Polygon vs Polkadot: Which One Is A Better Investment?

What Is Polygon?

Polygon, which was first known as Matic Network, is designed to be a Layer 2 scaling solution for Ethereum, i.e., its main goal is to increase the speed of transactions and decrease their fees while keeping the Ethereum network secure and decentralised.

To this aim, Polygon uses sidechains, which are independent blockchains developed to connect with the Ethereum main chain to carry out some tasks. The Polygon platform is a place to go for many dApps (decentralised applications) developers as it provides Ethereum’s security level but with remarkably faster transactions and lower fees since Polygon is not as congested as the Ethereum network.

Polygon uses a Proof-of-Stake (PoS) consensus algorithm, meaning that holders of the MATIC token (Polygon’s native cryptocurrency) can help validate transactions and earn staking rewards.

Also, Polygon supports the Ethereum Virtual Machine (EVM), which lets existing Ethereum dApps be ported over to the Polygon network, which means more efficiency and accessibility.

Let’s see what top features make Polygon stand out among the many cryptocurrency and blockchain platforms in the market.

Read More: Introduction To DApps: A Beginner's Guide

Polygon Features

• High Scalability: Polygon uses a Layer 2 scaling solution to process thousands of transactions per second, making it a highly scalable platform.
• Low Transaction Fees: Polygon charges significantly lower fees than Ethereum, which makes it more accessible to users.
• Fast Confirmation Times: Polygon confirms transactions within seconds.
• Ethereum Compatibility: Being completely compatible with Ethereum, Polygon allows the current Ethereum dApps to be easily migrated to Polygon.
• Interoperability: Polygon communicates with other blockchains to provide seamless cross-chain transfers of assets and data.
• Developer-Friendliness: Polygon provides various tooling, documentation, and support to streamline building and deploying dApps for developers.
• Ecosystem Growth: Polygon’s ecosystem of dApps, projects, and partnerships enables consistent network development.

Now that we know the basics of one part of the story, let’s find out what Polkadot is and how it works to be able to compare the two projects and find the one that is a better investment.

What Is Polkadot?

Polkadot aims to be a next-generation blockchain platform that provides more interconnectedness, scalability, and interoperability in the blockchain. Polkadot uses the experience of its founder Gavin Wood, who has also co-founded Ethereum.

Polkadot has a multi-chain architecture, which lets different blockchains connect and cooperate, making Polkadot a suitable platform to build and deploy dApps that perform in various blockchains and networks.

Polkadot has a main relay chain that harmonises connections between different para-chains, which are independent blockchains connected to the relay chain. Para-chains are useful as they have various use cases or applications in smart contracts, DeFi, gaming, identification, etc.

Also, Polkadot’s governance system is fully decentralised as it lets token holders vote for the upcoming changes, from adding new para-chains to upgrading the protocol.

Polkadot platform is built on top of Substrate, a blockchain infrastructure for developers to develop and deploy custom blockchain applications, i.e., using Polkadot, developers can launch their own blockchain projects more easily.

To know more details about the unique features of Polkadot, scroll and read the next section!

Polkadot Features

• Multi-Chain Architecture: Using a multi-chain architecture enables Polkadot to connect various blockchains and provide cross-chain interoperability and scalability.
• Cross-Chain Transactions: On Polkadot, users can transfer assets and data among blockchains.
• Shared Security: Polkadot’s para-chains can share security resources offered by the main relay chain to increase security and resist attacks.
• Scalability: Thanks to Polkadot’s multi-chain architecture, users can expect high transaction throughput and scalability, which allow the creation of large-scale dApps.
• Governance: Polkadot supports community-driven decision-making and lets the holders of the DOT token (Polkadot’s native cryptocurrency) vote for changes.
• Interoperability: Polkadot is a multi-chain, i.e., it enables cross-chain transactions, meaning that it has high interconnectedness and interoperability.
• Customisability: Substrate, a blockchain development structure on which Polkadot is built, streamlines the customisation and deployment of blockchain applications.

Now that we know the backbones of both projects, it’s time to compare them to see which one can better fit our cryptocurrency portfolio. Let’s start with their key differences.

The Key Differences Between Polygon vs Polkadot

The following table summarises the key differences between Polygon and Polkadot, focusing on their creators, launch date, consensus algorithm, block time, transaction throughput, and supply.

What follows the table will address Polygon vs Polkadot regarding their

• Price History
• ROI, ATL, ATH,
• Consensus Mechanism,
• Architecture,
• The Latest Developments,
• NFT,
• Fees,
• Transaction Speed,
• Price Prediction,
• DeFi, and
• Staking.

Polygon vs Polkadot: Price History

• Polygon (MATIC) started trading on Apr 27, 2019, at $0.00547046.
• Polkadot (DOT) started trading on Aug 19, 2020, at $2.94.
• Polygon fell to its lowest trading price of $0.00314376 less than a month after its launch on May 10, 2019.
• Polkadot fell to its lowest trading price of $2.70 just one day after its launch on May 20, 2020.
• Polygon struggled in the $0.0055429 range for about two years and finally started to move upward on Mar 14, 2021, at $0.422974.
• Polkadot fluctuated in the $6 range for about four months and then started the upward trend on Dec 29, 2020, at $6.61.
• Polygon continued the uptrend and reached $2.45 on May 19, 2021.
• Polkadot continued the uptrend and reached $47.33 on May 15, 2021.
• Polygon (MATIC) experienced some ups and downs in the following six months and finally recorded its highest trading price of $2.92 on Dec 27, 2021.
• Polkadot (DOT) experienced some ups and downs in the following six months and finally recorded its highest trading price of $54.98 on Nov 04, 2021.
• Polygon went down in the next six months after its highest price level and reached $0.382169 on Jun 20, 2022.
• Polkadot went on a downtrend in the next six months after its highest price level and reached $7.50 on Jun 20, 2022.
• Today, on Apr 17, 2023, each MATIC is traded at $1.16.
• Today, on Apr 17, 2023, each DOT is traded at $6.72.

Although price history draws a general picture of a cryptocurrency’s financial performance since its launch, it’s not the only important monetary factor. We also need to closely examine Polygon vs Polkadot ROI, ATL, and ATH.

Polygon vs Polkadot: ROI, ATL, and ATH

ROI (Return on Investment) shows the level of profitability of a given cryptocurrency in specific time spans. ROI is shown in positive and negative numbers, with the negative numbers indicating investment loss.

The following table indicates Polygon vs Polkadot ROI in the recent year, month, week, and 24 hours.

All-Time Low (ATL) and All-Time High (ATH) are two other financial factors showing the lowest and highest trading price of a given cryptocurrency until today.

The table below shows ATL and ATH of Polygon vs Polkadot plus their differences compared to their tokens’ current price level to let you know the potential of each token.

Polygon vs Polkadot: Consensus Mechanism

Polygon uses a Proof-of-Stake (PoS) consensus mechanism, in which validators are chosen based on the number of tokens they hold and are willing to stake or lock up as collateral.

Validators validate transactions, add new blocks to the blockchain, and are rewarded with a portion of transaction fees and the platform’s native tokens.

PoS is more energy-efficient than Proof-of-Work (PoW). Learn more about Consensus Mechanisms: A Matter of PoW and PoS.

Polkadot’s hybrid consensus algorithm combines the elements of PoS and PoA and is known as GRANDPA (GHOST-based Recursive Ancestor Deriving Prefix Agreement).

Like Polygon’s consensus mechanism, Polkadot’s validators are selected according to the number of tokens they hold and want to stake, and validators must add new blocks and validate transactions.

However, Polkdot differs from Polygon because it uses a secondary mechanism called BABE (Blind Assignment for Blockchain Extension) to avoid network forking and ensure quick finality.

BABE is a PoA consensus algorithm that selects validators randomly. Also, BABE ensures fast block addition and high finality, making transactions irreversible after being added to a block.

Polygon vs Polkadot: Architecture

The following image depicts the similarities and differences between Polygon vs Polkadot regarding architecture.

Generally, while Polygon's architecture prioritises providing a Layer 2 scaling solution for Ethereum, Polkadot's architecture is designed to increase the interoperability among various blockchains, making it a better platform for developing complex dApps that require connectivity between different systems.

Polygon vs Polkadot: The Latest Developments

Crypto projects with active teams and ever-growing plans and developments are worth investing in as the teams behind the project do not see an end to their growth, and they keep developing and adapting to new situations.

Such projects have updated roadmaps, publish their goals and accomplishments, and involve the community in their way of development. They also clarify where they’re heading so the investors can choose the projects fitting their priorities.

Let’s check the latest developments of Polygon vs Polkadot to see in which direction they’ve been moving.

Polygon's Latest Developments

Polygon has recently tried to expand its ecosystem and improve its technology. Here are some of the latest developments in the Polygon platform:

• Integrating with DeFi protocols: Polygon is cooperating with some major DeFi protocols on Ethereum, including Aave, Curve, and SushiSwap, to increase transaction speed and decrease fees.
• Launching Polygon Studios: Polygon Studios is developed to support dApps on Polygon by funding, resourcing, and mentoring developers.
• Launching Polygon SDK: The Polygon SDK (Software Development Kit) streamlines developing dApps on the Polygon network.

Polkadot’s Latest Developments

• Launching Parachain Slot Auctions: The Parachain Slot Auctions create competition among teams that want the right to launch their custom para-chains on the Polkadot network.
• Integrating with Moonbeam: Moonbeam is a smart contract platform compatible with the Ethereum Virtual Machine (EVM). Integrating with Moonbeam makes Polkadot more attractive to Ethereum developers, and when they join, Polkadot is expanded.
• Launching Polkadot Treasury: The Polkadot Treasury is a fund controlled by the community to finance development projects.

Polygon vs Polkadot: NFT

Polygon and Polkadot are home to Non-Fungible Tokens (NFTs). Let’s see the comparison of their current status regarding NFTs in the following table.

Polygon vs Polkadot: Fees

Demand (network congestion) and activity level are two factors determining transaction fees; therefore, the transaction fee is not fixed. Here’s how Polygon and Polkadot adjust transaction fees.

• Being built on top of the Ethereum blockchain, Polygon uses Ethereum’s fee model, which depends on gas fees paid by users to execute smart contracts and transactions on the network. However, as Polygon is not as congested as the Ethereum network, it charges significantly lower gas fees than the Ethereum mainnet.
• Instead of gas fees, Polkadot charges transaction fees in its native DOT cryptocurrency, which secures the network and incentivises validators.

Polygon vs Polkadot: Transaction Speed

• Polygon’s Layer 2 solutions (Optimistic Rollups and ZK Rollups) can process up to 7,000 Transactions Per Second (TPS), which is remarkably higher than Ethereum's current throughput, i.e., about 15 TPS.
• Thanks to its sharded architecture and GRANDPA consensus mechanism, Polkadot enables parallel processing of transactions across multiple shards, i.e., up to 100,000 TPS.

Polygon vs Polkadot: Price Prediction

While price predictions are not 100% correct all the time, they give valuable information about a given cryptocurrencies future financial potential. Using price predictions, crypto investors can get a general idea of the level at which the coin’s price can perform.

The following table displays a general price prediction of Polygon vs Polkadot from 2023 to 2030.

Polygon vs Polkadot: DeFi

• Polygon is a leading DeFi platform thanks to its fast and cheap transactions. Many popular DeFi protocols like Aave, Curve, and SushiSwap have integrated with Polygon.
• Because of its interoperability features, Polkadot is a suitable platform for DeFi applications needing connectivity between different blockchains. Some DeFi projects on Polkadot are Acala, Moonbeam, and ChainX.

Polygon vs Polkadot: Staking

Both Polygon and Polkadot allow staking on their platforms. Here’s how their staking systems work.

Polygon Staking

• Polygon's staking mechanism is posDAO, which lets users delegate their tokens to validators who secure the network and process transactions.
• Stakers earn rewards as MATIC tokens.
• Polygon's staking rewards can range from 5-20%, depending on network participation rates.

Polkadot Staking

• Polkadot also uses a PoS consensus mechanism, letting users stake DOT tokens to help secure the network and earn rewards.
• Polkadot's staking mechanism is called Nominated Proof of Stake (NPoS), by which users select validators to secure the network and process transactions.
• Stakers are rewarded with DOT tokens.
• Polkadot's staking rewards can range from 5-15% depending on network participation rates.

Polygon vs Polkadot: Which One Is Better?

As we read about Polygon vs Polkadot in this article, both projects come with unique features making them stand out among the many crypto projects out there.

Fundamentally, both projects support NFTs, staking, and DeFi, charge reasonable fees, have versatile architectures and consensus mechanisms, and keep developing according to market demands.

However, Polkadot has a significantly better transaction throughput (100,000 TPS) than Polygon (7,000 TPS).

Financially speaking, Polkadot’s current price is about six times higher than Polygon’s. However, regarding the Return on Investment (ROI), we witnessed that Polygon has performed way better than Polkadot.

Regarding price predictions, the charts indicated that Polygon can reach about $22 by 2030 while Polkadot can hit $140 by then. But remember that nothing can be fully predicted in the volatile market of cryptocurrencies.

So, the question is which one is a better investment in the battle of Polygon vs Polkadot. The answer lies in your goals and priorities because no one can say one project is good for all investors.

But generally, Polygon can be a better investment for those who are more cautious and can wait. Polkadot can be a better option for those willing to spend a bit more and earn more in the future. Wiser investors keep both!

This article has tried to set bias aside and compare the essential factors investors need to know. Now, it’s your turn to put things together and make the decision that best suits your plans and risk tolerance.

Summary

Congrats! If you’re reading this, you have gained good knowledge about Polygon and Polkadot platforms. As mentioned above, Polygon may appeal to investors who enjoy DeFi, and Polkadot's interoperability and scalability make it a favourable option for enterprise applications.

All in all, to make a rational investment decision, you need to do your own research, and to this aim, you can get help from Cryptologist, use its all-in-one free crypto screener, and read its detailed crypto project reviews.

Read More: Cardano vs Polygon: Which One Is A Better Investment?

FAQ

The following Q&As about Polygon vs Polkadot will answer any further questions you may have about these two leading projects.

Does Polygon Compete With Polkadot?

Polkadot charges lower fees and has a growing dApp ecosystem loved by developers. Polkadot aims to expand its interoperability in the crypto sphere. While Polygon concentrates on Ethereum networks, Polkadot aims bigger.

Does Polygon Have A Future?

Yes, price predictions indicate that Polygon’s MATIC token can increase in price by about 115% by 2025, which can amount to 533% by 2030.

Can Polygon Reach $10?

Yes, some crypto experts expect Polygon to reach $10 in 2028.

Will Polkadot Reach $10?

Yes, price predictions indicate that Polkadot has the potential to reach $10 by the end of 2023.