Chainlink vs Polkadot

Author: Samantha Downes

Find out how the two blockchain technologies differ

Chainlink vs Polkadot graphic
Chainlink enables other blockchains to run smart contracts using its ‘decentralised oracle network’ – Photo: Shutterstock
ChainLink / USD
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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 28 January 2022, there were more than 529 projects building on Polkadot.

What has happened to the price of Polkadot?

Polkadot’s current price, as of 28 January 2022, is fluctuating at about $17.73, with a market capitalisation exceeding $17.5bn.

  • The supply in circulation is 1,103,303,471 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. However, it has been on a consistent downward trajectory for the past three months.

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 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, 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 28 January 2022, the current supply equals about 47% of the maximum, with a market capitalisation exceeding $7bn.

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

Chainlink also features 700 plus pre-built oracle networks that deliver accurate price data to leading blockchains and Layer 2 solutions. 

What has happened to Chainlink’s price?

As of 28 January 2022 the Chainlink price is around the $14.94 mark. LINK has suffered huge losses – in excess of 70% –  since its 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 may be 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 above 30%.

LINK/USD price history

Date Close Change Chg% Open Min. Max.
2022-09-30 17.16525 0.16728 0.98 16.99797 16.90328 17.19319
2022-09-30 16.99996 -0.41052 -2.36 17.41048 16.96254 17.87116
2022-09-30 17.40648 0.19767 1.15 17.20881 16.8787 17.4346
2022-09-30 17.2128 0.65826 3.98 16.55454 16.52277 17.77323
2022-09-30 16.55653 0.24142 1.48 16.31511 15.40706 16.76752
2022-09-30 16.31311 -0.39442 -2.36 16.70753 16.12454 16.89033
2022-09-30 16.70654 -0.52492 -3.05 17.23146 16.47468 17.40801
2022-09-30 17.23245 0.70639 4.27 16.52606 16.34241 17.43107
2022-09-30 16.52706 0.22449 1.38 16.30257 16.2735 17.08303
2022-09-30 16.30157 0.09192 0.57 16.20965 16.0248 16.53933
2022-09-30 16.20565 0.68264 4.40 15.52301 15.44915 16.7325
2022-09-30 15.48708 1.64402 11.88 13.84306 13.51093 15.83167
2022-09-30 13.84406 0.86475 6.66 12.97931 12.81048 13.91708
2022-09-30 12.95337 -0.39355 -2.95 13.34692 12.90353 13.56624
2022-09-30 13.36488 -0.17112 -1.26 13.536 13.04829 13.64665
2022-09-30 13.52701 0.25559 1.93 13.27142 13.25439 13.56402
2022-09-30 13.27641 -0.25852 -1.91 13.53493 13.25145 13.78159
2022-09-30 13.53593 -0.64552 -4.55 14.18145 13.47126 14.34084
2022-09-30 14.2074 0.34032 2.45 13.86708 13.80839 14.3387
2022-09-30 13.86608 -0.10320 -0.74 13.96928 13.66122 14.08767

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 said: “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 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 467,009,549.52 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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