Polkadot vs Cardano

Since its launch in 2013, Ethereum has maintained its status as the leading smart contract blockchain. The second-generation project boasts the largest developer community and millions of users.

Most developers prefer Ethereum because its ecosystem is more mature than any other platform. It also offers a wide variety of development tools and resources.

However, the platform faces increased competition from emerging projects that offer unique advantages over the senior blockchain.

In this Polkadot vs Cardano comparison, we look at two standout networks tipped as the next breakout blockchain protocols.

Polkadot vs Cardano: A Side-to-Side Comparison

When you go through the most uplifting crypto success stories, you will notice one recurring theme. Investors who got into Bitcoin and Ethereum early enough probably made the investment decisions of their lives.

Since then, the values of both tokens have skyrocketed, meaning investors have to look elsewhere to secure a higher Return on Investment (ROI).

Enter Polkadot and Cardano. Both assets continue to develop at an unprecedented rate leading to widespread adoption.

Per cryptocurrency statistics, the two assets are among the top 20 digital assets by market capitalization, making them genuine competitors.

From the above Cardano vs Polkadot table, we can deduce that although both projects are unique, they share some aspirations. For instance, the fact that they are both trying to get to 1 million transactions per second tells us that they have set their sights on making scalability problems a thing of the past.

We can also establish that Cardano has the head start on Polkadot with a market capitalization that doubles Polkadot’s total value.

If you are an investor, you probably wonder which of the two has better long-term prospects.

Our next chapters will help you determine.

Introduction to Polkadot

Widely referred to as “The Internet of Blockchains,” Polkadot is designed to connect individual blockchains into a single unified network allowing independent blockchains to communicate.

Still not following? Think of it this way. Most blockchains operate independently. For instance, Bitcoin and Ethereum don’t communicate with each other. Therefore, decentralized apps built on each can’t interact. Polkadot solves this problem by allowing interoperability.

The Polkadot network is structured to include the main blockchain called the “relay chain” and many user-created parallel chains known as “parachains.”

It also has a “connecting layer,” which enables the smooth flow of value and data between most blockchains. The layer is also used to connect to non-blockchain databases.

Consensus mechanism

Most third-generation blockchains like Solana and Cardano use the traditional Proof of Stake (PoS) consensus protocol.

The Proof of Stake algorithm chooses validators randomly based on how many coins they have locked up in the network. This model relies on more than one participant such that when a specific number of validators confirm the block is accurate, it is finalized and closed.

Polkadot uses a modified version of Proof of Stake known as the Nominated Proof of Stake (NPoS). In this model, nominators propose validators and stake their crypto as a show of trust in the validator’s history of good behavior.

What Is Polkadot Used for?

Polkadot’s interoperability allows users to send data and tokens across blockchains. Developers also use the platform to build decentralized applications (DApps).

Its native token, DOT, facilitates transactions on the Polkadot network. Besides this, it grants participants a voice in the network’s governance.

The coin is also used as a medium of exchange. As of October 6, 2022, the asset was the 12th most valuable cryptocurrency, with a market capitalization of $7.2 billion. Investors are also upbeat about Polkadot’s potential to grow.

Polkadot’s Pros and Cons

We take a look at some of the pros and cons of investing in Polkadot below.

Pros

• Blockchain interoperability
• Ability to earn by staking DOT tokens
• Users play a role in the network’s governance
• Transparency and open communication

Cons

• Like any other crypto, DOT is highly volatile
• Participating in network activities like governance and staking requires a lot of DOT
• Polkadot is still fairly new and faces a lot of competition
• To become a Polkadot validator you need a lot of technical knowledge

Introduction to Cardano

Cardano is a decentralized, proof-of-stake blockchain that processes transactions using its native cryptocurrency, ADA.

It is a more flexible, scalable, and sustainable platform for building smart contracts than Ethereum.

This makes it ideal for developing a wide range of decentralized apps (DApps), new crypto tokens, and games.

Cardano is based on the Ouroboros Proof of Stake consensus mechanism, the first peer-reviewed, verifiably secure blockchain protocol.

What Is Cardano Used For?

Cardano is primarily an ecosystem where developers can create decentralized applications and other tokens.

Its native coin, ADA, is used to send and receive payments. It is also used for staking and paying transaction fees on the Cardano network.

Cardano Pros and Cons

While Cardano has some major advantages over most digital assets, investors should also be wary of the disadvantages that come with investing in ADA.

Pros

• Peer-reviewed technology
• Environmentally friendly
• It’s an open-source platform
• Great development team
• Scalability

Cons

• Platform is still in development
• Stiff competition
• Volatility
• Democratic governance can be a downside as most users are not tech-savvy and may vote on wrong proposals
• Synchronization issues between ledgers

Similarities Between Polkadot and Cardano

The first place to start when comparing the projects is by outlining what they have in common.

Origins

The most apparent similarity is their founders are both Ethereum alumni.

Gavin Wood (Polkadot) and Charles Hoskinson (Cardano), both Ethereum co-founders, broke ranks with Vitalik Buterin for different reasons.

Wood is on record stating he left over governance issues and Ethereum’s reluctance to carry out upgrades.

Hoskinson left Ethereum over differences in opinion on whether the blockchain-based network should be commercial.

Consequently, both Polkadot and Cardano seek to remedy Ethereum’s shortcomings.

Scalability

Polkadot and Cardano were built to achieve much higher throughput than Ethereum.

As of October 2022, Polkadot processed 1,000 transactions per second. Nonetheless, the blockchain’s developers have announced updates that will increase speeds to between 100,000 and 1 million transactions per second.

At the same juncture, Cardano could process 250 transactions per second with the potential to get to 1 million TPS eventually.

Decentralized apps

Although the Polkadot relay chain does not implement smart contracts natively, it coordinates the parachains hosting them, allowing developers to build decentralized apps.

Besides its smart contracts functionality, Cardano offers a broad set of tools that enable the development of decentralized apps.

Cardano vs Polkadot: The Differences

Statistics show investors who have acquired both Polkadot and Cardano have made different moves. This contrast is fuelled by perceptions of how their differences will likely influence future growth, which calls for a closer look at the variations.

Architecture

Polkadot’s architecture is coordinated by a central relay chain connecting a blockchain network.

Cardano has a double-layer infrastructure: The Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL).

The Cardano Settlement Layer is used for ADA transfers. And the Cardano Computation Layer supports the smart contract functionality, enabling developers to build decentralized applications.

Strengths

Polkadot has two major strengths: Its sustainability and scalability.

The network’s Nominated Proof of Stake consensus mechanism is considered one of the most sustainable protocols in the blockchain industry.

As of October 2022, the blockchain could process 1,000 transactions per second, making it one of the most scalable options in the market.

Cardano’s biggest strength is its low transaction fees. The average fee for a transaction ranges between 0.16 and 0.17 ADA, which amounts to a penny or two in USD.

Mission

Polkadot was created to allow interoperability between numerous blockchains.

Cardano is designed to make the development of decentralized apps as simple as possible.

Tokenomics

Polkadot does not have a cap on the total number of DOT tokens that can circulate. The downside is that DOT holders lose 10%  to inflation each year. One of the strategies used to mitigate this is staking DOT tokens on the Polkadot network for 10-15% APY.

Unlike Polkadot, Cardano has a limited supply. Only 45 billion ADA tokens will exist in its lifetime, making a flooded market unlikely.

Governance

There are two ways that decisions about the different aspects of a project are made: on-chain and off-chain.

In on-chain, voters sign off on transactions within the network. In off-chain, voting takes place outside the blockchain.

Cardano’s governance mechanism is off-chain, like Ethereum’s.

On the other hand, Polkadot’s governance takes place on-chain via several sophisticated voting and proposal mechanisms. This is to ensure stakeholders have a voice in the decision-making process, which is an important security measure.

Where to Buy Cardano and Polkadot

The first step you should take before buying cryptocurrency is arming yourself with facts on how the project is likely to perform in the future. The next task is knowing where to purchase the altcoins.

Below we list some of the best cryptocurrency exchanges that offer a pleasant customer experience when buying Polkadot or Cardano.

Binance

With more than 600+ coins listed and a native token that’s one of the most popular cryptocurrencies around, Binance is one of the leading exchanges. Besides offering the lowest transaction fees on the market, the platform offers advanced features such as futures and margin trading.

• Supports over 600 coins
• Binance.us for the US Users
• SEPA & Bank Transfers

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With more than 600+ coins listed and a native token that’s one of the most popular cryptocurrencies around, Binance is one of the leading exchanges. Besides offering the lowest transaction fees on the market, the platform offers advanced features such as futures and margin trading.

Kraken

Kraken is a US-based exchange that offers trading in US dollars, Canadian dollars, Australian dollars, Euros, British pounds, Swiss Francs, and the Japanese yen. The platform pays special attention to its security, with a track record of zero breaches. Kraken also has an extensive list of crypto assets and covers over 185 of them.

• Low fees
• Seven different fiat currencies
• 185+ cryptocurrencies

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Kraken is a US-based exchange that offers trading in US dollars, Canadian dollars, Australian dollars, Euros, British pounds, Swiss Francs, and the Japanese yen. The platform pays special attention to its security, with a track record of zero breaches. Kraken also has an extensive list of crypto assets and covers over 185 of them.

eToro

Established in 2007, eToro is a multi-asset trading platform offering stocks, digital assets, and Exchange Traded Funds (ETFs). Its best attribute is its social trading feature which allows users to match the moves of expert traders.

• Regulated in multiple jurisdictions
• Offers a communal experience
• Plenty of educational resources

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Established in 2007, eToro is a multi-asset trading platform offering stocks, digital assets, and Exchange Traded Funds (ETFs). Its best attribute is its social trading feature which allows users to match the moves of expert traders.

Crypto.com

Crypto.com has been ranked as the most secure crypto exchange and has been awarded a AAA rating. The platform also supports 250+ cryptocurrencies and offers a high return on crypto assets. It also features some of the most advanced tools in the market.

• Competitive fees
• FDIC-insured fiat balances
• Transparency

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Crypto.com has been ranked as the most secure crypto exchange and has been awarded a AAA rating. The platform also supports 250+ cryptocurrencies and offers a high return on crypto assets. It also features some of the most advanced tools in the market.

CEX.IO

Headquartered in London, CEX.IO is a cryptocurrency exchange popular for being one of the first platforms to make fiat-to-crypto transactions accessible through card payments and bank transfers. The platform has over four million users across the world.

• Supports a wide range of cryptocurrencies
• Licensed in the US
• Strong security measures

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Headquartered in London, CEX.IO is a cryptocurrency exchange popular for being one of the first platforms to make fiat-to-crypto transactions accessible through card payments and bank transfers. The platform has over four million users across the world.

Wrap Up

When you factor in everything covered in this piece, it is easy to see why Polkadot and Cardano generate great excitement.

Both boast massive blockchain interoperability potential and have made giant strides in offering answers to Ethereum’s limitations.

They are also continuously being developed to solve unique challenges. Polkadot seeks to provide the best platform for DApp development.

Similarly, Polkadot has secured its place as the “blockchain of blockchains” and is constantly improving its platform to promote a heterogeneous multi-chain network.

As far as the ADA vs DOT argument goes, it makes sense to hold on to some of each token. Both are likely to perform well at different stages in the future.