DOT, the native crypto currency of the Polkadot platform, has been on the rise recently. It has risen to fourth place by market capitalization, but is its current position guaranteed compared to Ethereum’s value?
BeInCrypto looks at existing platform analysis to compare DOT vs ETH price and their network usage. Estimation of future production capacity is one of the factors that guide the price. However, we can begin to understand the valuation of two ecosystems and why one might be less or more valuable than the other.
Is Polkadot really an Ethereum killer?
Since the bull rally of 2017, smart contract platforms have been emerging regularly. They promise higher transaction speed and lower transaction costs. They are also considering toppling Ethereum as the smart contract king. These goals still attract initiatives. Platforms like Polkadot and Cardano continue to grow in terms of value and user tracking.
So how is platform usage converted into price? Is it related? These new platforms can promise higher transaction speeds. Both speed and correlation deserve further examination in this case.
Understanding the metrics
Ethereum currently ranks second in cryptocurrency market cap. It has a total market value of $ 137.8 billion compared to $ 15.4 billion of Polkadot. Polkadot still continues to climb the ladder. CoinGecko, the crypto market cap publisher, showed that the platform has nearly quadrupled its market cap since mid-December. However, what justifies the price when comparing the usability of smart contract platforms? Let’s find out.
Reddit user Oxygenjacket points to data from Polkascan, a website that provides on-chain Polkadot data. The platform has peaked at around six transactions per minute during high trading volume over the past few days. Polkadot performed much less than an average of six transactions per minute before reaching its peak.
Ethereum, on the other hand, consistently averaged more than 850 transactions per minute last month. This equates to more than 140 times the previous peak. However, to simplify the problems, the Polkadot high number is used in the comparison below.
Comparing the market capitalization of the two projects with the current transaction output might clarify the situation. Ethereum’s market value of $ 136.8 billion exceeded Polkadot’s $ 15.6 billion. Polkadot owns more than 11 percent of Ethereum by this measure. However, it currently only produces 0.7 percent of Ethereum’s transaction volume. This wide inequality leads to the conclusion that Polkadot is overvalued or Ethereum is low in value. However, the analysis leads to an impasse at this point.
A tip from Pantera
Pantera Capital, one of the world’s most influential blockchain-based venture capitalist firms, gave a hint recently. Indirectly, it showed that Ethereum could be an underestimated asset. Pantera stated in the latest news release that Ethereum has a low value compared to Bitcoin. By extension, perhaps investors are depreciating Ethereum compared to Polkadot with its recent speculative growth.