Is Avalanche Here to Stay?

The post Is Avalanche Here to Stay? by Reid McCrabb appeared first on Benzinga. Visit Benzinga to get more great content like this.

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While you may be familiar with blockchains like Bitcoin, Ethereum or Polkadot, another chain is mentioned less but is actually much faster than these chains. 

Avalanche is a speedy, low-fee Layer 1 chain, with over 450 operating projects. Avalanche boasts a transactional finality of under 2 seconds, high energy efficiency and thousands of nodes – it could truly be a name to watch.

The Avalanche blockchain uses subnets to allow builders to create their own customizable blockchains. This feature holds great potential for GameFi, and it has already attracted a number of Web3 games – most notably DeFi Kingdoms and Crabada. The subnets are also useful for institutions to deploy blockchains; this demand will only grow as blockchain gets properly regulated.

If a multi-chain future is possible, then Avalanche has carved out a nice sector of the industry and can provide a great deal of value. But, if Ethereum continues to successfully develop its network and Layer 2s, it may be too much to compete with – and it could swallow up competing Layer 1s. For a real shot at competing with Ethereum, Avalanche would need to beef up its developers, war chest and quality projects running on its network.

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Is Avalanche Here to Stay, or Just a Fad?

Avalanche has a ton of advantages over other Layer 1 networks, but its number of users is far inferior to many other chains. Whether this narrative will flip is yet to be determined. 

The speed of the network and subnet capability are key features that Avalanche is leaning into. The chain is also proof-of-stake, making it more energy efficient than the proof-of-work Ethereum. Its key disadvantage is Ethereum’s first-mover advantage, as network effects are already far along.

Avalanche History

The Avalanche blockchain was founded by computer scientist and professor at Cornell, Emin Gun Sirer. The blockchain is backed by Ava Labs, a for-profit company that supports the Avalanche blockchain, also run by Sirer. 

Avalanche recently launched the Rush program, setting aside $225 million worth of AVAX for developer incentives. The program has seen great success, and similar incentive programs have been implemented in other Layer 1 projects. When Sirer was asked in an interview with Forbes about the similar programs, he called them copycats – Sirer also believes that Avalanche is further along in its technology than any other chain, even further along than the yet-to-be-launched Ethereum 2.0 via Forbes.

Pros and Cons of Avalanche

The Avalanche blockchain has a few key advantages, as well as areas needing improvement:

Pros

• Subnets that are great for gaming and institutional use
• Transaction finality < 2 seconds
• Infinite transactional throughputs
• More decentralized than most competitors
• EVM compatibility to make using Ethereum dApps on AVAX simple

Cons

• Number of developers is small in comparison to other Layer 1s
• Dropped over 75% in 2022
• Must compete with Ethereum and its many Layer 2s

Avalanche Competition

Creating alt-Layer 1s is a bold play with the behemoth that Ethereum has become. While Avalanche has to compete with Ethereum, Solana, Binance Smart Chain and others, it also must compete with the many Layer 2s built on top of Ethereum.

Ethereum has a firm grasp on the number 1 smart-chain compatible blockchain, leading in users, developers, market capitalization and many more aspects. 

Avalanche is unlikely to flip Ethereum but can certainly carve out a section of the market suited for its chain. Continuing its success with GameFi and institutions that want to dip their toe into blockchain technology will be crucial.

How to Make Money With Avalanche

Outside of just investing in Avalanche through the AVAX token, you can also stake the token and earn interest. By staking the AVAX token, you make the network more secure, and in return you are rewarded with roughly a 9% yield. Nexo, a cryptocurrency lending platform, offers a competitive APR of 12% on AVAX tokens.

The minimum staking time and amount of tokens staked is two weeks and 25 AVAX respectively. This means your tokens will be locked up for two weeks and you must invest at least $375 USD – AVAX trading at roughly $15 per coin at time of this writing.

How to Buy Avalanche

You can get exposure to Avalanche through the AVAX coin. The coin is tradeable on most big exchanges, like Coinbase Global Inc. (NASDAQ: COIN). If you are looking to dive deeper into the utility of AVAX a self-custodial wallet is required. You can use the AVAX wallet, found on the Avalanche website.

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So, is Avalanche Here to Stay?

If the future is multi-chain, Avalanche is well positioned to be one of the big names. It holds key fundamental advantages and caters to specific industries, creating real value for companies. If Ethereum and its Layer 2 swallows up all alt-Layer 1s, Avalanche could just be another name to pump and crash. To truly compete with the big dogs, Avalanche will need to attract more developers.

The post Is Avalanche Here to Stay? by Reid McCrabb appeared first on Benzinga. Visit Benzinga to get more great content like this.

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• Source: https://www.benzinga.com/money/is-avalanche-here-to-stay/