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According to analysts, Polkadot emerged as one of Ethereum’s main competitors in 2020. After the explosive decentralized finance (DeFi) cycle from July to September, the demand for high-capacity smart contract protocols has increased.
Of course, discussions began to emerge about which blockchain networks could realistically compete with Ethereum in the long run.
How could Polkadot compete with Ethereum?
Polkadot and Cosmos have always been at the forefront of discussions, given some of their similarities to Ethereum.
Polkadot, in particular, has a conceptual infrastructure project similar to ETH 2.0. They both divide their blockchain networks into many sub-pieces so that transaction verification can become more efficient.
Ashwath Balakrishnan, an analyst at Delphi Digital, said that with ETH 2.0, the Ethereum blockchain is “split into 64 pieces”. These pieces are called fragments, which connect together using the Beacon Chain.
This system, called sharding, can theoretically optimize the way Ethereum processes information. Rather than an entire community examining all the information together, a designated community or validator verifies the data on each fragment.
Balakrishnan found that the Polkadot relay chain is conceptually similar to the lighthouse chain. He explained:
“Polkadot’s Relay Chain is similar to the Beacon Chain, creating the blockchain infrastructure built with Substrate to seamlessly connect to Polkadot. These independent blockchains are called “parachains” “.
As Ethereum and Polkadot move closer to scaling by dividing their blockchains into many pieces, the two protocols share an amazing similarity. In terms of infrastructure and technology, these two protocols would likely be in direct competition in the long term.
But Balakrishnan said there is some skepticism towards Polkadot as well. Although Polkadot’s technology remains compelling, the analyst said the on-chain governance system early in the protocol and the upcoming ETH 2.0 remain like roadblocks.
The biggest obstacle to Polkadot would probably be ETH 2.0
The ETH 2.0 mainnet is expected to launch in December if ETH2 deposits reach the 524,288 ETH threshold.
If ETH 2.0 were launched, Balakrishnan said the developers would be left with a dilemma. They would have to choose between staying on Ethereum with ETH 2.0 or migrating to a completely new protocol which is Polkadot. He said:
“The design of DOT is elegant and solves scalability problems very well. But there are some question marks First, on-chain government is young and unproven. Decred and Tezos have been pushing the government in chains for a while and have not had the success imagined by supporters. Secondly, Polkadot’s app layer is a recreation of Ethereum. With the scalability improvements coming to Ethereum via L2 and ETH 2.0, it remains to be seen if there is a real catalyst for manufacturers to fully migrate or even mirror their protocols on Polkadot. “
For the growth of broader smart contracts and the DeFi ecosystem, the emergence of a true competitor against Ethereum remains a positive net development.
Polkadot, currently in ninth place by market capitalization, is on the rise 0.71% in the last 24 hours. DOT has a market cap of $ 3.78 billion with a 24-hour volume of $ 396.67 million.
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