Stellar Is No Clone

I love Twitter…for the most part…

Since signing in under @samconnerone on Twitter back in 2017 I’ve tweeted almost 17,000 times. Through the keypad I’ve traveled the world, spoke to celebrities, Fortune 500 executives and made a ton of new friends. It really is an incredible platform. Unfortunately, I’ve also seen a fair share of misinformation and/or flat out campaigns of deception. While things have improved in recent years, it seems as if Stellar is still climbing out of the blatant, deceptive marketing campaign set out on them in the early years. I can’t put a finger on where, but there was clearly an army of bots constantly spreading false claims designed to confuse the public. To go through all of them would take a lot more time then I prepared to sit down for, but lets address one of the bigger ones:

Myth: Stellar is a clone of Ripple

For starters, many still don’t understand that there is a difference between Ripple the company and the XRPLedger. Ripple is a private a technology company that delivers a global payments network, RippleNet, and XRP, a digital asset independent of Ripple, on the XRP Ledger that is the open-source technology behind it. While they both share the same creator, the XRPL and the Stellar Blockchain are completely different.

While it's true that Jed McCaleb, who was the co-founder of Ripple, forked the code in 2014, it took less then a year to determine that the vision he had for the future couldn’t be reached in its existing form. In the Spring of 2015, not even a full year since launch, the Stellar Development Foundation announced the details of an entirely new consensus protocol in a White Paper, written by chief scientist and Stanford professor David Mazieres. In fact, Jed described that the protocol and associated white paper were in development for months:

“From the beginning, we were trying to design it to be able to reach hundreds of millions of accounts, thousands of transactions. So we’ve stress tested to 100 million accounts and a few hundred transactions per second, and its holding up under those loads.”- Jed McCaleb 2015 interview

In reading deeper into the white paper, David details that they needed “ a worldwide financial network open to anyone, so that new organizations can join and extend financial access to unserved communities.” In it, he presents the newly created Stellar consensus protocol (SCP), a construction of the federated Byzantine agreement, a model which he described as a “model suitable for worldwide consensus”

Original SCP White Paper

The SCP differs from previous consensus mechanisms such as those using proof-of work, like Bitcoin, and proof-of-stake, like Cardano. Proof-of-work, as we already know, wastes resources, lags in transaction settlement and offers no asymptotic security. With proof-of stake, there’s the possibility of what the white paper describes as a “nothing at stake” attack in which previously posted collateral but later cashed in and spent can go back in and rewrite history. I’ll note here that Marcus Paulson-Luna, CEO of Script3, also pointed out in his blog “Why Stellar is the Perfect Blockchain for DeFi” that Proof-of-Stake also has an often overlooked downside:

An often-overlooked downside of PoS is the need for network validators to lock up capital simply to prove their trustworthiness. This makes Stellar baseline more capital efficient than PoS networks since the SCP can verify the trustworthiness of validators without having to rely on staking. Stellar’s validators can allocate their capital in ways that create value in the ecosystem rather than having to use it to prove their trustworthiness.

The SCP in fact lends from the Byzantine agreement which he describes as have having two appealing properties. Consensus can be fast and efficient while at the same time allowing trust to be entirely decoupled from resource ownership which allows “for a small non-profit to help keep more powerful organizations such as banks or CAs, honest”. The approach taken by Ripple was to publish a “starter”membership that participants can edit themselves. However, because divergent lists invalidate safety guarantees, users are reluctant to edit the list in practice causing power to concentrate in the maintainer of the starter list. The Stellar consensus protocol is the first Byzantine agreement protocol that gives each participant maximum freedom in choosing which combinations other participants to trust. A quorum is a set of nodes sufficient to reach agreement. A quorum slice is the subset of a quorum convincing one particular node of agreement.

Since 2014, the Stellar protocol developers have drafted over 38 Stellar Ecosystem Proposals (SEPs), 40 Core Advancement Proposals (CAPs) and 17 protocol upgrades. For example, SEP 30 provided a seamless, user-focused solution for key management and key recovery to reduce the friction for new blockchain users experience with key management:

SEP-30 defines an approach focused on making key management, and specifically loss prevention, as user-friendly as possible. It’s designed to:

Work without recovery phrases.

Prevent a third party from controlling a user’s account.

Ensure a user doesn’t need to remember a password.

CAP 38, which is scheduled to be included in the protocol 18 upgrade later this year, will introduce automated market makers (AMMs) to the Stellar network:

AMMs on Stellar have the potential to provide easy-to-access liquidity at scale, especially for new markets and markets currently overlooked by market makers. That’s because asset issuers will no longer need to rely on market makers to stock order books: they can simply create liquidity pools, and allow individual users to provide liquidity by depositing into them.

Recently, on June 1st 2021, Stellar released the protocol 17 upgrade that included an exciting feature that is that is very common in existing financial markets: Asset Clawback.. This feature makes it easier to issue specific types of regulated assets such as money market funds, bonds, and equities on Stellar. It was ushered in by Dan Doney, CEO of Securrency, and former Chief Innovation Officer of the Defense Intelligence Agency.

In summary, the Stellar protocol is not a clone of Ripple; it was built from the ground up by a team of developers inspired by the unique vision of Ripple’s Co-Founder, Jed McCaleb. Additionally, the protocol has vastly improved and adapted from its original inception. As enhancements are continuously being made, Stellar is actively proving to the world that its novel approach has been designed to be future-proof.

For instance, as Quantum computing continues to evolve, the Stellar protocol has the ability to adjust its algorithms to adapt. For a deeper dive into the Stellar protocol I encourage you to review the academic paper published through Stanford University for a much more in depth analysis. Here’s the truth: despite being under the radar on crypto twitter, Stellar has advanced and expanded. From the World Bank to the IMF…from Franklin Templeton to Securrency, more and more high profile organizations are learning how truly impactful this protocol can be. When mainstream media catches on and peels back the layers to see the anchors, the assets and ability to power SMEs across the globe the use case will create a domino effect that ultimately will prove to the disbelievers that Stellar, is no clone.