Wednesday, January 19, 2022

3 reasons why Avalanche (AVAX) price is up 200% this month


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Layer-one blockchain networks like Bitcoin (BTC) and Ethereum (ETH) type the muse of the cryptocurrency ecosystem and allow sensible contract performance that has allowed the creation of recent industries like decentralized finance (DeFi) and nonfungible tokens (NFT).

Avalanche (AVAX) is a comparatively new layer-one resolution that has lately seen a major enhance in worth and adoption because the dominant smart-contract platform (Ethereum) continues to battle with excessive transaction prices and slower processing instances than its rivals.

Knowledge from Cointelegraph Markets Pro and TradingView reveals that after hitting a low of $12.24 on Aug. 3, the worth of AVAX rallied 205% to a multi-week excessive at $37.42 on Aug. 20 as its 24-hour buying and selling quantity surged to greater than $1.4 billion.

AVAX/USDT 4-hour chart. Supply: TradingView

Three causes for the numerous worth progress from AVAX are its quickly increasing DeFi ecosystem, the discharge of the Avalanche bridge to Ethereum and the protocol’s distinctive tokenomic design that gives dynamic charges and a token burn mechanism.

Avalanche Rush expands the DeFi ecosystem

One of many greatest developments to occur for the Avalanche protocol was the announcement of Avalanche Rush on Aug. 18, a $180 million liquidity mining incentive program launched at the side of Aave and Curve that’s designed to introduce extra purposes and belongings to its rising DeFi ecosystem.

Part 1 of the Rush program is about to start within the close to future and  will enable AVAX for use as liquidity mining incentives for Aave and Curve customers over a 3 month interval.

A complete of $27 million value of AVAX has been put aside by the Avalanche Basis to fund the inducement program with extra allocations deliberate for part 2.

This system was designed to show the Avalanche Basis’s dedication to scaling DeFi on the community and serving to to “create a extra accessible, decentralized, and cost-effective ecosystem.”

Proof of the expansion of DeFi on the Avalance community could be discovered within the growing complete worth locked (TVL) in protocols on the community, comparable to Pangolin and Benqi Finance which lately surpassed a TVL of $300 million.

Ethereum bridge facilitates asset migration

A second motive for the bullish progress seen within the Avalance ecosystem over the previous few weeks is the release of the Avalanche Bridge (AB) on July 29. This “next-generation cross-chain bridging know-how” allows the switch of belongings between the Avalanche and Ethereum networks.

As proven within the above tweet, within the three weeks because the AB was launched, it has transferred greater than $100 million in token worth between the 2 networks as holders search lower-fee environments to conduct their transactions.

The AB is estimated to be 5 instances cheaper than the earlier Avalanche-Ethereum Bridge (AEB) and it’s purported to supply a “higher person expertise than any cross-blockchain bridges launched to-date.”

If Ethereum is unable to get a deal with on excessive transaction prices within the close to future, there’s a good probability that belongings and liquidity will proceed emigrate to chains like Avalanche as their DeFi ecosystems develop in measurement and worth.

Associated: Avalanche (AVAX) in ‘overbought’ zone after 100% gains in a week — Correction ahead?

Transaction burning improves AVAX tokenomics

A 3rd motive for the growing curiosity within the Avalanche community is the protocol’s distinctive tokenomic construction that features a transaction payment burning mechanism that helps scale back the circulating provide over time.

As famous within the above tweet, all charges on Avalanche are burned for the good thing about everybody locally because the hard-capped provide of 720 million AVAX is assured to lower over time. This might assist enhance the worth of the remaining tokens in circulation.

On the time of writing, greater than 163,000 AVAX have been burned, a determine which will increase extra quickly as extra customers transact on the community.

The community’s payment mechanism can also be set to bear an improve to Apricot part three which can introduce C-Chain dynamic charges on Aug. 24.

The brand new integration will enable for the addition of a time-based, rolling window payment calculation, a capped payment vary of 75–225 nAVAX and a block fuel restrict of 8 million fuel.

The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Each funding and buying and selling transfer includes threat, you must conduct your individual analysis when making a choice.