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 Ethereum 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 – e.g. 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 mid-October 2021, there were more than 496 projects building on Polkadot.

What has happened to the price of Polkadot?

Polkadot’s current price, as of 17 October 2021, is fluctuating at about $42, with a market capitalisation exceeding $46.5bn.

  • Supply in circulation is 987,579,315 DOT coins.

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

  • Prices are also quite volatile: on 15 May 2021 the DOT coin price peaked at $46.53, 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 $27.4 billion.

“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 October 2021, the Chainlink price is moving around the $27 mark.

Its 30-day annualised price volatility increased in May 2021, though it represented only about 50% of its peak volatility in January 2018 and July 2019.

Chainlink is more volatile than Bitcoin and Ether, on average. Other risks relate to low volume and market cap in comparison to other appealing cryptocurrencies, despite its huge potential for popularity.

LINK/USD price history

Date Close Change Change(%) Open High Low
Oct 18, 2021 26.17125 -0.19118 -0.73% 26.36243 26.56143 26.09571
Oct 17, 2021 26.35447 -0.68839 -2.55% 27.04286 27.44101 25.73145
Oct 16, 2021 27.04685 0.21379 0.80% 26.83306 28.49073 26.78814
Oct 15, 2021 26.83207 0.28557 1.08% 26.54650 27.19922 25.88772
Oct 14, 2021 26.54551 1.04873 4.11% 25.49678 27.67781 25.24396
Oct 13, 2021 25.48882 1.02686 4.20% 24.46196 25.49579 24.03696
Oct 12, 2021 24.46395 -0.58894 -2.35% 25.05289 25.08182 23.42022
Oct 11, 2021 25.05689 -0.38119 -1.50% 25.43808 26.58133 24.53462
Oct 10, 2021 25.43907 -1.82474 -6.69% 27.26381 27.30071 25.35748
Oct 9, 2021 27.26082 1.04080 3.97% 26.22002 27.69871 25.94652
Oct 8, 2021 26.22401 -0.47368 -1.77% 26.69769 27.26788 26.04005
Oct 7, 2021 26.69769 0.05480 0.21% 26.64289 27.52658 25.79429
Oct 6, 2021 26.64289 -0.42586 -1.57% 27.06875 28.00318 25.10662
Oct 5, 2021 27.06877 0.62183 2.35% 26.44694 27.31763 26.05980
Oct 4, 2021 26.44495 -0.95024 -3.47% 27.39519 27.48777 25.47477
Oct 3, 2021 27.39918 0.47118 1.75% 26.92800 28.13950 26.55800
Oct 2, 2021 26.92950 0.63300 2.41% 26.29650 27.78950 25.85900
Oct 1, 2021 26.29150 2.30300 9.60% 23.98850 26.66950 23.60100
Sep 30, 2021 23.98550 1.12500 4.92% 22.86050 24.35550 22.73050
Sep 29, 2021 22.86100 0.74150 3.35% 22.11950 23.88950 22.04850

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; 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.”

Further reading

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