Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

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Both Polkadot and Cardano will release important network updates, comparing the two public chain giants from the perspectives of founders, technology, and token economy.

Original title: “Cardano vs. Polkadot, who will win in the end?” 》
Written by: Coin Bureau and Selcuk Aslantas
Compiler: Mary Liu

2021 will be the year of smart contract blockchain. Except for Tether (USDT), half of the top 10 cryptocurrencies by market capitalization are compatible with smart contracts. These projects are all trying to compete with the leading position of the Ethereum ecosystem.

Among these high-value smart contract cryptocurrencies, two are most likely to compete for the crown: Cardano and Polkadot.

In 2020, the development and adoption of these two projects is unprecedented, and the market value rankings are basically on par.

The push data shows that just last week, Cardano surpassed Polkadot and the platform currency BNB to become the third largest cryptocurrency by market value.

Both Cardano and Polkadot are about to release major network updates. Industry insiders are also curious, which one will become the real Ethereum killer in 2021?

This article compares the two projects from multiple angles so that investors can make clearer judgments.

Founder

There are many different metrics you can use when comparing crypto projects. This article starts with the most basic indicator-the project founder.

Gavin Wood, the founder of Polkadot:

  1. Computer scientist
  2. Doctor of Human-Computer Interaction;
  3. Founder of the Swiss non-profit organization Web3 Foundation, which is responsible for overseeing the development of Polkadot (DOT);
  4. The founder of Parity Technologies, a British software development company, was commissioned by the Web3 Foundation to develop and maintain Polkadot.

Charles Hoskinson, the founder of Cardano:

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

  1. Mathematician, without a doctorate;
  2. The founder of the for-profit software development company Input-Output Hong Kong (IOHK), IOHK and the Japanese for-profit software development company Emurgo were commissioned by the Cardano Foundation to develop the project, which is also a Swiss non-profit organization.
  3. Charles does not have any official title in the Cardano Foundation, which has 5 board members.

In contrast, Gavin Wood is one of the three board members of the Web3 Foundation.

As we all know, Charles and Gavin co-founded Ethereum in 2013 with Vitalik Buterin and others.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

In June 2014, 13 months before the Ethereum mainnet went live, Charles left the team due to differences in venture capital funding with Vitalik.

Gavin left the Ethereum team in January 2016 for various reasons. Before leaving, Gavin served as the CTO of Ethereum, wrote the “Ethereum Yellow Paper”, developed the Solidity coding language, and even wrote the first functional version of Ethereum.

Although both Gavin and Charles play a pivotal role in the Ethereum team, Charles seems to have invested much more in the Cardano community than Gavin has invested in the Polkadot community.

Charles’ daily YouTube videos and live broadcasts are enough to prove this point. More importantly, Charles and Gavin adopted completely different methods when setting up their respective projects, which is also due to their own personalities. Eventually, all projects that are launched on Polkadot (DOT) must pass the test of the sister chain of Polkadot (DOT) KUSAMA (KSM).

In contrast, all content on Cardano will be reviewed by some of the “smartest peers” in the world before being tested and implemented. Peer review is also an important feature that distinguishes Cardano from other projects.

technology

In terms of technology, both are Proof of Stake (PoS) blockchains. But they have a very different structure.

Polkadot is committed to fulfilling the promise that Ethereum cannot fulfill, so Polkadot is indeed similar to Ethereum 2.0 in some respects.

Polkadot (DOT) uses a complex hybrid consensus mechanism called Grandpa / Babe, which enables the network to process approximately 1,000 transactions per second. Gavin pointed out that Polkadot’s theoretical upper limit is to use parallel chains and multithreading to process 1 million transactions per second.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

Polkadot is essentially a blockchain ecosystem called “parachain”, which is connected to a core blockchain called “relay chain”. These parachains will host all smart contracts and applications in the Polkadot ecosystem, initially limited to 100 parachains.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

However, it is not yet clear whether these parachains can be interoperable immediately after they go online, which will become a key factor affecting the adoption rate of Polkadot.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

Compared with Polkadot, Cardano’s design is more original. The Cardano blockchain is divided into two layers: the Cardano settlement layer (used to track token balances and transfers), and the Cardano calculation layer (used to run all smart contracts). Cardano uses the Ouroboros Proof of Stake (PoS) consensus mechanism. The execution efficiency of the network under this mechanism is: hundreds of transactions per second are processed.

However, after deploying the Hydra scaling solution, Cardano will be able to process one thousand transactions per second for each validator connected to the network. This means that if it is to compete with Polkadot’s top speed, Cardano will need 1,000 validators.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

At this point, Cardano’s products are still in the immature stage. According to its development roadmap, it is currently only in the second phase of the five phases, and the remaining phases are scheduled to start next year or the following year. Among them, Goguen will be launched in March this year, and the smart contract function is within easy reach.

mortgage

This is where the two projects are really interesting.

Currently, more than 1,500 validators have participated in the pledge of more than 70% of circulating ADA tokens. You can operate directly from the delegation center in YOROI and DAEDALUS wallets, and get an annual rate of return of about 5%.

Polkadot has about 300 validators, and the tokens pledged by these validators account for more than 60% of the tokens in circulation. Users can choose to use the Polkadot {.js} browser extension to operate, and the annual return rate is 14%.

Seeing this, you may think that Polkadot is the obvious winner, but don’t ignore a small detail: when you pledge Polkadot DOT tokens, if you decide to withdraw the coins, the unlock period of DOT is 28 days.

On Cardano, you can withdraw ADA at any time. Cardano’s design mechanism is that no rewards will be received within the first 20 days. After 25 days, users can mortgage or withdraw at will without any penalty.

Having said that, the bet on Cardano seems a bit risky, because Daedalus and Yoroi are not the most stable wallets, and any major update of Cardano may have technical issues such as delegation errors.

Token design

The most obvious difference between Cardano and Polkadot is the difference in the supply of their tokens.

The current supply of ADA is approximately 31.8 billion, and the maximum supply is 45 billion.

The current supply of DOT is 960 million, and the initial supply is 1 billion. Logically speaking, the greater the supply, the lower the price of the token, which is why the price of DOT is $36 and the price of ADA is $1.40, even though the market value of the two is not so different.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?

Polkadot’s inflation rate does not exceed 8% per year, and additional issuance is used to reward verifiers and nominators, and 1% of the unused DOT tokens in the fund library will be destroyed every month.

Even if ADA will not be issued by inflation, about 13.9 billion ADA will be slowly mined in the next 20 years to pay pledge rewards, so that the annual inflation rate is about 7%. Of course, the supply dynamic curve of ADA is better than this. Much more complicated.

Another big difference between ADA and DOT is the token distribution. Of the 31 billion initial supply of ADA, more than 80% is in the hands of the community, compared with 50% for DOT. Compared with DOT where tokens are mainly concentrated in the top 100 wallets, ADA’s supply distribution is more fair.

From the total number of wallets, there are nearly 300,000 Cardano wallets, but not 110,000 Polkadot wallets. However, Polkadot has been available for less than a year, and Cardano has been developing since September 2017.

From a technical analysis point of view, this also gives DOT an advantage because it does not have a clear historical high and price pressure is less.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?Polkadot price chart, image source: BiTweet

In contrast, ADA broke its previous high of approximately US$1.25 to reach US$1.4, entering the altcoin bull market cycle that began in February 2021.

Multi-dimensional comparison between Polkadot and Cardano: Who is the real Ethereum killer?Cardano price chart, image source: BiTweet

ecosystem

In terms of adoption, more than 350 projects are based on Polkadot development, Bondly Finance, the first and currently the only DApp that has migrated to Cardano. So the current leader seems to be Polkadot.

Polkadot is still building a bridge to Ethereum. Cardano completed the ERC-20 converter in the fall of 2020 and demonstrated it in its October update.

In the demo, the IOHK team pointed out that they are ready to help the Ethereum project clone or migrate it to Cardano. The ERC-20 converter allows the destruction of tokens on Ethereum to mint the same amount of tokens on Cardano, so many of these operations can be done easily.

According to previous reports, Charles Hoskinson recently stated that Plutus, a dedicated smart contract environment for Cardano, will be ready for stress testing in March 2021.

This will give Cardano a huge lead. Polkadot plans to test its parachain auction in Kusama first, so we may not see any DApp officially launched in Polkadot until the end of this year. In addition, each Dapp on Polkadot needs its own parachain, and only 100 slots are available. Technically speaking, this means that there are 100 DApps online.

Cardano (ADA) has no such restrictions. However, although the number of DApps on Polkadot is limited, the parachain loan provision mechanism will ensure that every DApp can change the rules of the game.

in conclusion

Charles and Gavin have the same qualifications, but Charles is more stable and deeply involved in the development of Cardano, which is an important reason why Charles enjoys such a large and active community.

Polkadot also has a huge community, but the reasons are completely different. As a pioneer of smart contract technology, Gavin seems to attract developers with the same vision, who are building DApps that can develop the community.

Although completely different methods are used in development, Cardano (ADA) and Polkadot (DOT) seem to be similar in terms of size. If you value decentralization, then you may prefer Cardano (ADA);

If you value staking rewards, then you may prefer Polkadot (DOT); if you value interoperability, Cardano seems to be the winner; but if you want to find the next 100 times altcoin, you may be in Polkadot It is found in a huge ecosystem.

In terms of raw price potential, you might say that choosing ADA is better because it has a lower price and will attract inexperienced retail investors. However, you can also argue that the performance of DOT will be better, because the current 28-day unlock period for hundreds of millions of DOTs limits the total market supply.

Given the strength of both sides, maybe tossing a coin is a good idea?

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