The Avalanche Rush begins - Deep Dive into Avalanche

GB Market Commentary

by Marcus Sotiriou

Today’s cryptoinsight will include a deep dive into Avalanche - a high speed smart contracts platform, hoping to scale to visa level throughput with sub second transaction times!

What is Avalanche?

Avalanche is another Ethereum competitor, as its platform allows decentralised applications and blockchains to be built. Its mainnet went live on September 21st 2020 after raising $60 million. In 12 months since the mainnet has been live, Avalanche has:

• Integrated 335 projects

• $4.55 billion Total Value Locked (value of assets in the Avalanche ecosystem)

What makes Avalanche unique to other blockchain ecosystems?

• Speed

  • Avalanche is the fastest smart contracts platform.

  • It can reach finality (transactions being completed) in under 1 second!

• Compatible with Solidity

  • Solidity is Ethereum’s programming language.

  • It is therefore very easy for developers who can use Ethereum to use the Avalanche blockchain.

• Ethereum bridge

  • A bridge has been built allowing Ethereum projects to easily migrate over to Avalanche.

• Scalability

• Avalanche can process up to 4500 transactions per second!

  • Validator nodes gossip with each other about transactions occuring within the network. With the speed that gossiped information can spread, validators can come to agreement on the network within 1 second and process 4500 transactions per second.

What are the main goals of Avalanche?

1. DeFi

• Avalanche is fully compatible with Ethereum assets, whilst bringing faster speeds, higher throughput, and lower fees – why wouldn’t an Ethereum project migrate over to Avalanche?

• In August, Avalanche announced a $180 million mining incentive called Avalanche Rush, which started this month: Total Value Locked on Avalanche is now pushing $4.5 bn.

• AAVE and Curve (two DeFi blue chips) launched on Avalanche recently, experiencing a huge take up.

2. Institutions and governments

• Avalanche CEO says the main goal is to provide a platform for the tokenisation of assets on the blockchain – they have formed a partnership with Roche Cyrulnik Freedman LLP, and Republic Advisory Services to bring litigation financing (a multi-billion dollar asset class) to retail on the Avalanche blockchain.

• Avalanche CEO claims to be working with a dozen central banks in order to facilitate the implementation of Central Bank Digital Currencies

3. NFTs

• Avalanche allows smart contracts to be run from any blockchain, which is a great deal for the NFT market - NFTs on Ethereum blockchain and other blockchains can coexist on a blockchain without the challenge of huge fees, throughput, and consequently speed of transactions. It will be possible to have a game that will accept NFTs from Ethereum, Solana, etc. on Avalanche.

Team

• Avalanche was founded by Emin Gun Sirer in 2018, who has a PhD in computer science and was a professor at Cornell University.

• In 2018, Emin founded the Avalanche team known as Ava Labs.

• Emin has a Turkish heritage and Avalanche is one of the only cryptos with a presence in Turkey, who have incredible crypto adoption with the help of the inflating Turkish Lira.

• The president John Wu was CEO of Digital Assets Group which is a leading cryptocurrency tech house, bringing trustworthy products and management advisory services to the people in the emerging digital asset industry.

• The CFO Chris Lavry worked at Blockchain.com, a leading crypto asset platform with 42M+ users and $70B+ in transaction volume, as Executive Vice President of Financial Strategy.

• The COO Kevin Sekniqi worked as a researcher and Software Engineer at Microsoft.

What role does the token AVAX play in the Avalanche ecosystem?

• AVAX is the native token that powers the avalanche ecosystem.

• This secures the network and pays for fees. Fees are burnt and taken out of supply. Token burn rate may increase dramatically over the coming months if Avalanche sees adoption from the Avalanche Rush programme.

• AVAX also plays a role in governance - holders have a say in the direction of the network.

• You can stake AVAX and earn a 10% reward.

• Therefore there are demand drivers from a utility and staking perspective.

Roadmap for Q4

• Decentralised identity solutions

  • For people without a way of attaining official identity documentation without centralised systems.

• Interoperability

  • Allowing projects on Avalanche to connect with other chains.

Challenges

• Competition

  • Ethereum is currently more secure.

  • Cardano is more decentralised, although Avalanche has the most validators for a Proof of Stake blockchain.

  • Solana can theoretically scale to larger transactions per second.

AVAX Price Action:

• AVAX is currently retesting key supports including the August high. Reclaiming the $57 level would be bullish and could signal a continuation to the upside. With Avalanch Rush incentives being deployed this month for many Avalanche protocols, I could see AVAX testing all time highs in the not so distant future.