Cosmos vs Polkadot: Crypto Comparison for Investors
Find out everything you need to know about Cosmos vs Polkadot. This article has a full breakdown of the similarities and differences between the two cryptos.
Additionally you will find out about the teams, funding, development, controversies and any other related information. It should help you understand Cosmos vs Polkadot and what investors have been looking out for.
Note that this article is meticulously researched, but is not meant to serve as financial advice. If you intend to invest in crypto you should seek a financial advisor.
Cosmos vs Polkadot Similarities
Both Cosmos and Polkadot are 2 projects that are very similar to each other. Cosmos and Polkadot are called cryptocurrencies, but ‘cryptocurrency’ is more of an umbrella term.
Specifically they are what are known as crypto commodities, which is one of the four types of cryptoassets. Crypto commodities have their own tokens, but they do not operate exclusively as a cryptocurrency like Bitcoin. They are platforms that have very flexible code.
Their code is set up to allow other blockchains to be built upon them. This difference is explored in more detail in our comparison of Bitcoin and Waves.
Cosmos and Polkadot are sometimes seen as competitors to Ethereum which is another crypto commodity. They are similar to Ethereum in many ways. However Cosmos and Polkadot are trying to improve on what Ethereum has to offer. One improvement is focusing on interoperability.
Interoperability is quickly becoming a really important factor to the crypto space. Without it, the space would fragment. In other words each crypto would have its own ecosystem and the individual blockchains would not interact with each other.
Platforms would also need to embrace Bitcoin. As it stands Bitcoin is the largest network and leaving it out would be a strategic mistake. For these reasons, not having any cryptos offering interoperability would hinder mass adoption.
So instead of different blockchains being in competition with each other there is collaboration. Cosmos and Polkadot are leading the way and working on much needed interoperability. However the platforms are developing interoperability using different methods.
What You Should Know About Polkadot
Polkadot was founded by Dr Gavin Wood, Robert Habermeier and Peter Czaban. The most well-known is Gavin.
Gavin already had 15 years of experience coding before he co-founded Ethereum. While at Ethereum, Gavin was deeply involved in different aspects of the platform.
Gavin did a lot of the ground work and gained critical hands on experience. He became the Chief Technology Officer for Ethereum and was in the role for just over 2 years. Gavin ended up leaving Ethereum to found Polkadot.
On the other hand Robert may be young, but he is bright. Robert was named Theil Fellow in 2018. The Theil Fellowship is about dissuading young people from attending tertiary level education. Instead they should chase their ambitions.
Peter is the Technology director of the Web3 Foundation where he does research and development for Polkadot. Peter has a Masters of Engineering from the University of Oxford.
Polkadot through their Web3 Foundation launched an ICO (initial coin offering). They raised $140 million by the end of October 2017. However there was an issue with the crypto wallet and they ended up losing half the funds.
With new technology there is always a risk of bugs and vulnerabilities that need to be ironed out. Unfortunately this issue costed the team dearly. Luckily they still had a substantial amount to move forward with the project anyway.
Regardless, the amount raised first off showed investors had some faith in the Polkadot team. Notwithstanding the fact that Polkadot had nothing to show for their project at that point. All they had was a white paper.
Later, the Web3 foundation went on to raise more funds in 2019 and 2020.
Polkadot is known for being the most complex crypto project.
As soon as the team got started on Polkadot they blazed through an impressive amount of work. Additionally they have been heading in a good direction.
You can check Polkadot’s progress on the Polkadot Network on Medium. Gavin Wood provides timely updates on releases and developments on Polkadot. Additionally at the end of every year in December, Gavin also publishes round ups. In his round ups he gives an overview of Polkadot’s progress over the year.
Here are the round ups for the last 3 years on Polkadots progress:
Although the project is progressing well overall there were some delays here are there. That includes the release of the parachains which is a vital part of Polkadot. The release was meant to happen in Q1 2021. However Polkadot ended up releasing them at the end of 2021. Here is the update on the Polkadot site Parachains are Live!
Polkadot’s Future is More Certain
At some point there was some uncertainty with Polkadot. This is not necessarily critique in itself as every project has to start from somewhere. It is more to highlight to you that the project is still young and there was not much to go by at some point.
This is mainly because the team had their work cut out for them and they needed to release major features. Like for example the parachains. However since their release things are looking brighter for Polkadot.
Additionally Polkadot clarified that the parachains are interoperable between themselves. They are not just interoperable with blockchains outside Polkadot. This is a big plus.
Moreover the auction system for the parachains launched and is working well. There are 11 auctions in total that are happening. The last one starts on March 3rd 2022.
The rules on Polkadot allow for confiscating tokens called ‘slashing’ to act as a fine for misbehaviour. There are several reasons why someone could have their funds slashed. One of those examples would be if a validator went offline.
Polkadot encountered an issue in September 2020 where a validator on the network went offline for 14 hours. Not all cases are the same, but in this case it posed a serious security and monetary risk. Their stake got slashed and there were some other repercussions.
Unfortunately a motion got proposed to forgive the validator and it passed. Polkadot forgave the validator and returned the funds. According to some this sets a bad precedence.
What You Should Know About Cosmos
The Cosmos founders may not have so much experience as the founders of Polkadot. However they have sound knowledge in blockchain and related technologies.
Jae Kwon had just under two years and a half experience in development before starting Cosmos. Jae was first at applying Byzantine Fault Tolerance (BFT) to a Proof of Stake blockchain.
Ethan Buchman met Jae at a conference in 2015 and joined forces to develop Tendermint. The co-founders published the Cosmos whitepaper.
In its early days Cosmos was getting a lot of attention. Cosmos won the ‘Most Innovative Project’ award in the Shanghai Blockchain week in 2016.
As a result of the positive attention Cosmos got a good response when it launched its ICO. It managed to raise $16.8 million in 30 minutes. It is one of the most in demand ICOs in history, especially considering there were many in 2017.
Additionally Cosmos was conservative when it came to managing its treasury. In 2019 Cosmos had 1,400 Bitcoin and over 50,000 Ether coins. Cosmos managed to turn a $17 million ICO into $104 million according to CoinDesk.
Things That Did Not Pan Out So Well For Cosmos
The Cosmos team has made a strategic mistake that undermines Cosmos. They decided to make the use of the platform free for others to build their blockchains. It also included free support so that companies get their blockchains up and running.
As a result there are several high profile companies that built their blockchains on Cosmos. Like for example Binance Chain and Crypto.com Coin. These companies have made millions from building their own blockchains. In contrast other projects require companies to pay their way and use the platforms own native tokens to fund projects.
This has two advantages; firstly because a project like Cosmos can generate more revenue. Secondly because it creates a use case and demand for coins and the price of the coin will go up.
As the moment the Cosmos token called Atom only has a couple of use cases on the network. As a result Atom would be valued on the value of the network alone.
Additionally team members have had frequent disagreements. Here is an article on CoinDesk highlighting the internal tensions: what is going on with Jae Kwon and Cosmos?
There were also issues with allocating resources to key projects and an ‘adverarial environment’. However Jae Kwon has stepped down from Cosmos. Unfortunately these issues have hindered Cosmos from where it should have been at this point in time.
However the Cosmos team has come up with a new road map. At the moment they are working on some projects geared towards increasing demand for Atom coins. Like this they can increase the value of the network.
Cosmos has had quite a bit of good news coming in. For example in October 2021 a Malaysian bank adopted Cosmos technology to build a new digital banking system. The idea is to create a system that is more fair across the board. So all parties whether network users, consumers or companies will benefit from a more transparent, secure and cost-effective network.
Osmosis which is Cosmos’s largest DEX raised $21 million in October 2021. As of 8th February 2022 Osmosis has $1.3 billion locked in its network. You can check more updated values here on Osmosis.
In December 2021 the Gravity DEX (decentralised exchange) launched. This project is meant to help Cosmos gain some much needed revenue. Additionally Gravity provides interoperability of the Cosmos blockchains with the Ethereum network.
The bridge still needs to be connected. However the first bridge the team is going to connect is going to be Osmosis.
Cosmos has a features page which you can check out to know the latest developments. You can find out about release and updates on Cosmos here. It will give you an idea of their new road map.
Cosmos vs Polkadot – Scalability
When it comes to scalability in the Cosmos vs Polkadot debate neither has a clear advantage. When people say scalability mostly they are referring to how many transactions per second (tps) the network can handle.
A lot of the time, blockchain values are compared to Visa which can support up to 65,000 tps. This is because it has become a benchmark by how much blockchains are expected to scale. In their primitive states Cosmos and Polkadot do not come anywhere close to the 65K figure. They will process more like 1,000 tps at first.
However both Cosmos and Polkadot platforms were built to scale. Polkadot is projected to have over 166,000 tps. Although one of the founders has mentioned it could go up to 1 million tps.
On the other hand Cosmos can scale horizontally and keep adding hubs. For this reason Cosmos could potentially have an infinite amount of tps.
At this point it is still early days for both the Cosmos and Polkadot networks. So who knows what will happen till then. What is for sure is that both networks could potentially support many more tps than Visa.
Although you may ask why would you need any more than 65,000 tps it would definitely be beneficial. Especially considering blockchain is aiming to bank the unbanked.
Cosmos vs Polkadot Percentage Gains
There are plenty of crypto commodities that are referred to as Ethereum killers. Cosmos and Polkadot are two of them even though they are more collaborative projects. So the label Ethereum killers does not quite fit.
Ethereum killers are meant to be other crypto commodities that are going to surpass Ethereum in popularity. As a result the price gains of the crypto should go up.
Whether or not this will happen to Cosmos or Polkadot would depend on a lot of factors. So far their percentage gains have been good. Although in fairness we are in a crypto bull market so all coins will benefit from the cycle. (If you do not know what the crypto cycle is you can have a look at the Bitcoin halving.)
Polkadot Percentage Gains
Data sourced from CoinMarketCap
Cosmos Percentage Gains
Data sourced from CoinMarketCap
At the moment Cosmos is doing better than Polkadot this year. It is even slightly outperforming Ethereum which had 404% percentage gains in 2021.
Long Term Considerations
Polkadot and Cosmos are both centralised. It goes against the whole idea of blockchain technology bringing in much needed decentralisation.
Of course Polkadot and Cosmos are improving the issues of previous crypto commodities. However the good work they are doing could be undermined if people feel they are centralised. Both cryptos would eventually suffer from lack lustre performance in the long run.
An example of this is EOS. Unfortunately validator collusion on the EOS platform ended up affecting the price of EOS. This is all outlined in an article on CoinTelegraph: Perceived centralisation could kill PoS networks.
Cosmos vs Polkadot Conclusion
Cosmos and Polkadot both bring the benefits of crypto commodities that are able to scale. Additionally they have the added benefit of being interoperable. Interoperability is something they have over Ethereum. Unlike Ethereum, Cosmos and Polkadot are speculative at this point. The same could be said of investing in Waves.
Ethereum’s future is more certain than other crypto commodities. This is because it has the benefit of being the first mover in the space.
The Polkadot team is a good team and investors had high expectations. It is the reason why Polkadot raised millions of funds in their ICO launch. Investors faith was not misplaced. In fact the team have done a lot of good quality work.
However it is still new and there is still more ground work that needs to be done. The good thing is the main features like the parachains and the parachain auctions were launched. Unfortunately the network may have eroded the faith of some investors at the beginning. This was when the community decided to forgive a validor when they technically shouldn’t have.
So far it has not had a lasting impact on what the community thinks of Polkadot. However if more situations like this pop up in future it could damage Polkadots reputation.
Cosmos might be further along than Polkadot development wise. However the Cosmos team did not get along and it kept the project back. One thing they aced is their management of funds they raised from their ICO launch. The team held onto crypto investments and the value of their funds increased by 500%.
Both Polkadot and Cosmos have had phenomenal gains this year because of where we are in the cycle. Cosmos has really outperformed Polkadot in 2021.
Their value in the long term is going to be tied partly with what their team is able to deliver. Additionally it will depend on whether people outside the space take issue with them being centralised. If they do then they could suffer the same faith as EOS.
Frequently Asked Questions
What are the similarities between Cosmos and Polkadot?
What are the differences between Cosmos and Polkadot?
Is Polkdot or Cosmos better?
Will Cosmos or Polkadot make more gains?
This is not meant to be financial advice. Consult a financial advisor if you are thinking of investing in cryptocurrency. We may make commission fees from products or services recommended on this site.