Categories: Blockchain

Compare Cardano and Polkadot

2021 will be the year of blockchain smart contracts. Half of the top 10 cryptocurrencies by market capitalization are compatible with smart contracts, and these projects are all aimed at dethroning current market leader Ethereum (ETH).

Among these high market capitalization smart contract cryptocurrencies, in addition to Ethereum, the two with the highest probability of success are Cardano and Polkadot.

These two networks have seen unprecedented growth and adoption rates over the past year. As a result, they follow one another closely in the charts by market capitalization.

Both Polkadot and Cardano are well on their way to releasing critical updates for their networks. This leaves many people wondering which of the two projects will win and become the real Ethereum alternative in 2021. So the article will compare Cardano and Polkadot and show which has the best chance of being the next focus for smart contracts and decentralization applications for cryptocurrencies.

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When it comes to comparing crypto projects. There are many different metrics that you can use. The first is the size and complexity of the Cardano and Palkadot. The article will not examine the highly technical factors but instead stick to indicators that anyone can understand, starting with the least technical. For example, compare the founders of both projects.

Dr. Gavin Wood is the co-founder of Polkadot, he is a computer scientist and has a PhD in human-computer interaction. Gavin is also the founder of the Web3 Foundation, a non-profit organization in Switzerland that oversees the development of Polkadot, and is the founder of Parity Technologies, a for-profit software development company based in the UK. It is authorized by the Web3 Foundation to develop and maintain Polkadot.

Polkadot co-founder

Charles Hoskinson is the founder of Cardano. He is a mathematician and dropped out in the middle of his doctoral studies. Hoskinson is also the founder of Input-Output Hong Kong (IOHK), a software development company based in Hong Kong. The Cardano Foundation is a non-profit organization in Switzerland for the development of Cardano.

Board of the Cardano Foundation established

Hoskinson does not hold any official title with the Cardano Foundation, which has five board members.

In contrast, the Web3 Foundation only has 3 board members and one of them is Gavin.

Board member of the Web3 Foundation

Surely many people know that Hoskinson and Gavin founded Ethereum in 2013 together with Vitalik Buterin and 5 others.

Ethereum founder

Hoskinson left the company in June 2014, 13 months before the Ethereum mainnet went live. This was due to a disagreement between himself and Vitalik about accepting venture capital funding, which Hoskinson supported and Vitalik declined.

Vitalik (far left) and Hoskinson (far right)

Gavin left Ethereum in January 2016 to make promises Ethereum couldn’t make, only mentioned in the Ethereum 2.0 implementation originally planned shortly after the Ethereum mainnet went live in 2016.

Gavin (left) and Vitalik (right)

Until his death, Gavin served as the CTO of Ethereum, authored the Ethereum Yellow Paper, invented the Solidity language and even coded the first functional version.

In terms of connectivity, it appears that Hoskinson spends more time with the Cardano community than Gavin with the Polkadot community.

Check out Hoskinson’s daily YouTube videos and live streams for proof. More importantly, Gavin and Hoskinson have completely different approaches to their projects and maybe it’s a reflection of their own individual personalities. Everything that lands on Polkadot has to go through Kusama, Polkadot’s Canarian network, which has the same code as Polkadot but is 4x faster, which also means a higher risk.

In contrast, everything that lands on Cardano is peer-reviewed by some of the smartest people in the world before it’s tested and deployed.

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Cardano and Polkadot are both Proof of Stake (PoS) blockchains. However, they have a noticeably different architecture that seems to be inspired by the personalities and experiences of the founders.

Since Polkadot was invented to fulfill promises Ethereum couldn’t fulfill, Polkadot is similar to Ethereum 2.0.

Polkadot uses a complex hybrid consensus mechanism called Grandpa / Babe that allows the network to process around 1000 transactions per second. Gavin notes that Polkadot has a theoretical limit of 1 million transactions per second with parachain and multithreading.

The longest chain with the highest priorities on the last completed grandpa block

Polkadot is basically an ecosystem of blockchains called “Parachains” that are connected to the core blockchain “Relay Chain”. These parachains will host all smart contracts and applications in the Polkadot ecosystem with an initial limit of 100 parachains.

According to Gavin Wood, he shared:

“The latest benchmark shows that the Polkadot network will achieve sustained speeds of over 1,000 tx / s even without parachains or multithreading. With parachain and multithreading, it could be 1,000,000 tx / s, 100% secure, scalable and decentralized. “

Unfortunately, it remains unclear whether these parachains will even be interoperable, which will be a major factor in Polkadot adoption once these parachains work later this year.

Unlike Polkadot, Cardano has a more original design. The Cardano blockchain has 2 layers: the Cardano payment layer – balance tracking, token transfers and the Cardano calculation layer – which executes all Cardano smart contracts with a consensus mechanism called Ouroboros Proof of Stake (PoS) transactions per second.

However, once the Hydra scaling solution is implemented, Cardano can process 1,000 transactions per second for each validator connected to the network. This means that Cardano needs 1,000 validators to reach the speed of Polkadot in its final form.

Therefore, Cardano still has a long way to go before it can be called a finished product. The project has only gone through two-fifths of Cardano’s development roadmap, the remaining phases are expected to take place over the next 1 or 2 years.

The new Goguen phase went live in March of this year and will enable smart contracts on Cardano.

Mark out

The staking out of Cardano and Polkadot is really an interesting feature that is grabbing a lot of people’s attention. With Cardano there are now over 1,500 validators, which define a total of over 70% of all ADA in circulation. The authorization can be done directly via Yoroi or Daedalus wallets and brings about 5% per year in ADA.

Polkadot has around 300 validators, which cover over 60% of the total DOT circulation.

The Nominator is a proxy version of Polkadot that runs with the Polkadot {.js} browser extension and brings in around 14% per year in DOT.

Well, one would think that Polkadot clearly wins and you are right because it is not a small detail. If you participate in Polkadot, this DOT has a 28 day unlock period if you choose to withdraw.

You can withdraw ADA at any time on Cardano. However, you will not receive any rewards in the first 20 days and can only claim the rewards after 25 days. After this first 25-day period, you are free to bet and cancel as you wish without penalty. At the same time, staking on Cardano seems to be a bit risky, as Daedalus and Yoroi are currently not stable wallets and any major update to Cardano could lead to technical problems due to authorization errors. , Cardano had these problems more than 5 times.

Additionally, Cardano clearly intends to be the most decentralized cryptocurrency blockchain there is. In contrast, Polkadot has an upper limit of 1,000 validators.

Tokenomics

The most obvious difference between Cardano and Polkadot in this regard is their token offering.

ADA has a current supply of around 31.9 billion with a maximum supply of 45 billion.

DOT has a current offer of 926 million and an initial offer of 1 billion. Logically, the larger the supply, the lower the value of the coin, which is why DOT is valued at $ 42.53 and ADA at $ 1.25, although both have similar market capitalizations.

You will be surprised how often these economic fundamentals outperform retail investors. It’s not rising to around 8% a year anyway, and that inflation is used to reward validators and nominees. As such, 1% of the unspent DOT from the Polkadot Treasury is burned monthly.

Although ADA is not inflationary, approximately 13.9 billion ADA will be gradually minted over the next 2 decades to pay staking rewards at a functional inflation rate of about 7% per year. ADA’s supply dynamic is a little more complicated.

A big difference between ADA and DOT is the token assignment. As you can see here, more than 80% of ADA’s initial $ 31 billion offering is in community hands compared to 50% of the DOT.

ADA and DOT rating | Source: OLDoinmarketcap

This is reflected in the account balances of both cryptocurrencies, which shows that the supply of ADA is more evenly distributed than the highly concentrated supply of DOT in the top 100 wallets.

Speaking of wallets, there are almost 300,000 Cardano wallets compared to 110,000 Polkadot wallets. This is quite understandable as Polkadot has been active for less than a year while Cardano has been at it since September 2017.

This also gives DOT an advantage from a technical analysis standpoint as it does not have a significant previous all-time high that has seen serious resistance.

DOT price table | Source: Tradingview

In contrast, ADA broke previous high at $ 1.25 and hit $ 1.40 when the most recent altcoin cycle began in February 2021. Because there are many top investors who want to make up for their losses.

ADA price table | Source: Tradingview