Chainlink vs Polkadot

Find out how the two blockchain technologies differ

Contents

Chainlink and Polkadot explained

Chainlink is an Oracle-based network. It is built on the Ethereum blockchain and is used to grab price data for Ethereum projects. 

Polkadot is a new-generation blockchain that aims to operate without any of the flaws that plague Ethereum. It also aims to provide ways of increasing interoperability across blockchains.

Chainlink vs Polkadot: which is which?

Marcus de Maria, founder and CEO of Investment Mastery and Your Crypto Club, says Polkadot (DOT) and Chainlink (LINK) both aim to solve the issue of interoperability:

“Both try to create a world where all networks and blockchains can interact with each other and work together. You could call it the internet of tomorrow.” Marcus de Maria

He believes that since they solve a similar problem, it’s easy to say that they’re competing with each other, but often it’s more of a collaboration:

“The blockchain space is big enough for many players and if they work together, adoption will likely go even faster.” Marcus de Maria

What is the difference between Chainlink and Polkadot?

Polkadot launched in 2016 and debuted on trading exchanges at the end of 2020. It was created by Gavin Wood, one of Ethereum’s co-founders. Polkadot is a network for connecting and launching blockchain applications. Its parachain technology acts as a bridge between different blockchains.

“The aim of the interoperability is to create a fully decentralised and private web, controlled by its users,” explains de Maria. “See it as an improved version of all the services and products available on the web today – eg, internet 2.0.”

Dr Roman Matkovskyy, an associate professor at the Rennes School of Business, says Polkadot is a Proof-of-Stake (PoS) agnostic blockchain that connects other different blockchains.

“It is a next-generation blockchain and layer-0 protocol that combines multiple specialised blockchains into a unified and scalable network.” Dr Roman Matkovskyy

Technically, it uses the concept of a relay chain as its base layer and parachains, which are the blockchains that connect to the relay chain.

Polkadot allows information to be seamlessly transferred between parachains, effectively solving the blockchain scalability problem.

“For instance, once Bitcoin, Monero, Ethereum or any other cryptocurrency is connected to Polkadot, investors or users will be able to move BTC into Ethereum and then clean profits via Monero or Chainlink.” Dr Roman Matkovskyy

Unlike Chainlink, which is built on the Ethereum blockchain, Polkadot is attempting to become a new Ethereum of sorts.

As of 17 December 2021, there were more than 515 projects building on Polkadot.

What has happened to the price of Polkadot?

Polkadot’s current price, as of 17 December 2021, is fluctuating at about $24.91, with a market capitalisation exceeding $24.5bn (£18.6bn).

  • Supply in circulation is 987,579,314.96 DOT coins.

  • Polkadot does not have a maximum supply and its coin DOT is inflationary.

  • Prices are also quite volatile: in early November 2021, the DOT coin price peaked at $53.88, which also represents its all-time high.

Chainlink explained

Chainlink was created by Sergey Nazarov in 2014, but wasn’t launched until 2017. Its mainnet went live in May 2019.

It was among the first cryptocurrency projects to enable other blockchains to have smart contracts using its ‘decentralised oracle network’.

Smart contracts are immutable and verifiable contracts that automatically execute in an IF/THEN framework when conditions are met.

Put simply, this means that all the different blockchains can talk to, and benefit from, each other.

Chainlink enables blockchains to securely interact with different external data feeds, events and payment methods.

The information from the different blockchains can unite through Chainlink and create complex digital smart contracts.

“What is interesting is that Polkadot uses Chainlink’s oracle capability,” says de Maria.

Scalable network 

Dr Matkovskyy says Chainlink is a decentralised and infinitely scalable network of nodes built on Ethereum.

Technically, it is an ERC-20 token that provides data to any connected blockchain to permit the integration of off-chain data into smart contracts.

Chainlink is an oracle provider that calls inputs of data from the real world into the blockchain. It uses the Proof-of-Stake (PoS) consensus mechanism, which is lighter on energy consumption than the Proof-of-Work protocol, commonly used in Bitcoin, Litecoin and Ethereum.

Its supply is limited to a maximum of 1,000,000,000 LINK tokens. As of 17 October 2021, current supply equals about 54% of the maximum, with a market capitalisation exceeding $27.4bn.

“For instance, for a smart contract that requires the EUR/GBP exchange rate, Chainlink steps in to provide this information, after verification by its participants, who are paid in LINK tokens by the network, instead of relying only on one source.” Dr Roman Matkovskyy

So far there are 120 data sources and 13 data providers for cryptocurrency and traditional financial market data, covering more than 65,000 Equities and ETFs, options, and so on. They also cover proprietary and aggregated sports odds and sports results data, property on record and real-estate data, luxury goods and services’ prices, and collector database information.

What has happened to Chainlink’s price?

Currently, on 17 December 2021, the Chainlink price is moving around the $18 mark. LINK has suffered huge losses in excess of 60% from the November high.

Chainlink is more volatile than bitcoin (BTC) and ether (ETH), on average. Other risks relate to low volume and market cap in comparison to other appealing cryptocurrencies, despite its huge potential for popularity. If heavy losses are maintained, it might spell the end of the coin. However, the coin is poised for a trend reversal. For the Chainlink price to return to a clear bull market, it will need to close at or above the $35 value area according to Fibonacci retracement – among other indicators – as reported in TradingView.

LINK/USD price history

Date Close Change Change(%) Open High Low
Jan 18, 2022 23.44317 -0.28629 -1.21% 23.72946 24.23920 23.38332
Jan 17, 2022 23.72746 -1.71172 -6.73% 25.43918 25.52598 23.22470
Jan 16, 2022 25.43918 0.34315 1.37% 25.09603 26.30006 24.61723
Jan 15, 2022 25.09802 -0.58855 -2.29% 25.68657 26.12151 25.07807
Jan 14, 2022 25.68658 0.89876 3.63% 24.78782 25.79530 23.86312
Jan 13, 2022 24.79881 -1.88824 -7.08% 26.68705 26.68708 24.39982
Jan 12, 2022 26.68704 0.18055 0.68% 26.50649 27.15191 25.58480
Jan 11, 2022 26.50349 -1.38852 -4.98% 27.89201 28.57927 25.80227
Jan 10, 2022 27.89101 0.42092 1.53% 27.47009 28.40678 25.04711
Jan 9, 2022 27.47010 2.13910 8.44% 25.33100 28.65950 25.11100
Jan 8, 2022 25.33200 -0.61900 -2.39% 25.95100 27.28600 23.58850
Jan 7, 2022 25.95301 0.53851 2.12% 25.41450 27.30050 22.68250
Jan 6, 2022 25.41050 0.21700 0.86% 25.19350 25.94401 23.34400
Jan 5, 2022 25.18700 1.74450 7.44% 23.44250 27.44851 22.36350
Jan 4, 2022 23.44900 -0.26800 -1.13% 23.71700 24.45100 22.81200
Jan 3, 2022 23.71500 1.83850 8.40% 21.87650 23.76950 21.28700
Jan 2, 2022 21.87701 1.19493 5.78% 20.68208 22.12450 20.51650
Jan 1, 2022 20.68407 1.23789 6.37% 19.44618 20.71700 19.43521
Dec 31, 2021 19.44319 -0.41496 -2.09% 19.85815 20.55141 19.01532
Dec 30, 2021 19.85715 0.18651 0.95% 19.67064 20.35893 19.10802

Which is best – Chainlink or Polkadot?

As an investment, both projects are very promising – although remember to always do your own research first and factor in the latest news trends and developments. 

“I have allocated funds to each. My larger position is in Chainlink,” said de Maria.

Katharine Wooller, managing director of Dacxi in the UK and Ireland, said both cryptocurrencies are of interest to investors who want ‘clean crypto’. She says: “Elon Musk’s recent comments about the environmental impact of bitcoin kicked off a 50% price crash, and, quite rightly, some soul-searching in the crypto industry.

“In terms of year-to-date performance, there is not much daylight between Chainlink and Polkadot. However, some key differences lead me to believe that Polkadot may well triumph in the short term.

“Polkadot’s market dominance has doubled in eight months; [from a] standing start in 2020 and it has also found significantly more traction in the fund community, with Master Ventures, an Asian-based venture capital firm announcing $30m to invest in promising on the network.

“This leads me to believe in the value of the Polkadot community,” added Wooller. 

Chainlink of course, has its advantages: it is able to link complex fields of information via smart contracts, and will be a major player in data processing.

Wooller added: “Let us not forget that big data already dominates the world. It has proven itself and is used extensively in securing billions of dollars of value in DeFi. To my mind, however, Polkadot has a broader use case and ‘fixes’ some of the problems inherent to crypto.”

FAQs

There are currently 467,009,550.44 LINK coins in circulation, or almost 47% of the 1,000,000,000 total supply, according to CoinMarketCap.

There are currently 987,579,315 DOT coins in circulation, according to CoinMarketCap.

Further reading

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