Avalanche: Is AVAX about to explode? – Currently, there is a bull market in full swing, which has many people wondering what cryptocurrency has the most potential in the near term. Individuals and institutional investors seem to favor smart contract cryptocurrencies over other coins and tokens which can achieve fantastic gains. The list includes Ether (ETH), Avalanche (AVX), Solana (SOL), Polkadot (DOT), and Cardano (ADA).
AVAX has more than quadrupled in value in the last month, and both the fundamentals and technicals of the smart contract crypto show AVAX can grow the most.
In this post, I’d like to tell you what Avalanche is, keep you updated on some of the latest updates to the project, and tell you how much potential is still left for AVAX.
The company was founded by a computer scientist and Cornell Ph.D. Emin Gun Sirar in 2018.
Emin founded AVA Labs, a software development firm in New York, which also led to the development of Avalanche in 2018.
Over 60 million dollars were raised in several funding rounds leading up to the launch of the Avalanche mainnet in September 2020. Team Rocket, a group of anonymous individuals who call themselves Avalanche, pitched Avalanche in 2018 as a new Proof of Stake (PoS) cryptocurrency consensus protocol.
The Avalanche consensus protocol is a novel Proof of Stake (PoS) bitcoin protocol that involves gossiping messages to other nodes until they have been made aware of transactions.
Avalanche is capable of processing around 4,500 transactions per second (TPS) based on the exponential speed of gossiped information.
The TPS of the Avalanche network can vary according to the three blockchains it encompasses.
AVAX coin transfers are carried out on the Exchange Chain or X-Chain, which handles all token minting and exchanges on the network.
Payments for Avalanche transactions are made with AVAX, and those transactions are burned.
As of August 2016, AVAX has a maximum supply of 720 million coins. Nearly 40% of this supply went to team members, 10% was sold through public sales, and the remainder went to staking rewards.
Now that I have brought up the Platform Chain or P-Chain, I can comment on Avalanche’s second blockchain that coordinates network validation, including stakes and delegations.
Those staking 2000 AVAX must delegate 25 AVAX, while those delegating must stake at least 50 AVAX. In addition, Avalanche does not slash misbehaving validators.
The staking rewards of 10% per year are unlocked in approximately two weeks in AVAX.
Creating new subnets is also possible due to the P-Chain. Avalanche’s validator nodes utilize subnets to create customized blockchains.
On Avalanche, the Contract Chain houses Avalanche’s smart contracts and is the third blockchain on its network.
In order to execute smart contracts, the C-Chain uses a modified version of the Ethereum virtual machine (EVM). According to estimates, its transaction rate is closer to 1,500, which is still pretty fast for smart contracts.
As a unique feature of Avalanche, its ability to run multiple virtual machines is based on its subnet capabilities.
Although its focus has shifted to decentralized apps and NFTs as of late, Avalanche intends to be the hub for tokenization of real-world assets.
As of early February, I had last covered Avalanche. Since then, a lot has happened. Following that post on Medium, Avalanche launched its Pangolin AMM DEX. As you might assume, Pangolin is very similar to Unswap on Avalanche.
Avalanche suffered a crash in mid-February due to an unknown bug that caused Pangolin to become popular enough to overwhelm its network.
In March, SushiSwap was one of several DeFi projects to launch on Avalanche despite the bearish news.
Avalanche has also added TUSD stablecoin and USDT in May.
Over half a dozen smart contract blockchains, including Avalanche, have been added to the REN cross-chain protocol in June, enabling token swaps between the two.
The following month, Wyre integrated with Avalanche by making it possible to purchase Avax directly from Metamask, which runs with the EVM for smart contracts, enabling users to buy Avax from directly within Metamask.
Its growing ecosystem of DeFI services has been enriched with native support for Chainlink (LINK) data feeds since July.
As part of its Avalanche Rush incentive program, Avalanche announced it would bring popular DeFi protocols into its ecosystem.
DeFi projects AAVE and Curve Finance (CRV) were the first to announce integration with Avalanche, and we’ve seen many more protocols follow their lead in just the last few weeks.
The market value of Avalanche’s DeFi ecosystem is in the vicinity of $3 billion despite most of these protocols not being deployed yet.
The Avalanche blockchain has many bullish metrics that you can observe. I will compare a few numbers I mentioned when I discussed Avalanche last time to show just how much it grew in the past few months.
Avalanche validators have exceeded 1,000 now, instead of 800 years ago.
Avalanche delegations have increased from 500 to more than 14000 since then.
At the time, Avalanche had 1,000 tokenized assets. These days there are nearly 3,000 assets tokenized on Avalanche.
The Avalanche wallet has grown to nearly 200,000 unique addresses today from 3,000 back in 1997.
AVAX Price Analysis
The ridiculous stats seem to be having an impact on AVAX’s price. It has nearly regained its previous record high of 59 dollars in the last few days.
AVAX’s aggressive vesting schedule may have contributed to its failure. During AVAX’s first year of operation, a substantial portion of its supply is slated for release.
One of the last big Avalanches of supply will be released in one year when Avalanche’s mainnet went live in September 2020.
ICO prices for most early AVAX investors range from 33 to 50 cents, which means that most are now trading at a 100x profit, and given how uncertain the market is, there are no doubt a lot of profit-takings going on.
Evidence of this can be found in the percentage of staked AVAX. AVAX staked more than 70% of its supply when I covered the project last.
As I mentioned above, that number is now closer to 50%, which suggests I was right about early investors being able to stake their AVAX despite being unable to sell it. The timing for this is yet to be determined.
Moreover, AVAX hasn’t risen above its previous high because security concerns may be involved, making it difficult for AVAX to approach its previous high.
The short answer is that many cryptocurrencies are too similar to stocks according to a law passed after a case involving a guy with a lot of lemons caused U.S. lawmakers to come up with an outdated test.
There’s nothing much we can do about it, except we have to take that into account considering the SEC’s recent hyperactivity. The situation isn’t all gloom and doom, however, as Avalanche recently changed the tokenomic model, which can help drive price pumps even harder.
Apricot upgrade Phase 4 was responsible for introducing dynamic transaction fees to Avalanche smart contracts.
The fee structure for Avalanche smart contracts was fixed before this change. This is significant because AVAX is burned to pay for transaction fees, and with a dynamic fee schedule, even more AVAX would burn during peak network usage.
With more dApps and DeFi protocols set to debut, I can only see Avalanche in the future as a network activity that will push the crypto above its previous highest price.
The end-of-year target for AVAX is 100 dollars, which I think is a realistic expectation.
Nonetheless, I think we will likely see a bit of front running – that is, some people will probably sell before the price reaches $100. From $80 to $490, we can consider selling.
Depending on what Avalanche plans for the coming months, AVAX could rise much higher.
Unlike most cryptocurrencies I’ve covered during the past few months, Avalanche put together a quite detailed roadmap between mid-June and mid-September.
Recent developments contribute to the enhancement of the Avalanche Bridge, which is one of the company’s landmarks.
The moving of tokens between Avalanche and Ethereum is now five times faster and two times cheaper with the help of some new technology, which I do not understand.
Moreover, Avalanche plans to establish bridges with other blockchain platforms to provide a centralized platform for Defi.
In addition to the introduction of Avalanche Wallet, which includes a mobile app and browser extension, Avalanche has yet to meet another major milestone. With only one month left until the end of September, we might get to see these new wallet features then.
In addition, the Avalanche ILO, or Initial Litigation Offering, fits into that timeline.
In their abbreviated form, ILOs are similar to ICOs, but crowdfunding is not a cryptocurrency project but a legal proceeding.
Those who pitched in will receive a share of the settlement if the legal action is successful. The innovation is amazing and one I’m excited about, but I think it’s one that could be very difficult to bring to life if AVAX becomes a security threat.
Since crowdfunds cannot be used to pay for legal fees if the cryptocurrencies used are not available in the country where the trial is being held, it will be hard to crowdfund legal fees.
We are planning to implement a number of new features that will enhance the functionality of its existing infrastructure, primarily its subnetwork, by the end of the year.
Here, it’s the interoperability of subnets that grabs my attention the most. Polkadot and Ethereum, for instance, are going at the interoperability problem between parachains and shards by reducing the complexity of these cryptocurrencies.
It would be a big help if Avalanche could implement subnet interoperability efficiently to facilitate both individual and institutional adoption.
In the past few months, I have been watching the Avalanche blockchain domains and a decentralized identity solution, which should arrive by the end of the year.
It will be interesting to observe how Avalanche approaches its own domains given how blockchain domains have been all the rage on Ethereum.
Avalanche’s decentralized identity system is probably going to be an essential component of its governance system. In a recent post, I outlined how cryptocurrency governance can be fully unlocked by decentralized identities since this is crucial to unlocking the full potential of digital currencies.
Avalanche Origin Story
Prior to concluding this analysis, I want to quickly discuss an article written by a chap on Medium titled Taking on Mr. Davis.
This is a recap that I came across while researching for this post.
It was created by a group called Team Rocket, which operates anonymously under the name Avalanche consensus protocol. On May 16, 2018, they published a paper on IPFS about the protocol.
IPFS is a decentralized storage system that can be found on the Interplanetary File System. Those of you who are familiar with Filecoin (FIL) may have heard of it.
Avalanche founder Emin Gun Sirer stumbled upon Team Rocket’s peculiar paper less than 24 hours later, even though IPFS is now fairly well known.
Interestingly, In every interview that I have seen with Emin, his narrative is almost exactly the same as that of the Team Rocket paper.
The traditional consensus protocols from the 1980s and 1990s are regarded as the most innovative since Nakamoto-style Proof of Work.
According to another narrative, other cryptocurrencies use classical consensus protocols and are not really innovative. In essence, Avalanche is offering a brand new family of cryptocurrency consensus protocols to combine the best of both worlds.
Team Rocket reacted by creating their own Twitter account whose handle is written in leetspeak, one day after Emin acknowledged the Team Rocket paper. Look it up yourself if you wish.
The Twitter handle of Emin also appears in lead speak. Emin revised their paper, which would ultimately appear on Cornell University’s web archive website in June 2019. As if that wasn’t enough of a coincidence, the team worked with Emin to revise their paper.
Some have suggested that Emin may actually be a member of Team Rocket, which means that he definitely knows who Team Rocket is. The world of cryptography may never be able to reveal this and it might just remain one of many mysteries.
In my book, Avalanche is one of the best cryptocurrency projects—it has all the hallmarks of the real thing. An incredible origin story, solid tech, and robust tokenomics.
Avalanche has grown in a parabolic way over the last six months, and I expect this trend to continue through the remainder of the year. Avalanche, however, does not seem to be sustainable for a number of reasons and I have a number of concerns regarding that.
Additionally, Avalanche is facing some serious competition as a smart contract cryptocurrency due to Avax’s supply cap.
Avalanche may offer tokenized assets as a service, but with regard to the attributes defining its smart contract crypto niche, its score isn’t the best. To put it mildly, Ethereum wins when we talk security, Cardano wins when we talk decentralization, Solana wins when we talk speed.
It’s still very early days for Avalanche, though. I believe it’s one of the newest smart contract cryptocurrencies, if not the newest. The massive roadmap Avalanche has created is a testament to the reality that still remains.
This means that Avalanche will lag behind its competitors in almost every measure, including price, users, speed, etc., but it also means that its potential is greater.
In addition, Avalanche founder Emin Gun Sirer has provided an explanation of how the project is designed to survive the next bear market. My experience with other crypto founders is quite different from this. The next bull market could blow up AVAX in a good way if it doesn’t impress this time.
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