Polkadot and Cardano are public chain projects that emerged after Ethereum. The founders of both projects are also among the original 8 founders of the Ethereum Fund. The purpose of both is to provide a better public chain than Ethereum. In the current bull market of encrypted digital currencies, the market value of both has jumped to the top 5 in the market value of encrypted digital currencies. It can be seen from this that the market recognizes these two public chain projects. However, these two projects are now developing in different directions, and the two do not form a positive competitive relationship. They provide the market with two different types of public chain solutions.
In terms of technology, the technical architecture of both adopts a two-tier design approach. The bottom layer is responsible for security and verification, and the upper layer is responsible for specific business calculations. Of course, the two projects are different in terms of specific implementation. Polkadot's design is more innovative. Its layer 2 supports 100 parachains. These parachains are provided by the market and are qualified to operate through slot auctions. The mechanism of the second layer on Cardano's chain is more similar to that of Ethereum.
In terms of design philosophy, Cardano pursues maximum distributed computing. In terms of the number of nodes, it strives to be 50-100 times that of Bitcoin. Cardano also strives for equality when it comes to token distribution. Nearly 90% of its total tokens will be held by the community. In addition, the design of each node of Cardano only supports an optimal number of staking tokens. When the number of staking tokens in this node exceeds this optimal value, the profit obtained by each token will decrease. Such a design method is to avoid excessive concentration of tokens held by some nodes, and to promote a more balanced and equal system as a whole. Among the tokens issued and circulated by Polkadot, about 60% are held by the community. So in terms of the democratic equality of the built system, the Cardano project is more advanced.
In terms of ecological construction and community promotion, the two also adopted different strategies. The Polkadot Foundation provides funds to developers in the community to support the development of various applications in the Polkadot ecosystem. Therefore, so far, various types of projects have been developed in the Polkadot ecosystem. The Cardano project mainly relies on its companies IOHK and Emurgo for underlying development. To date, there is no support for the developer community to develop projects on its chain. Its plan in this regard is to select projects that support development in its ecology through community voting in the future.
In terms of the type of users served, Polkadot follows the characteristics of the blockchain project, which is mainly aimed at the developer community and retail users, while the Cardano project pays more attention to institutional customers. Cardano has a dedicated team responsible for cooperation with some African and Central Asian governments. In the near future, it will announce a cooperation that has been reached with African countries, and about 5 million users will establish identities on the Cardano project and use applications on it. Cardano is also very confident that it will migrate about 100 million users to its platform in a year or two in this way. Polkadot is obviously a natural way of growth that is completely dependent on ecology. It is the same way that Bitcoin and Ethereum have developed in this respect.
In terms of supporting the automatic operation of the system, both are realizing the automatic operation of the public chain. The operation and maintenance of the system is also supported by the foundation. Cardano launched in 2017. It is going live in phases. On March 1, 2021, it will launch its third stage, which is the Goguen stage. At this stage, the Cardano system will begin to support smart contracts and the operation of various types of assets on top of it. After the Goguen phase, there will be a Basho phase for expansion and a Voltaire phase for governance to go live. Polkadot went live in May 2020 and became an automatic system in August. However, the launch of its parachain needs to be carried out through slot bidding, and this process management is carried out through the Web3 Foundation.
Despite these differences between the two projects, I think the competition between the two is definitely not a zero-sum competition. The development of the blockchain-based encrypted digital ecology has just begun, and various underlying distributed accounting technologies including the public chain will provide basic support for such a digital ecology, so the public chain project market still has huge room for long-term development. Both projects have very huge room for development. This is similar to the early days of the development of the mobile Internet, where various underlying operating systems have huge room for development. In this sense, Ethereum 2.0 also has huge room for development. As long as these public chain projects have their own distinct characteristics, including characteristics in technology, governance model, service user groups and service industries, they can form differentiated competition. For users of the public chain, the development of these public chain projects also provides more choices. For investors in public chain projects, Polkadot and Cardano have made very good progress so far, and each has its own characteristics, so these two projects are worthy of attention. With the progress of these projects, corresponding investment strategies can be adopted. In the long run, both projects offer very good investment opportunities.
