XLM vs ADA: Crypto Comparison

Table of Contents

• XLM vs ADA: Similarities
• Smart Contracts
• Decentralization
• Interoperability
• XLM vs ADA: Differences
• Use Cases
• Consensus Mechanism
• Development Approach
• XLM vs ADA: Which Is a Better Investment?

Both Stellar and Cardano are crypto protocols with a long history in the ecosystem. They have evolved throughout the years and adapted to the changes and demands of the market. Let’s take a look at their similarities and differences, to find out which of them is a better investment. Then, you can decide if it’s the right time to purchase the tokens or if it’s best to do an HNT to IOTA swap at the moment.

XLM vs ADA: Similarities

XLM is the ticker of Lumens, the token of the Stellar blockchain. ADA, on the other hand, is the token of the Cardano blockchain. They share plenty of similarities. However, their approaches to various topics on crypto development are different. It’s important to take a deep dive into these factors before deciding which is the winner in the XLM vs ADA battle.

Smart Contracts

Smart contracts are the backbone of modern blockchains. Even protocols that weren’t created with this feature in mind have changed their software to include them, for the benefits they bring regarding the development of DApps. That’s the case with Stellar. In the beginning, it was intended to be a platform for cross-border payments, connecting banks and traditional payment systems. Although that feature still exists, Stellar now introduced smart contracts, allowing users to build DApps on top of it. Cardano, on the other hand, had this feature in mind for a while but didn’t deploy it until 2021.

Decentralization

Blockchain technology is intended to be decentralized and transparent, and protocols built using this architecture should follow suit. Stellar achieves decentralization by allowing anyone to create a node and participate in the consensus protocol. However, some critics argue the core development team still makes most decisions.

Cardano also encourages users to run network nodes and participate in protocol governance. Block consensus is reached using a Proof-of-Stake (PoS) algorithm, where anyone can participate.

Interoperability

The Stellar blockchain allows users to tokenize fiat currencies and assets, as well as transfer them. Moreover, it is designed to interconnect with other payment systems and banks. Anyone can use the protocol to build their own payment system using smart contracts, and these DApps would be compatible with one another.

Cardano focuses on interoperability with centralized banks as well. However, it also supports integrations with other blockchains, like Ethereum. This means that DApps developed on Cardano can be migrated to Ethereum and vice versa.

XLM vs ADA: Differences

Despite the similarities, Stellar and Cardano have differences both in their intended use and their technical infrastructure.

Use Cases

Stellar, as we mentioned, is mainly focused on providing a means for money transfers. You can get tokenized dollars and euros, but also Bitcoin or other cryptocurrencies. It has developed integrations with large apps, like MoneyGram, to bring the benefits of crypto to its users.

Cardano, as an Ethereum competitor, is focused on providing users with tools to build DApps and foster the creation of an internal ecosystem, with the ability to perform any function needed, growing based on the needs of its users.

Consensus Mechanism

Unlike most blockchains, XLM cannot be mined or staked. All XLM tokens were created at the time of launch and distributed evenly in the following five years. No network participant receives token rewards now, neither by staking nor mining. Still, users are encouraged to run servers and contribute with the validation of transactions.

Cardano uses a Proof-of-Stake (PoS) algorithm called Ouroboros. Stakers must participate in staking pools, and block validation is assigned randomly among pools. The reward is then distributed between the stakers.

Development Approach

A defining feature of Cardano is its reliance on peer-reviewed papers. All the technical documents of the blockchain are peer-reviewed and approved independently. While this improves Cardano’s security and performance, it has caused it to stay behind in innovation, even if it started developing the features before other competitors.

Stellar, on the other hand, is not as tightly connected to the scientific fields. Developments come from the core development team and other collaborators and are promptly deployed on the main network.

XLM vs ADA: Which Is a Better Investment?

As we’ve seen, both cryptos are solid and successful. They’re both among the most valuable by market capitalization, although Cardano ranks higher. The decision on which is a better investment depends on what you need it for. However, the Cardano blockchain is probably a better financial investment, judging by its current value and the activity of its deve