27 October 2021| ZebPay Trade-Desk
Avalanche is known as a layer-one blockchain that works as a platform for decentralized applications and tailored blockchain networks. It is one of Ethereum’s rivals, aiming to oust Ethereum as the most popular blockchain for smart contracts. It aims to do this by having a higher transaction output of up to 6500 transactions per second without compromising scalability.
After launching on the mainnet in 2020, Avalanche worked on developing its own ecosystem of DApps and DeFi. Several Ethereum-based projects such as SushiSwap and TrueUSD have integrated with Avalanche. In addition, the platform is constantly working to improve the interoperability between its ecosystem and Ethereum, for example through the development of bridges.
AVAX Snapshot (at the time of writing):
| Market Capitalization | $15,035,167,347 |
| Current Price | $88.18 |
| 24 HR Volume | $749,523,277 |
| All Time High/Low | $79.52/$2.79 |
| Script in Circulation | 220,286,577 AVAX |
| Total Supply | 391,128,419 AVAX |
Avalanche was started by Ava Labs, founded by Emin Gün Sirer, professor at Cornell University, and Kevin Sekniqi and Maofan “Ted” Yin, PhD in computer science at Cornell University. Gün Sirer is a crypto research veteran, having designed a conceptual peer-to-peer virtual currency six years before the publication of the Bitcoin white paper. He was also involved in work on scaling solutions for Bitcoin and research on Ethereum prior to the infamous DAO hack in 2016. From this research was born the white paper that led to the founding of Ava Labs in 2018. Investors such as Polychain, Andreessen Horowitz, and Balaji Srinivasan. Avalanche closed its initial 2020 coin offering in less than 24 hours, raising $ 42 million. The total supply of AVAX is 720 million. Staking AVAX currently provides an annual reward of 11.57%, with the minimum time for staking being two weeks with a minimum of 2,000 AVAX.
Investment Analysis:
AVA is essentially an amalgamation of platforms. It allows various digital assets to be issued by pretty much anyone. Its USP is that AVA allows multiple scripting languages and multiple virtual machines to interact simultaneously with each other. This mechanism provides support for a variety of nodes with different capabilities, opening up new avenues and developments of digital assets, functionalities, and capabilities in the process.
The fast transaction is made possible by the unique architecture of Avalanche. The Avalanche network is made up of three individual blockchains: XChain, CChain, and PChain. Each chain has a separate goal, which is radically different from the approach Bitcoin and Ethereum take, which is to have all transactions validated by all nodes. Avalanche blockchains also use different consensus mechanisms depending on their use cases. Instead of creating additional layers of protocols, Avalanche has managed to include scalability, quick finality, performance, and high levels of decentralization on layer 1. AVA has benchmarked 4x higher than the TPS of VISA, which itself speaks volumes with respect to its efficiency and scalability.
| Asset | Transaction per Second |
| BTC | 7 |
| ETH | 15 |
| XRP | 1500 |
| VISA | 1700 |
| PAYPAL | 195 |
| AVAX | 6500 |
| AVAX | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 |
| Price (US $) | 3.6 | 22.9 | 24.2 | 32.3 |
| MoM ROI (%) | -20.40% | 400.33% | 5.47% | 33.88% |
| Volume ($ mn) | 0.02 | 0.31 | 0.26 | 0.79 |
| % growth | -68.63% | 369.53% | -14.58% | 202.91% |
| Market Cap ($, bn) | 0.13 | 2.16 | 3.26 | 6.40 |
| % growth | 44.82% | 2299.99% | 50.78% | 96.34% |
Avalanche tries to resolve the blockchain obstacles that it cannot attain a sufficient degree of large-scale decentralization. A consequence of this is the high gas charges, as is often the case with Ethereum. In the table given above, we can see the growth the token has attained since the last 4 quarters. The prices have increased by about 1782% since January. It has shown phenomenal growth this year making an all-time high of around $79.5 on 23rd September. The last quarter of 2020 saw a visible drop which made the asset touch the all-time low on December 31st at $2.79.
The volume has been somewhat volatile with negative growth seen in the 4th quarter of 2020 and 2nd quarter of 2021. This can be attributed to the fall in price in both quarters due to fundamental reasons as well as the May market crash. But the volume has swelled by almost 1025% giving a positive signal about the asset hold on the investors. The market capitalization had remained stable across the 4 quarters. It continued to rise and rallied by about 5280% over 10 months. The asset currently ranks at 15 due to its versatility and giving stiff competition to the likes of Ethereum and Polygon.
AVAX the in-house token is traded on the exchange chain, which heeds its own Avalanche consensus mechanism. The Avalanche consensus mechanism does not have a leader who processes transactions that are validated by others contrary to Proof of work and proof of stake. Rather, all nodes process and validate transactions using a direct acyclic graph (DAG) protocol. In this way, transactions are processed simultaneously and random probing of validators ensures that transactions are correct with statistical certainty. There is no blockage in this consensus mechanism, which allows immediate finalization and greatly improves the speed of the blockchain.
Conclusion
Avalanche division of computing tasks enables higher throughput without compromising on decentralization. For instance, private blockchains on the network could require its subnet’s validators to be sufficiently geographically decentralized or comply with certain regulations. Following this modular structure, Avalanche improves its interoperability with other blockchains wishing to integrate with its ecosystem. Furthermore, the two different consensus mechanisms are designed with each blockchain’s requirements in mind, further improving their efficiency.
The announcement of Ampleforth integrating with Avalanche to introduce a stablecoin alternative allowing users of the blockchain to access the algorithmic language AMPL for stabilizing contract interaction is sure to bring the platform and coin a boost. The network also holds the largest decentralized trading platform in terms of Total locked value is Trader Joe with around $2.18 billion worth of assets presently on the protocol.
Avalanche is also going to launch a bridge between itself and Cartesi described as a blockchain protocol aiming to integrate the traditional tools used by developers with tools of decentralization. There seems to be a lot of positive news for the asset. It is likely to boom in the near future and will fare well for the investors.
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Disclaimer : This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice
