Embracing the Avalanche opportunity

Embracing the Avalanche opportunity

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Chris
Chris

An editor at Coincrop


15 Jan 2022 | 7 min read
35,622 views

T

he smart contract platform space is increasingly crowded with numerous technologies building on the foundations of Ethereum. Avalanche stands out from other platforms as being a powerful solution with a promising future.

In this guide:

Disclaimer: All of the information written on Coin Crop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.

What is Avalanche?

Avalanche is a smart contract platform that enables the creation of custom blockchain networks and decentralised applications (dApps).  It describes itself as the fastest smart contracts platform in the blockchain industry.

The platform launched its main net on the 21st September 2020. Over 400 individual projects have since utilised the technology in their implementations. A community of over 1.3M+ individuals globally and over 1,200+ block-producing validators participate in the project.

At the time of writing, the token ($AVAX) is priced at $88.71 with a market cap of $21.6bn.  The token has a capped supply of 720 million.

Why use Avalanche?

One of the main motivations for using Avalanche is the scalability, something that Ethereum has struggled to solve at adoption has increased. Avalanche has a stated throughput of 4,500 transactions per second (TPS) – a stark contrast to the approximately 30 TPS possible in the current implementation of Ethereum.

The finality of those transactions (the time taken to confirm the legitimacy of the transaction) is typically under two seconds.

Transaction fees are another area where Avalanche has significant benefits. During times of exceptionally high usage, users on the Ethereum blockchain have paid upwards of $200 for a single transaction – average fees of several dollars are more common.

Future applications such as play-to-earn gaming will require frequent transactions as players buy and sell in order to participate. The chosen blockchain technology must be capable of support high throughputs with low fees. On Avalanche the price of transacting is low at around $0.0000064525.

The success of smart contract platforms such as Avalanche has been born from the limitations of Ethereums technology as developers have been forced to choose more capable platforms.

How is Avalanche used?

There are a number of uses for the Avalanche smart contract platform:

    • Developers can use Avalanche to easily create their own purpose-built private (permissioned) or public (permissionless) blockchains.

          • Create decentralised applications (dApps) for execution on their own private (permissioned) or public (permissionless) blockchains. Such applications could include browsers, chat services, games, exchanges etc.

    • Games such as DeFi Kingdoms Crystalvale have adopted Avalanche as the smart contract platform to power their multiplayer game. Although having initially launched on the Harmony (ONE) platform, the developer announced the intention to bring a subsequent adventure to market on the Avalanche smart contract platform in February 2022.  The choice of Avalanche likely came about as a result of the throughput limitations on Harmony.

Staking and internet bonds

There are a number of opportunities to earn a passive income on Avalanche – staking and internet bonds are two such methods. 

Staking is the activity of locking up your Avalanche tokens in order to support the network – in return you earn a reward which is your yield.  The process of staking your tokens requires transferring them to a decentralised validator node – if this is beyond the technical means of an individual then centralised companies exist who will assist with this staking.

A variation on staking are internet bonds which is an evolution of staking. Typically staking involves locking up your tokens meaning they are now “illiquid” or cannot be spent.  Internet bonds allow you to stake your AVAX tokens and receive aAVAXb bond tokens in return.  On a daily basis you will receive staking rewards to your wallet from the reward-earning bond.  This product is available from Ankr.

Below are some example of returns that can be earned by staking your Avalanche:

OrganizationTermsRatingAPY Rate
MyContainerFlexible

6.20%

BTSEFixed (60 days)

5.95%

BTSEFixed (30 days)

5.74%

Yield farming

Below are some example of returns that can be earned from yield farming your Avalanche tokens:

OrganizationTermsRatingAPY Rate
PangolinFlexible

412%

BabySwapFlexible

37.2%

Beefy FinanceFlexible

33.5%

Beefy FinanceFlexible

33.2%

Beefy FinanceFlexible

33.2%

Beefy FinanceFlexible

33.2%

Beefy FinanceFlexible

33.2%


Chris

Chris

An editor at Coincrop
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