3 the explanation why Avalanche (AVAX) worth is up 200% this month

Time Stamp: August 21, 2021 5:28 PM
Source Node: 1039207

Layer-one blockchain networks like Bitcoin (BTC) and Ethereum (ETH) type the inspiration of the cryptocurrency ecosystem and allow smart contract performance that has allowed the creation of latest industries like decentralized finance (DeFi) and nonfungible tokens (NFT).

Avalanche (AVAX) is a comparatively new layer-one resolution that has lately seen a major improve in worth and adoption because the dominant smart-contract platform, Ethereum, continues to battle with excessive transaction prices and slower processing occasions in contrast with its opponents.

Data from Cointelegraph Markets Pro and TradingView exhibits that after hitting a low of $12.24 on Aug. 3, the worth of AVAX rallied 205% to a multi-week excessive at $37.42 on Aug. 20 as its 24-hour trading quantity surged to greater than $1.4 billion.

AVAX/USDT 4-hour chart. Source: TradingView

Three causes for the numerous worth development from AVAX are its quickly increasing DeFi ecosystem, the discharge of the Avalanche bridge to Ethereum and the protocol’s distinctive tokenomic design that provides dynamic charges and a token burn mechanism.

Avalanche Rush expands the DeFi ecosystem

One of the largest developments to occur for the Avalanche protocol was the announcement of Avalanche Rush on Aug. 18, a $180 million liquidity mining incentive program launched along with Aave and Curve that’s designed to introduce extra purposes and property to its rising DeFi ecosystem.

Phase one of many Rush program is about to start within the close to future and can enable AVAX for use as liquidity mining incentives for Aave and Curve customers over a three-month interval.

A complete of $27 million value of AVAX has been put aside by the Avalanche Foundation to fund the motivation program with extra allocations deliberate for section two.

The program was designed to reveal the Avalanche Foundation’s dedication to scaling DeFi on the community and serving to to “create a more accessible, decentralized and cost-effective ecosystem.”

Evidence of the expansion of DeFi on the Avalance community will be discovered within the growing complete worth locked (TVL) in protocols on the community, corresponding to Pangolin and Benqi Finance which lately surpassed a TVL of $300 million.

Ethereum bridge facilitates asset migration

A second purpose for the bullish development seen within the Avalance ecosystem over the previous few weeks is the release of the Avalanche Bridge (AB) on July 29. This “next-generation cross-chain bridging technology” enables the transfer of assets between the Avalanche and Ethereum networks.

As proven within the above tweet, within the three weeks because the AB was launched, it has transferred greater than $100 million in token worth between the 2 networks as holders search lower-fee environments to conduct their transactions.

The AB is estimated to be 5 occasions cheaper than the earlier Avalanche-Ethereum Bridge (AEB) and it’s purported to supply a “better user experience than any cross-blockchain bridges launched to date.”

If Ethereum is unable to get a deal with on excessive transaction prices within the close to future, there’s a good likelihood that property and liquidity will proceed emigrate to chains like Avalanche as their DeFi ecosystems develop in measurement and worth.

Related: Avalanche (AVAX) in ‘overbought’ zone after 100% gains in a week — Correction ahead?

Transaction burning improves AVAX tokenomics

A 3rd purpose for the growing curiosity within the Avalanche community is the protocol’s distinctive tokenomic construction that features a transaction payment burning mechanism that helps scale back the circulating provide over time.

As famous within the above tweet, all charges on Avalanche are burned for the good thing about everybody locally because the hard-capped provide of 720 million AVAX is assured to lower over time. This might assist improve the worth of the remaining tokens in circulation.

At the time of writing, greater than 163,000 AVAX have been burned, a determine which will increase extra quickly as extra customers transact on the community.

The community’s payment mechanism can also be set to bear an improve to Apricot section three which is able to introduce C-Chain dynamic charges on Aug. 24.

The new integration will enable for the addition of a time-based rolling window payment calculation, a capped payment vary of 75–225 nAVAX and a block fuel restrict of 8 million fuel.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Every funding and trading transfer entails threat, you must conduct your individual analysis when making a choice.

Source: https://btcupload.com/latest-cryptocurrency-news/3-the-explanation-why-avalanche-avax-worth-is-up-200-this-month

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