The Avalanche (AVAX) platform was launched in September 2020 and it took the startup just a few months to enter the TOP-20 in terms of capitalization. In moments of high volatility, the coin shows quite good stability, although it mostly follows the general market trend. Investors have only one question: will Avalanche be able to compete with Ethereum or will it fade into oblivion over time?
Avalanche is an alternative solution to the blockchain trilemma
The blockchain trilemma is the main problem of platforms for independent startups. Scalability, security or decentralization – developers must sacrifice one thing for the health of the network. Avalanche is another variant of a unique consensus algorithm that, in theory, should be an alternative solution.
Comparison Avalanche and Ethereum by different criteria:
- Speed. If Ethereum has it equal to 15-20 transactions per second, then the actual speed of Avalanche is 4000-4500 with the prospect of overclocking to 20 thousand. According to this indicator, the platform outperforms one of the competitors – Solana.
- Safety. Avalanche has about 1,000 validators, while Ethereum has over 250,000. Avalanche becomes more vulnerable in this regard, as gaining control over one validator means gaining control over a larger share of decision-making centers. But it speeds up the decision itself.
- Volatility. According to this indicator, Avalanche loses BTC and ETH. The coin is characterized by deep drawdowns during recessions. This means that the price of the coin is still formed by speculative capital, while the Ethereum rate is formed more on long-term trust.
The consensus algorithm is a unique mechanism for parallel confirmation of transactions. It consists of three modules, one of which is still in development. Unlike competitors, there are no sidechain ideas, blockchain merging, or second-tier solutions here. But the interest of app developers in the platform shows that Avalanche’s solution is competitive.
Investors may be interested in the coin as a speculative asset and staking. The first option is interesting because of the high volatility. And CFD brokers allow you to earn, including short positions. Staking involves blocking money for a fixed period. And it is best to do this at the price bottom – to earn more on growth.
Platform Disadvantages. High competition in the segment, unfinished consensus algorithm, “clumsiness” of the network. Attempts to gain leadership as quickly as possible led to the fact that already at the start the network failed. After that, investors preferred to take a waiting position.
Conclusion. The fact that the coin quickly took a leading position speaks in favor of the seriousness of the platform. But there are a few points. History remembers such coins as EOS, NEO – they all also tried to offer unique ideas in order to compete with Ethereum. All of them were in the TOP, but over time they went far down. Ahead is the ETH 2.0 fork, which is able to nullify all the existing advantages of competitors. While AVAX is interesting to investors, it is chosen by many developers of the GameFi and DeFi sectors for its compatibility with other blockchains. But the real actual results of the network are far from the declared ones. Therefore, Avalanche (AVAX) is rather a promising asset for short-term risk diversification. But with the transition of Ethereum to the PoS algorithm, the coin may go down.