By Peter Henn and Mensholong Lepcha
Edited by Martyn Cornell
It aims to help the self-proclaimed “world’s fastest blockchain network”, but what is avalanche (AVAX)? Let’s see what we can find out, and also take a look at some of the avalanche price predictions that were being made as of 3 April 2023.
In the blockchain world, the ability to keep up with higher traffic, known as scalibility, and overall speed are among the main technical hurdles for decentralised finance (DeFi) projects seeking to go mainstream. Platforms such as Avalanche and Solana (SOL), which use smart contracts, computer programs which automatically execute once certain conditions have been met, have offer users lower gas fees and faster transactions than some potential rivals.
Avalanche claims to be the fastest smart-contract platform in the blockchain industry “as measured by time-to-finality”. According to Avalanche, time-to-finality is the time a user has to wait to receive confirmation that a transaction made on the blockchain will not be changed or cancelled.
Let’s look at Avalanche’s core features and how it differs from other smart-contract platforms.
Avalanche aims to achieve a high-transaction throughput and scalability via its native Snow protocol, which combines the properties of a classical consensus protocol and Nakamoto consensus.
Avalanche’s whitepaper says the classical consensus protocol offers low delays and high throughput but has problems with scalability because of its reliance on “all-to-all communication” to reach consensus. The whitepaper claims that the consensus mechanism used by proof-of-work (PoW) networks such as Bitcoin (BTC) suffers from delays, low throughput and constant energy requirements.
Under the Avalanche Snow protocol, each computer, or node, on the network polls a small, constant-sized, randomly chosen set of neighbouring nodes to achieve consensus, instead of the “all-to-all communication” seen in classical consensus protocols.
The use of subnetworks, or subnets, on Avalanche helps to reduce network traffic and facilitate customisability on its network. Avalanche says a subnet is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains.
Validators, also referred to as ‘stakers’ on proof-of-stake (PoS) networks such as Avalanche, can be members of multiple subnets. Each blockchain built on Avalanche is validated by one subnet, and each subnet can validate many blockchains.
Avalanche said that its subnet model reduces network traffic by allowing validators to choose which subnet to join in order to validate a blockchain. Subnets can also be designed to be private subnets by deciding which validators can enter them.
The Avalanche network has a “default subnet” which is validated by all validators. The default subnet, also known as the ‘primary network’, validates a set of three predefined blockchains on Avalanche: Exchange Chain (X-Chain), which is used to create and trade digital assets, Platform Chain (P-Chain), which helps with the creation of new subnets and keeps track of active ones, alongside coordinating validators, and Contract Chain (C-Chain), which is used to create smart contracts.
Ashu Pareek, a research specialist at the blockchain analytics firm Messari, said in a report: “Today, the vast majority of Avalanche applications are deployed on the Contract Chain, Avalanche’s EVM-compatibility smart-contract platform. However, while Avalanche’s consensus brings speed and low fees, it doesn’t provide a long-term solution for scalability. To accomplish this, Avalanche enables projects to create custom blockchain networks (subnets) using the Platform Chain.”
AVAX is the native coin on the Avalanche platform. It is used for staking and paying transaction fees on the network. People who hoold the coin also have the right to vote on proposed changes to the network.
AVAX is also required to create or join a subnet. Avalanche requires a validator to stake a minimum of 2,000 AVAX. Delegators who want to participate in staking can choose to stake with an existing validator by committing a minimum of 25 AVAX.
According to its whitepaper, the AVAX coin has a capped supply of 720 million coins. All processing fees on Avalanche are burned to increase the scarcity of AVAX. Avalanche has said that while AVAX is capped, the rate at which the coin reaches its maximum capacity is subject to governance.
Let’s now take a quick look at the AVAX price history. While past performance should never be taken as an indicator of future results, knowing what the coin has done can give us some much needed context when it comes to either making or interpreting an avalanche price prediction.
AVAX first came onto the open market in September 2020, when it was worth about $5. In early 2021, the coin’s price rallied and it peaked above $50 in February of that year. It then settled to hover around the $30 mark, before dropping down over the summer of the year and then recovering over the course of the autumn to reach an all-time high of $146.22 on 21 November 2021. Following that, the price dipped and it closed the year at $109.27.
While 2021 was a really strong year for AVAX, 2022 was one that it, along with much of the rest of the crypto market, would probably rather forget. It performed inconsistently over the course of the first four months or so, with a high of $103.53 on 2 April a notable highlight, but then a series of market crashes saw it fall to a low of $13.79 on 19 June. Following that, there was a recovery and as late as 5 November it was trading above $20, before the collapse of the FTX (FTT) exchange led to it dropping to a low of $10.65 on 30 December before it closed the year at $10.90, an annual loss of more than 90%.
The New Year saw some recovery, with a resurgent market leading it a peak of $22.71, its highest price since November. After that, though, it slipped, with the collapse oif the Silvergate bank seeing it fall to a low of $13.94 on 10 March. The coin was then able to recover and on 3 April 2023, it was worth about $17.30.
At that time, there were a little under 32.6 million AVAX in circulation out of a total supply of 422,018,587. This gave it a market cap of around $5.6bn, making it the 16th largest crypto by that metric.
With that all over and done with, let’s take a look at some of the avalanche price predictions that were being made as of 3 April 2023. It is important to remember at this stage that price forecasts, especially when it comes to something as potentially volatile as cryptocurrency, very often turn out to be wrong. Also, you should keep in mind that a lot of long-term crypto price predictions are made using an algorithm, which means that they can change at a moment’s notice.
CoinCodex had a rather mixed short-term avalanche price prediction for 2023, saying the coin could drop to $16.14 by 8 April before recovering to $17.62 by 4 May. The site’s technical analysis was bearish, with 15 indicators sending downbeat signals and 13 making bullish ones.
For the longer term, the algorithm-based website WalletInvestor’s AVAX price prediction suggested the coin was due for a tough 12 months, falling to just $6.14 in a year’s time.
DigitalCoinPrice was more bullish in its long-term AVAX crypto price prediction. According to its AVAX price prediction for 2025, the site expected the coin to trade at an average price of $60.55. DigitalCoinPrice’s AVAX price prediction for 2030 saw the token rising further to an average price of $179.91.
When considering an AVAX coin price prediction, it’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin or token’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong.
If you are considering investing in cryptocurrency coins and tokens, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns. And never trade with money that you cannot afford to lose.
It is hard to say. A lot will depend on how the market performs.
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether the AVAX token is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. Never invest money that you cannot afford to lose.
On 3 April 2023, there were a little under 32.6 million AVAX in circulation out of a total supply of 422,018,587.
No one can really tell right now. As of 3 April 2023, DigitalCoinPrice was bullish in its long-term AVAX crypto price prediction, however WalletInvestor said there was bearish sentiment around the cryptocurrency. Remember that price predictions are very often wrong and that prices can, and do, go down as well as up.
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether AVAX is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. Do not put at risk any money you cannot afford not to get back
Before you invest in AVAX, you will need to do your own research, not only on avalnache but on other coins and tokens.
Ultimately, though, this is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research and never invest more money than you can afford to lose because prices can go down as well as up.
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