Cardano vs. Polkadot

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In this article I set out to investigate Cardano and Polkadot, the two most promising blockchain usability platform proposals for DeFi and Dapps.

I will analyse the differences between the two based on the issues that have the greatest impact on the development and operation of the networks.

Quantitative data is from February 2021.

Delegation

Polkadot

It has nominators and validators.

When nominating, tokens are locked for 28 days.

The nominator can lose DOT as punishment if a validator is sanctioned for misbehaviour.

There is a minimum amount of DOT required to earn rewards. This amount is dynamic.

It can be delegated to up to 16 validators and once pools are chosen to produce blocks, the protocol will choose one of those 16 validators to support with your nomination.

A pool is “oversubscribed” when it has more than 128 nominators. This means that only the top 128 nominators, as measured by the amount of nominations assigned to that validator, will receive rewards. All other nominators do not receive rewards.

In order to manage a validator pool, a minimum amount of DOTs is required. This amount is dynamic and depends on certain factors.

Annual yield: ~ 14%.

Cardano

Cardano has delegators and pools.

Tokens are not locked. You can move them whenever you want.

There are no penalties, Cardano works with incentives instead. You can never lose ADA, you just might not collect rewards if a pool doesn’t sign blocks in an epoch (every 5 days) or collect less rewards if it gets saturated with delegation.

There is no minimum amount required to earn rewards. You only need a deposit of 2 ADA to register your wallet (returnable upon delegation cancellation) and 0.17 ADA for the one-time network transaction fee.

Pools can become saturated. Any delegation that exceeds 100% saturation decreases the rewards per delegator, which incentivises some delegators to seek out unsaturated pools, thus promoting decentralisation of the pool network.

Annual return: ~ 5%.

Monetary policy

Polkadot

Native currency: DOT

Total initial supply: 10 million

Supply in circulation: 908 million

Total planned inflation: Unlimited

Maximum token supply: Unlimited.

Inflation rate: Depends on the nomination rate on the network, but reaches a maximum of 10% when the nomination rate approaches 50%.

Cardano

Native currency: ADA

Supply in circulation: 31 billion.

Total expected inflation: 14 billion.

Maximum token supply: 45 billion.

Inflation rate: Every 4–5 years half of the reserves (the 14 billion) will be deployed. So the inflation rate will be reduced over time.

This is basically the monetary policy of Bitcoin, where the circulating supply every 4 years is halved and thus curbs inflation due to scarcity.

Treasury

Polkadot

If you want to make a funding proposal from the Polkadot treasury you need to deposit 5% of the requested funds or at least 100,000 DOT. This amount is burnt if the proposal is rejected. Proposals are decided by the board consisting of a maximum of 24 “actors” (currently 13).

Cardano

Proposals in Catalyst for the Cardano treasury do not require a deposit. You make a proposal, get feedback from the community, refine it and then all ADA holders can vote on it and the proposals with the most votes get funding.

Governance

Polkadot

Polkadot’s governance solution is to use a centralised board that makes many of the decisions.

Changes to the parameters of the protocol, among other essential matters, go through a referendum process. Anyone can propose a referendum by depositing the minimum amount of tokens for a set period of time. The proposal with the highest amount of token support will be selected to be a referendum in the next voting cycle. There can also be council referendums. When all board members agree with a proposal, it can go to referendum.

The council is primarily called upon to perform three tasks of governance: proposing sensible referenda, overturning uncontroversially dangerous or ill-intentioned referenda, and electing the technical committee. A proposal can be cancelled if the technical committee agrees unanimously.

Cardano

Governance is in progress and under construction. Project Catalyst is in experimentation, and will be refined over time. It is the first implementation of the Voltaire era.

Community proposals are currently being voted on in Catalyst for funding. CIP (Cardano Improvement Proposal) procedures are also enabled to propose changes to the blockchain.

Cardano has a DAO (Decentralised Autonomous Organisation) type governance format starting with Catalyst.

Consensus protocol

Polkadot

Proof of Stake nominated.

Hybrid consensus separates the consensus mechanism with the block production mechanism.

BABE is the block production mechanism that runs between validator nodes and determines the authors of new blocks. BABE (Blind Assignment for Blockchain Extension) is comparable as an algorithm to Ouroboros Praos, with some key differences in the chain selection rule and slot time settings. It is 51% Byzantine-resistant.

GRANDPA (GHOST-based Recursive ANcestor Deriving Prefix Agreement) is the final device implemented for the Polkadot Relay Chain (main chain on which the parachains are mounted). Byzantine resistance 30-20%.

Cardano

Proof of Stake dynamic

Ouroboros. 51% Byzantine resistance.

Scalability

Polkadot

Uses sharding, and claims to eventually be able to do 1 million TPS (transactions per second).

Cardano

Cardano will use Hydra as a second layer solution that will scale to around 1000 TPS per head, and with 1000 heads (stake pools) could reach a maximum of 1 million TPS.

Interoperability

Polkadot

It focuses on interoperability with other blockchains much more than Cardano. It calls itself “the blockchain of blockchains” and the idea is that complete blockchains can easily be developed on top of Polkadot blockchains, which share the security of the main blockchain and benefit from interoperability with each other.

Cardano

It seeks to be interoperable with the legacy native systems of other blockchains and other cryptocurrencies. To this end, Cardano will integrate KMZ sidechains.

Smart contracts

Polkadot

Will not support smart contracts natively. This feature will be built by other projects on top of its parachains.

Cardano

Supports smart contracts natively starting with Plutus and Marlowe, which will be released in February 2021.

Plutus is a completely new smart contract language based on Haskell.

Marlowe is a domain-specific language (DSL) based on the Plutus platform, which uses visual programming tools (lego-like blocks) and allows building standard and simple financial contracts without having to master a difficult programming language, in an online development environment.

Decentralisation of the network

Polkadot

Validators (pools): 297

Nominators (delegators): 6751

Total nominated of circulating currency: 60%.

https://polkadot.js.org/apps/#/staking

Cardano

Pools: 1626

Delegated wallets: 220K

Total staking of circulating currency: 70%.

Community @Reddit

Polkadot

r/dot has 13k users.

Cardano

r/cardano has 170k users.

Test network

Polkadot

Kusama is basically an incentivised permanent testnet. It replicates real-world scenarios much better than other test networks.

Cardano

It Develops the ITN on demand before running changes on the Mainnet.

Network analysis sources:

https://polkascan.io/

https://pooltool.io/

17 Likes

Thank you for the review @arielfavio !
I think others like me have been curious and tardy in looking into this interesting project! :sunflower:

1 Like

Thank you for sharing

1 Like

Good work!

I’ve been invested in Cardano since 2018. I hadn’t heard anything about Polkadot until a couple weeks ago. Why Coinbase has listed them and not Cardano is beyond me, since they do seem to be highly equivalent. Some notable differences I take away from this summary comparison:

Polkadot has centralized governance.
Polkadot is putting more emphasis on blockchain interoperability
Cardano will run smart contracts natively
Cardano is building decentralized governance.

<< The nominator can lose DOT as punishment if a validator is sanctioned for misbehaviour. >>

I REALLY don’t like that feature. We might as well anticipate right now that somebody somewhere is going to try to exploit this technology in skeevy ways. And if and when that happens, people who weren’t a party to the crime shouldn’t be punished for it.

4 Likes

Thanks for your comments!

Thank you @arielfavio for posting this, I found it very helpful.

1 Like

Excelente articulo amigo.

It would be interesting in the future to see how cardano will find a niche now that it is delivering.

I don’t know if the fact that cardano has not focused so much in the interoperability will represent a challenge for the cardano ecosystem growth in the future now that interoperability is becoming more important and we are seeing projects like Polkadot tackling this issue.

1 Like

<< I hadn’t heard anything about Polkadot until a couple weeks ago. Why Coinbase has listed them and not Cardano is beyond me >>

I haven’t been able to find Polkadot on Coinbase, but I have a free account. Maybe it’s only available on their premium service. You can buy such crypto powerhouses as Maker, Civic, Dai, Augur, Orchid, Numeraire, Loopring, UMA and some others.