion lumens in 2019 to streamline the supply structure.
Where Stellar Is Actually Being Used
Stellar has been more successful than most Layer 1 blockchains in achieving real-world adoption in payment corridors.
MoneyGram partnership. Stellar partnered with MoneyGram to enable USD-to-USDC transfers through the Stellar network, giving consumers in various markets a way to send, receive, and cash out stablecoin value through MoneyGram's physical locations. The partnership represented a meaningful integration of a major money transfer operator with blockchain rails.
Remittance corridors. Stellar has been used in payment corridors across Africa (particularly in West Africa and Nigeria), the Philippines, and parts of Latin America — markets where the existing banking infrastructure is expensive, slow, or inaccessible for many people.
Vibrant and other wallets. Consumer apps built on Stellar allow users in markets like Argentina and Nigeria to hold USD-pegged stablecoins on their phones, protecting savings from local currency volatility without needing a US bank account.
CBDC development. The SDF has worked with several central banks exploring digital currency issuance on Stellar's infrastructure. The network's anchor model — where regulated institutions issue asset-backed tokens — maps well to how a CBDC might function in practice.
Stellar vs. Ripple/XRP
Both networks target cross-border payments and both implement ISO 20022 compatible messaging. The differences are worth understanding:
Target market. Ripple focuses primarily on institutional bank-to-bank transfers. Stellar has historically leaned toward financial inclusion — serving individuals and businesses in underbanked markets rather than large financial institutions.
Governance. The Stellar network is a nonprofit-supported open-source project. Ripple is a for-profit company. This affects how each network develops, who can participate, and how the native token is distributed and used.
Smart contracts. Stellar added smart contract capabilities through its Soroban platform, broadening what can be built on the network beyond pure payments. Ripple has a separate EVM-compatible sidechain (XRPL EVM) for smart contracts.
Decentralization. Both networks use federated consensus mechanisms rather than proof-of-work or pure proof-of-stake. Stellar's validator set is more distributed and open than Ripple's has historically been.
ISO 20022 and Stellar
Stellar's ISO 20022 compatibility positions it similarly to the other compliant networks — capable of communicating in the data format that banking infrastructure is migrating toward. For cross-border payment applications where Stellar-based stablecoins or anchors interact with bank systems, this compatibility reduces the friction of integration.
The Honest Assessment
Stellar has demonstrated more live, real-world payment usage than most crypto projects. The MoneyGram partnership, the Africa remittance corridors, and the CBDC work are concrete rather than theoretical.
The limitation is scale. Stellar's payment volumes, while real, are small relative to the global payments market. The network has struggled to achieve the institutional banking relationships that Ripple has pursued. Whether Stellar's focus on financial inclusion and open-source infrastructure is a strength or a constraint in the longer-term competition for payment rail relevance is an open question.
Frequently Asked Questions
Is XLM the same as XRP?
No. XLM (Stellar Lumens) and XRP are separate digital assets on different blockchain networks. Both target cross-border payments and are ISO 20022 compatible, but Stellar is run by a non-profit foundation focused on financial inclusion, while Ripple is a for-profit company targeting institutional banking.
What is XLM used for?
XLM serves as the native asset of the Stellar network and is used as a bridge currency for multi-currency payments, to pay transaction fees on the network, and to maintain minimum account reserves. The Stellar network also hosts stablecoins, remittance apps, and tokenized assets.
Is Stellar (XLM) ISO 20022 compatible?
Yes. Stellar (XLM) is among the eight cryptocurrencies identified as ISO 20022 compatible, meaning it can carry the structured payment data that the ISO 20022 standard requires for financial messaging.
Who founded Stellar?
Stellar was founded in 2014 by Jed McCaleb and Joyce Kim. McCaleb previously co-founded Ripple before departing in 2013. The non-profit Stellar Development Foundation governs the open-source Stellar network.
This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making investment decisions.