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As Ethereum gas costs have skyrocketed over the past year, many investors are looking for alternatives to the blockchain. In November 2021, the price of Ethereum fell, while several small smart contract blockchain platforms rose significantly. Both Polkadot and Solana are projects that seek to improve current blockchain technology by implementing more scalable consensus mechanisms. Polkadot aims to connect blockchains to improve interoperability and scalability. Likewise, Solana is a blockchain focused on speed and low fees.
What is Polkadot?
Polkadot is a multi-chain network that connects blockchains. Most blockchains operate completely independently. For example, you cannot send Bitcoin (BTC) to the Ethereum network because they work independently. This limitation is often seen as a problem for the adoption of cryptography, as the 2 separate networks cannot interact directly.
Polkadot seeks to solve this problem by connecting blockchains, or as they call them, “parachaines”. These chains work in parallel and communicate with each other, hence the name. Polkadot already has over 100 channels on the network and can process up to 1 million transactions per second. However, the project is still in development and in the “pre-chain deployment” phase.
Although Polkadot’s governance and NPoS systems have not been officially released, Kusama is a project that tests Polkadot’s software. Kusama allows users to create projects and test them on multiple channels. Kusama is a crucial part of Polkadot’s release, as it gives developers feedback on the platform. Once Polkadot is released, the 2 platforms will combine.
Moonriver is another important aspect of the Polkadot network. Moonriver allows users to test their projects and have them verified. It is also compatible with the Ethereum Virtual Machine (EVM), which allows the project to use the creative power of the Ethereum network. Moonriver will play a vital role in helping developers create useful and powerful projects on the Polkadot network.
What is Solana?
Solana is a unique blockchain that primarily focuses on speed and low costs. It allows almost anyone to create new projects on the chain through the use of smart contracts. Additionally, the chain supports a variety of functions, ranging from Decentralized Finance (DeFi) to NFTs.
Solana allows anyone to deploy smart contracts on their blockchain. Smart contracts are programs that can automate tasks and save time. Smart contracts use conditions to automatically perform tasks. For example, a smart contract might say that if someone sends me ETH, send them back a note saying “Thank you”. In this situation, a smart contract would save the user time by automatically replying to each person who sent them ETH. Obviously, this is a simple example, and smart contracts can be used in many other situations.
Solana is also known for its speed and low costs. Payments sent to the Solana chain are verified within seconds and cost an average of $ 0.000025, functioning as a key aspect of the Solana chain as many crypto issues involve transaction fees and speed. Solana is able to solve the problem of high transaction fees and slow speeds through a Proof of History (PoH) consensus model.
Proof of stake vs. proof of history
Solana uses a PoH consensus model to accurately and efficiently verify all transactions in the chain. The PoH model is different from traditional consensus models.
The PoH model works by arranging all transactions in chronological order using a verifiable delay function (VDF). Once the transactions are sorted, they are returned to the validators for verification. Solana has strict requirements on who can become a validator as it does not need as many as other verification methods.
A good analogy for PoH is that of a puzzle. In traditional consensus models, validators receive all the pieces of a puzzle and are responsible for putting them together correctly. Solana’s PoH gives validators puzzle pieces with numbers on the back. This process allows fewer people to complete the puzzle in less time because the pieces are already in order. Validators must determine if any parts are missing or do not belong. A PoH model makes the process of solving a puzzle or verifying transactions much faster and more efficient.
When Polkadot is fully functional, it will use a Nominated Proof of Stake (NPoS) consensus model to verify transactions. An NPoS model allows token holders to lock in their position on the chain in order to receive the opportunity to validate transactions and earn rewards.
When users wager their tokens on traditional PoS blockchains, they will have the opportunity to earn a block reward. However, generally only one person can earn this block reward. To combat this, users will place their funds in separate pools in the chain. This pooled money will be put into play and will increase the chances of winning a block reward. When a block reward is earned, the pool will distribute it among the pool members.
This system has a problem because funds are stored off-chain and the pool can have a lot of power. Polkadot’s NPoS allows these pools to be on-chain. Players can pool their funds in a validator and earn bulk rewards that way. Pickers appoint validators to represent them, allowing the average picker to earn bulk rewards while keeping the funds in play on the chain.
What has more room to grow: SOL or DOT?
In terms of market capitalization, DOT has more room for growth. DOT’s market capitalization is currently just over $ 36 billion, while SOL’s is over $ 60 billion. It would be easier for the DOT to increase its market cap as a percentage of earnings because it is smaller.
However, utilities will most likely play a larger role in overall growth. For both tokens, future utility can lead to price increases. For SOL, the focus on speed and low costs may attract Ethereum users who are fed up with high fees. If this were to happen, the price of SOL would almost certainly increase. However, ETH2.0 hopes to tackle the problem of high fees. If Ethereum can keep its fees down, then SOL may not be as useful.
Polkadot hasn’t been fully released yet, and the developers haven’t given a set release date. If the project is published successfully and can help with scalability and interoperability issues, DOT certainly has room to enjoy it. However, if the release is taking much longer than expected, or if another project fixes the interoperability issue, DOT may not be as necessary.
The future prices of the two tokens will be largely determined by future utility. If the projects become extremely useful, the price will likely increase. Conversely, if the projects offer minimal utility or another project offers a better solution, then the price may depreciate.
So, what could be better: Solana or Polkadot?
Because the 2 projects are so different, it’s impossible to say which one is the best. Polkadot hopes to tackle the scalability and interoperability issues of blockchain technology, while Solana is a blockchain that hopes to deliver speed and low fees. Although the 2 projects are different, they both seek to improve the way crypto is used. If they can achieve these goals and provide unique ease of use, then projects can become the backbone of the blockchain ecosystem.
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