Is CARDANO-POLKADOT universe pre-planned?
From whatever angle you look at things, it boils down to a single conclusion: one is a backup!
In a nutshell:
- Both Wood and Hoskinson came from Ethereum — both leaving after disagreeing with Buterin about running Ethereum as a non-profit. Therefore, they a) share the same vision of the business, and b) have similar drives.
- Cardano aims to connect legacy systems with blockchain. To do that, they must first bridge blockchains.
- Polkadot aims to become the internet of blockchains. However, Cardano’s ERC-20 converter means that they are aiming for the Polkadot’s fishing pool also. (Just in case?)
- Cardano also seems to be a more ambitious project than Polkadot. Perhaps it is merely a result of different paths taken?
- Cardano has a fixed total supply of ADA tokens — which doesn’t make much sense unless you want to squeeze more money from the project but makes ADA deflationary crypto nevertheless.
- Polkadot’s DOTs, on the other hand, are uncapped and thus, inflationary by nature. (Two different strategies to cover the playing field?)
- If both turn successful and, ultimately, merge, the newly created entity would become a force to reckon with.
- If, however, one fails to deliver, the other can simply pick up where the failure left off.
Too far-fetched theory or?
Meet…
CARDANO (ADA)
A THIRD-GENERATION SMART CONTRACT PLATFORM RUNNING ON ADA NATIVE TOKEN
Founded in 2015 by Ethereum’s co-founder and early Bitcoin developer, Charles Hoskinson, tech entrepreneur and mathematician, and Jeremy Wood, former Ethereum’s Operations Manager, Cardano is considered a third-generation smart contract platform.
It is a project that aims to become the global financial and transacting operating system that solves three crippling issues of the currently existing blockchains:
1. Scalability
2. Interoperability
3. Sustainability
Officially launched in September 2017, Cardano is currently ranked #5, with a market cap of $44,410,680,022 and a circulating supply of its native token, ADA, of 32,082,747,476 coins (max. supply of 45,000,000,000 ADA coins).
Governed by the three institutions:
· Cardano Foundation, responsible for support and growth of the ecosystem,
· IOHK, a development spearhead of the project, and
· Emurgo, which works to create a commercial adoption of the platform,
Cardano project is using a unique peer-review process to implement a high-assurance code; thereby, creating the first provably secured protocol through partnerships with universities, governmental institutions, and the scientific community.
Gradually, these peer reviews are upgrading the platform’s unique two-layer architecture:
1. Cardano Settlement Layer responsible for generating new blocks through a proof-of-stake consensus, and
2. Cardano Computational Layer that a) contains information on why transactions are verified, and b) enables the building of decentralized applications and, thus, sidechains. It also includes the recently launched innovative ERC-20 converter that enables blockchains previously build on that Ethereum protocol to safely migrate to the Cardano network.
Bitcoin’s and Ethereum’s proof-of-work consensus algorithm is now notorious for its excessive energy consumption, high fees generated by miners, and extremely limited TPS (transactions-per-second).
In contrast, Cardano’s non-mining proof-of-stake protocol mitigates these problems by enabling block validation at the fraction of the cost while being able to execute hundreds of transactions per second (at the time).
The immediate and long-term scalability issues of Bitcoin and (current) Ethereum networks in terms of limited TPS, high bandwidth, and energy consumptions, and data scaling are solved through a reverse paradigm.
→ Adding new users to the network automatically increases:
1) The number of transactions per second
2) Network resources, and
3) Data storage — without compromising the security of the blockchain.
This is achieved through innovative technologies such as Ouroboros (proof-of-stake algorithm) and soon, RINA or Recursive Internetwork Architecture that ensures stability in ecosystems with massive and, most importantly, incrementing volumes of data.
In a nutshell, Cardano aims to “trim” the data contained in the blockchain to make the system scalable by reducing the overall network’s weight.
This will be done through the intelligent implementation of already available means such as pruning, subscriptions, compression, and sidechains that, as a smart contract platform, Cardano enables by default.
The underlying reason for this data partitioning is to, ultimately, achieve complete interoperability.
Or, in other words, to build the Internet of Blockchains as the first stage in bridging different legacy (e.g., SWIFT, ACH) and blockchain protocols (e.g., Bitcoin, Ethereum, Ripple); thereby, merging the traditional, largely centralized financial systems with those residing on the blockchain.
On the surface, a closely similar attempt has been made by the Polkadot blockchain project that is, virtually, a Cardano replica founded in 2016 by another former notable Ethereum developer, Dr. Gavin James Wood, the inventor of Solidity, a programming language used to write smart contracts. However, Polkadot and its native token, DOT, has somewhat unclear governance and a series of additional limitations that give Cardano a slight competitive edge (when observed independently).
CARDANO’s “ARTSY” ROADMAP
Unlike traditional blockchains that rely on the technical legacy of Bitcoin, Cardano utilizes a complex peer-reviewed methodological approach in development that occurs simultaneously through five stages that are rolled out one after another in a sequential manner upon finalization.
→ After establishing the foundation during the Byron era, with Shelley, Cardano has successfully decentralized the core of the system. Recently, they have rolled out Goguen, the third “era” that releases the true power of the Cardano platform.
→ With Goguen, the platform introduces smart contracts, and adds the ability to build stand-alone decentralized applications; thereby, slowly building the future scalability and interoperability that will be available in the Basho stage.
→ In the final phase of the development (Voltaire), Cardano resolves the problem of long-term sustainability and governance. Voltaire will introduce the so-called, Treasury and Cardano Improvement Proposals based on a constitutional principle rather than forking utilized in today’s blockchains (e.g., Bitcoin → Bitcoin Gold; Ethereum → Ethereum Classic).
The proposed governance model called Cardano Improvement Proposals is due to evolve into machine-understandable conditions that eliminate any need for (biased) human involvement.
But one of the most prominent signs of the future global adoption is the validation of Cardano by top financial lawmakers in Switzerland, governments, and national universities on three continents; most notably the collaboration with the Ethiopian government that plans to utilize Cardano in identity and record-keeping system of its five million students.
Additionally, companies and government-approved institutions are lining up as Cardano’s partners in recent years, after recognizing its core potential. For instance, a Dubai-based crypto investment fund, FD7, recently swapped 75% of its Bitcoin asset or some $750 million to buy ADA and DOT. (An interesting choice, isn’t it?)
Conclusion
- Given that the total supply of ADA tokens is limited, the price will inevitably rise in the upcoming period. (which is yet another intriguing topic)
- Experienced leadership and veteran developers can tackle even the most complex issues connected with the future generations of blockchain.
- Security and scalability provided through the layered architecture and decentralized nature of the blockchain ensure a steady adoption rate.
- Considering the innovation aspect of the project, Cardano has great potential because it moves to solve critical problems that are currently keeping the blockchain technology detached from the legacy system we commonly use for transactions and record-keeping.
Now meet…
POLKADOT (DOT)
AN OPEN-SOURCE MULTICHAIN PROTOCOL
Different blockchains (e.g., Ethereum, NEO, Binance Chain) are using different consensus protocols and technology. This, in turn, disables them to communicate and, most importantly, cooperate with each other in a seamless and functional way.
The Polkadot project, developed by a Swiss-based Web3 Foundation, aims to solve that problem and become the so-called, Internet of Blockchain.
Launched by Dr. Gavin Wood, co-founder of Ethereum, Web3 Foundation was created for a single purpose: to bring a fully decentralized web that is both functional and user-friendly.
Polkadot, as a flagship project of Web3, plays a central role in that effort since it is attempting to bring dozens of incompatible technologies under the same roof.
Once achieved, the cross-chain interoperability should, potentially, enable Web3 that is completely user-controlled and that simplifies the creation of apps and services.
By connecting public and private (enterprise) chains, oracles, permissionless networks, and a host of future technologies, Polkadot enables independent blockchains to transact with each other in a trustless environment.
To achieve that ultimate goal, Polkadot’s technology architecture consists of (or will consist of, eventually) of four main components:
1. RELAY CHAIN (launched) — a central nervous system of the entire project that facilitates consensus and interoperability across multiple (different) chains while maintaining the maximum level of security without compromising the governance of individual chains.
2. PARACHAINS (launched, but only on a testnet) — like Ethereum’s ERC20 protocol, Polkadot’s parachains enable the creation of independent blockchains with individual tokens.
3. PARATHREADS (in development) — these are, effectively, parachains, but built for temporarily per-block-basis participation on the network for those blockchains that either cannot lease a dedicated parachain slot or don’t find it useful to hold the Polkadot parachain on the long term.
4. BRIDGES (in development) — or Cross-Chain-Message-Passing (XCMP) is the core of Polkadot’s mission to connect otherwise incompatible, sovereign blockchains and enable them to communicate to each other.
In the center of all of this is DOT, Polkadot’s native token that has three main purposes:
1. Network governance
2. Operability
3. Bonding parachains
Polkadot uses sharding to enable fast transactions in a multichain environment that allows the cross-chain transfer of unlimited asset types and data. However, for any of this to happen, DOTs have to be staked since the project is using a NPoS[1] (Nominated Proof-of-Stake) consensus for governance.
Staking, quite possibly, drives the nominal price of the token even though it is inflationary by nature without a fixed supply and the project is still largely in a development phase. Regardless, DOT is currently trading at $20.04 and has a 24-hour trading volume of $1,512,056,471 with a market cap of almost $20 billion and a little less than a billion tokens in circulation.
Note that, this seemingly “high” circulating supply is mostly the result of the redenomination of DOT in August 2020 when all balances got increased by the factor of 100.
Polkadot’s roadmap
Since the launch, Polkadot has gone through a series of (planned) upgrades organized in phases, starting with the so-called, PoA or Proof of Authority in the very beginning where only Web3-owned validator nodes governed over the network.
In the next phase, once a satisfying number of validators have staked their tokens, the project rolled out NPoS consensus during which, the network was running with a decentralized set of validators.
Eventually, this genesis NPoS was substituted by Polkadot’s originally planned governance model that consists of the Council and Technical Committee, by which, the governance was, effectively, handed to token holders. And the first thing they did was lifting a transaction balance restriction; thus, pushing Polkadot into the next phase that rolled out parachains, but only on Kusama testnet.
In other words, the Polkadot project is still far from achieving its end goal and become the bridge of sovereign blockchains. And its closest competitors, Cosmos (ATOM) and Polygon (MATIC) are, in a few important segments, ahead of Polkadot.
To conclude…
A logical question comes to mind: what are the odds that Polkadot literally persuades independent blockchains such as Ethereum, NEO, Binance Chain, Cosmos, and others to put their egos aside, discontinue the race to the top to become the leading (read: the only one) globally accepted blockchain, and, ultimately, buy a parachain slot and move under the Polkadot’s governance just so they could transact among each other (under the pretext of building Web 3.0)?
The more plausible outcome is that all these blockchains will come up with the consensus protocol that would, ultimately, enable independent cross-chain communication without a third party acting as a mediator (the core promise of the blockchain, by the way).
Still, a number of high cap investment firms are opening exposures to DOT prices through ETP products, namely Goldman Sachs, JP Morgan, and UBS. This ensures that Polkadot is here to stay for some time.
But if Cardano and Polkadot merge — given, of course, that their underlying individual goals are achieved, the world would wake up to a brand new beast ready to shake up the world order.
Now we can see the brilliance of the let’s-split-it idea. There are no guarantees. One or both might go down at any given moment. However, as long as one is alive, the money is pouring in and the boys can continue their overly expensive game.
(Which blockchain projects, in a nutshell, really are — a bunch of boys who are given billions to play around with but, most often than not, they come up with nothing.)
Maybe I’m completely off track with all of this, but no matter how I analyze things, a pre-planned strategy of building two parallel and seemingly independent projects simply resonates. I would be surprised and utterly disappointed to learn that Wood and Hoskinson didn’t plan the split-and-merge strategy to beat not only Ethereum and Buterin, but all the other pretenders for the Eth’s throne.
[1] In Delegated Proof of Stake networks, validators are weighed according to their stake. In Nominated Proof of Stake, nominators select validators they trust. In a case of a bad validator, DPoS delegators are not subject to loss of stake, while nominators in NPoS are. This, at least in theory, further strengthens the network’s security.
