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Although you may be familiar with blockchains like Bitcoin, Ethereum or Polkadot, there is another chain that is less mentioned but is actually much faster than these chains.
Avalanche is a fast and inexpensive Layer 1 chain, with over 450 projects in operation. Avalanche boasts sub-2 second transaction finality, high power efficiency and thousands of nodes – this could really 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, including DeFi Kingdoms and Crabada. Subnets are also useful for institutions to deploy blockchains; this demand will only grow as the blockchain is properly regulated.
If a multi-channel future is possible, then Avalanche has carved out a nice sector of the industry and can bring a lot of value. But, if Ethereum continues to successfully grow its network and Layer 2s, it may be too difficult to compete with – and it could gobble up competing Layer 1s. For a real chance to compete with Ethereum, Avalanche would need to bolster its developers, war chest, and quality projects running on its network.
Is the avalanche here to stay, or just a fad?
Avalanche has a ton of advantages over other Layer 1 networks, but it has a much lower user count than many other channels. It remains to be seen whether this narrative will turn around.
Network speed and subnet capacity are key characteristics that Avalanche looks into. The chain is also proof-of-stake, which makes it more power-efficient than Ethereum proof-of-work. Its main drawback is the first-mover advantage of Ethereum, as the network effects are already well advanced.
The Avalanche blockchain was founded by computer scientist and Cornell professor Emin Gun Sirer. The blockchain is backed by Ava Labs, a for-profit company that supports the Avalanche blockchain, also managed by Sirer.
Avalanche recently launched the Rush program, setting aside $225 million from AVAX for developer incentives. The program has been very successful, and similar incentive programs have been implemented in other Tier 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 more advanced in its technology than any other chain, even further than Ethereum 2.0 which has yet to be launched via Forbes.
Advantages and disadvantages of avalanche
The Avalanche blockchain has a few key advantages, as well as areas in need of improvement:
- Perfect subnets for gaming and institutional use
- Finality of the transaction < 2 seconds
- Infinite transactional rates
- More decentralized than most competitors
- EVM compatibility to simplify the use of Ethereum dApps on AVAX
- The number of developers is low compared to other Layer 1s
- Fall of more than 75% in 2022
- Must compete with Ethereum and its many layers 2
The creation of alt-Layer 1 is a bold play with the juggernaut that Ethereum has become. While Avalanche has to compete with Ethereum, Solana, Binance Smart Chain, and others, it also has to compete with the many Layer 2s built on top of Ethereum.
Avalanche is unlikely to overthrow Ethereum, but can certainly carve out a suitable portion of the market for its chain. Continued success with GameFi and institutions looking to get into blockchain technology will be crucial.
How to make money with Avalanche
In addition to 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 a return of around 9%. Nexo, a cryptocurrency lending platform, offers a competitive 12% APR on AVAX tokens.
The minimum wagering time and the number of tokens wagered are two weeks and 25 AVAX respectively. This means that your tokens will be locked for two weeks and you must invest at least $375 – AVAX is trading at around $15 per coin at the time of this writing.
How to buy Avalanche
You can expose yourself to Avalanche through the AVAX coin. The coin is tradable on most major exchanges, like Coinbase Global Inc. (NASDAQ: CURRENCY). If you’re looking to delve deeper into the usefulness of AVAX, a self-service wallet is a must. You can use the AVAX wallet, available on the Avalanche website.
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So, is Avalanche here to stay?
If the future is multi-channel, Avalanche is well positioned to be one of the big names. It holds key fundamental benefits and addresses specific industries, creating real value for businesses. If Ethereum and its Layer 2 gobble up all alt-Layer 1s, Avalanche might be just another name to pump and crash. To really compete with the big dogs, Avalanche will need to attract more developers.