Chainlink vs Polkadot

Confused about how the two blockchain technologies differ? Here's what you need to know…

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 would be 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, who was also one of the co-founders of Ethereum. 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,” said de Maria. “See it as an improved version of all the services and products available on the web today – ie, 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, ether 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 7 June 2022, there were 547 projects building on Polkadot.

What has happened to the price of Polkadot?

Polkadot’s current price, as of 7 June 2022, is fluctuating at around $9.02, with a market capitalisation of almost $9bn.

  • The supply in circulation is 987,579,314.96 DOT coins.

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

  • Prices are volatile: in early November 2021, the DOT coin price peaked at $53.88, which also represents its all-time high. It has been on a general downward trajectory for the past few months, but there are some suggestions that the coin will break out. 

Chainlink explained

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

Chainlink was among the first cryptocurrency projects to enable other blockchains to have smart contracts using its “decentralised oracle network”. Smart contracts are immutable, 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.

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

Scalable network 

Dr Matkovskyy said that Chainlink is a decentralised, 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, as used by Bitcoin, Litecoin and Ethereum.

Its supply is limited to a maximum of 1,000,000,000 LINK tokens. As of 7 June 2022, the current supply equals about 47% of the maximum, with a market capitalisation of almost $3.5bn.

“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 75 providers of cryptocurrency and traditional financial market data running on various networks such as Ethereum, Matic, Binance, Fantom and xDai through the mainnet.  

What has happened to Chainlink’s price?

As of 7 June 2022, the chainlink price is around the $7.50 mark. LINK has also suffered huge losses – almost 86% –  since its all-time high in May 2021.

Chainlink is more volatile, on average, than bitcoin (BTC) and ether (ETH). Other risks relate to its 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.

LINK/USD price history

Date Close Change Change(%) Open High Low
Jul 1, 2022 6.11163 -0.13166 -2.11% 6.24329 6.39192 6.10165
Jun 30, 2022 6.24130 0.05087 0.82% 6.19043 6.27522 5.85426
Jun 29, 2022 6.18943 -0.09777 -1.56% 6.28720 6.46176 6.08567
Jun 28, 2022 6.28920 -0.23540 -3.61% 6.52460 7.21689 6.24430
Jun 27, 2022 6.52360 -0.14964 -2.24% 6.67324 6.96750 6.37897
Jun 26, 2022 6.67623 -0.55660 -7.70% 7.23283 7.45627 6.67123
Jun 25, 2022 7.23382 -0.00800 -0.11% 7.24182 7.33857 6.77398
Jun 24, 2022 7.24182 0.27931 4.01% 6.96251 7.40541 6.92260
Jun 23, 2022 6.96451 0.37407 5.68% 6.59044 7.05030 6.58046
Jun 22, 2022 6.59144 -0.23541 -3.45% 6.82685 6.99843 6.42884
Jun 21, 2022 6.82485 -0.12269 -1.77% 6.94754 7.52510 6.72809
Jun 20, 2022 6.94654 0.37505 5.71% 6.57149 7.25777 6.27722
Jun 19, 2022 6.57149 0.67332 11.42% 5.89817 6.67722 5.79643
Jun 18, 2022 5.90317 -0.42991 -6.79% 6.33308 6.43983 5.38346
Jun 17, 2022 6.33408 0.00598 0.09% 6.32810 6.69817 6.23333
Jun 16, 2022 6.32710 -0.96458 -13.23% 7.29168 7.46924 6.18146
Jun 15, 2022 7.29068 0.59551 8.89% 6.69517 7.33657 5.80241
Jun 14, 2022 6.69218 0.81394 13.85% 5.87824 6.82385 5.36650
Jun 13, 2022 5.75155 -0.50474 -8.07% 6.25629 6.31414 5.28173
Jun 12, 2022 6.25529 -0.75910 -10.82% 7.01439 7.10915 6.25527

Which is best – Chainlink or Polkadot?

As an investment, both projects are very promising – which means the question “Chainlink or Polkadot?” may to some extent be redundant, although you must still always remember to your own research and factor in the latest news, trends and developments before making any investment decision.

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

Similarly, Katharine Wooller, managing director of Dacxi in the UK and Ireland, said that both cryptocurrencies are of interest to investors who want “clean crypto”. 

“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,” she said. “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 on the network.

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

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

Wooller said: “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 467,009,549.52 LINK coins in circulation, or almost 47% of the 1,000,000,000 total supply, according to CoinMarketCap.

There are currently 987,579,314.96 DOT coins in circulation, according to CoinMarketCap.

Further reading

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