ONLY $1000: Invest in Polkadot or Cardano, $DOT or $ADA?

Polkadot and Cardano. $DOT or $ADA? Are we looking at two dinosaurs in the crypto space, or is there still time for redemption? Both projects are facing hard times. They both dropped out of the top 10 measured by market cap. In May 2021 they had spot #8 for Polkadot and #4 for Cardano. Currently, that’s respectively #20 and #12. Both are around 90% away from their ATH. They have been around since 2017-ish. However, the crypto sector is a dynamic and fast-changing sector.

Do both projects have it in them to turn things around? To become more relevant again and find back that former glory? The good news is that both have new features and changes coming up. Or they had them recently implemented. However, these should also be their lifelines to remain relevant.  So, if you had $1,000 to put in either $DOT or $ADA, which one would you pick?

What Do Polkadot and Cardano Have Cooking?

Both projects have a bit of crypto history. Polkadot released its whitepaper in 2016 and had its mainnet go live in 2020. Cardano saw the public light of day in 2017. The founders for both projects were also Ethereum founders. That’s Gavin Wood for Polkadot and Charles Hoskinson for Cardano.

I covered both chains extensively. Only two months ago, I looked at Cardano and I just covered Polkadot. In case you missed that, check the links. 

So, they both go back a while. However, as already mentioned, the crypto sector is dynamic. You nod off for a second, and you’re left behind. All the time, there are new projects popping up left and right. Not all of them can deliver what they promise. However, some can. They have newer, maybe shinier, or even better tech. Or better marketing.

Bottom line is, there’s always some new project knocking on their doors. They are more than willing to take the $DOT or $ADA place. And that’s what happened. So, what did Polkadot and Cardano do about this?

Polkadot 2.0

Well, let’s start with Polkadot. In its own words, it’s working on the rebirth of its network. That’s by means of Polkadot 2.0. 

Polkadot 1.0 is best known for its parachains. Projects can obtain such a parachain for a 2-year lease period by bidding on it. However, this can be expensive, so they use a form of crowdfunding for this. The picture below shows the architecture of a parachain.

Source: Polkadot docs

Project supporters can lock up their $DOT for 2 years as part of the bid or auction. Now, if the project wins the bid, after the 2-year period, the supporters receive their $DOT back and a reward.

Polkadot 2.0 got rid of the parachains and a new set-up is coming. This involves a technical upgrade with, among others, core time and elastic scaling. 

With the new core time, projects can rent time on the Polkadot infrastructure. It’s available on-demand or instantaneous and long-term or bulk. If a project grows and needs more core time, it can easily upgrade. 

Core time comes in the form of NFTs and you can fractionalize them. So, a different twist on their crowdfunding idea. However, this should make Polkadot more agile. Besides the tech upgrade, there’s also a UX upgrade. This involves a new website and a new visual design. So, this is Polkadot’s plan to remain relevant.

Cardano

Cardano does things differently. No wonder with Charles Hoskinson at the helm. He’s a character and is also not afraid of some occasional drama. Nonetheless, $ADA holders are loyal. Currently, 73% of $ADA holders hold $ADA for a year or longer. 

Another improvement was that MetaMask added a Cardano snap. In other words, you can now use your MetaMask for your Cardano transactions. However, there are also two other major events that happened. 

The Chang hard fork is the first one. This is part of their roadmap. It brings governance to Cardano. Cardano had 5 different eras on its roadmap, and the Chang hard fork is the last step.

• Byron — that was the foundation.
• Shelley — this brought decentralization.
• Goguen — for smart contracts.
• Basho — for scaling.
• Voltaire — brings governance.

So, the Voltaire era gives community members more input. In typical Hoskinson style, he called this a milestone for ‘the whole industry’. Not only for Cardano. However, it did not have a big impact on the $ADA price.

Here’s some more recent news with the potential to positively impact the $ADA price. Cardano has officially joined Bitcoin’s ecosystem. It’s the very first layer-1 blockchain to do this. 

It allows Cardano to tap into the massive Bitcoin liquidity. Cardano can do this more easily than other projects because it follows the same UTXO model Bitcoin does. Not only that, but it bridges the gap between Bitcoin and DeFi. This has huge potential for Cardano. Cardano makes use of the BitcoinOS Grail bridge for this. As Charles Hoskinson said, “Welcome home, Bitcoin.” 

Tokenomics on the Table

When looking at the tokenomics of both projects, we see two different set-ups. 

Polkadot has an infinite supply. There’s a 10% annual inflation rate. As you know, I’m not a big fan of such tokenomics. Nonetheless, the current $DOT price is $4.13. It has a $5.9 billion market cap. Out of the 1.5 billion total supply of $DOT tokens, 1.4 billion circulate. However, $DOT has a 59% staking percentage, so that’s good. 

Cardano, on the other hand, has a fixed token supply of 45 billion. However, after six years, there’s still only 85% of $ADA unlocked. The current $ADA price is 35 cents. It has a market cap of $12.3 billion. So, both projects don’t have the best tokenomics to show for themselves.

Where Am I Putting My $1,000, in $DOT or $ADA?

To be honest, I wouldn’t buy either of these two tokens. There are too many other projects with much more potential. In a way, both projects are indeed like dinosaurs. 

Yes, they have plans, they have good fundamental tech, but it seems all a bit too late. There are too many other, newer projects that promise bigger returns. For example, look in the AI, RWA, or infrastructure, especially among small and mid-caps. Tokens have much smaller market caps there, hence, bigger growth potential. 

$DOT or $ADA, on the other hand, are safer bets. So, if I had to choose, I find it hard to pick one between them. However, Polkadot still has its upgrade to 2.0 coming in early 2025. Hence, that’s why I would pick that one, if I only had these two choices. What are your thoughts on Polkadot and Cardano? Which one would you pick, $DOT or $ADA or something else?

Disclaimer

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