New Delhi: Amid the recent weakness in the cryptocurrency market, Avalanche (AVAX) has made its way into the list of top 10 digital tokens thanks to its stellar performance.
Despite a poor appetite for risky assets during volatile times, Avalanche has seen strong buy action lately and sentiment has improved further as investors started making risky bets at lower prices.
Avalanche is a layer-one blockchain that acts as a platform for decentralized applications and custom blockchain networks. It is one of Ethereum’s competitors and aims to overtake it as the most popular blockchain for smart contracts.
With a market cap of more than $ 30.2 billion, Avalanche has dethroned big names like Polkadot and Dogecoin, followed by Terra (LUNA), which is valued at more than $ 34 billion, according to data from Coinmarketcap.
The token is up more than 4,200 percent last year to $ 127.42 on December 22nd from $ 2.91 earlier. However, the previous week it peaked at $ 134.53, increasing to 4,500 percent.
Investors have started to focus on the blockchain after a Bank of America analyst note identified Avalanche as a credible alternative to Ethereum due to “faster time to final (settlement) and lower costs than alternative blockchains”.
In the past few weeks, the token has recovered around 80 percent. As of 11:40 a.m. IST on December 22nd, it has risen 35 percent in the past week. However, the volume of the token has decreased by more than a quarter.
Market experts say that there are a few key reasons that justify the growth of the blockchain both fundamentally and technically. These include a sudden increase in DeFi space, lower costs, and the unique protocol.
Ganesh Kompella, Partner, Tykhe Block Ventures, is optimistic about Avalanche. He sees this as an alternative to Ethereum. “It’s one of the fastest growing smart contracts platforms,” he says, adding that the token will create new lifetime highs once it moves into the blue sky zone.
One of the biggest developments for the Avalanche Protocol was the announcement of the Avalanche Rush back in August this year, which partnered with Aave and Curve to launch a $ 180 million liquidity mining incentive program to attract more applications and assets in introduce its growing DeFi ecosystem.
Raj A Kapoor, founder of the India Blockchain Alliance, says the foundations of Avalanche focus on a fast growing DeFi ecosystem and a new low cost bridge to the Ethereum network. He says the rapidly growing DeFi ecosystem and the release of the Avalanche Bridge to Ethereum support this. “The protocol’s unique tokenomic design offers dynamic charges and a token burn mechanism,” he added.
Ethereum has been heavily criticized for its slower speed and high transaction costs, which makes its other alternatives more attractive. A number of high-profile blockchains have earned the label as a possible “Ethereum killer”. But this feat has not yet been accomplished. Even so, there’s a good chance assets and liquidity will continue to migrate to chains like Avalanche as their DeFi ecosystems grow in size and value.
Emin Gun Sirer, CEO and founder of Avalanche, has announced a new partnership with the consulting firm Deloitte, which includes building software platforms for disaster relief on the Avalanche blockchain.
According to Kapoor of the India Blockchain Alliance, this is a clear indicator that the blockchain network and its Avax token are rapidly gaining strong acceptance and investment.
Avalanche seeks to solve the blockchain trilemma which states that blockchains cannot achieve a sufficient degree of decentralization on a scale. One consequence of this is high gas fees, as is often the case with Ethereum.
Avalanche had a strong team of cryptographers and researchers before Web 3.0, says Kompella. “We have to wait and see, however, as a lot of L1 chains have come and gone in the past.”
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