Helena Lyng Blak
7 weeks ago

Avalanche is dying, says crypto-expert

The 10th largest cryptocurrency is living on borrowed time according to one cryptocurrency analyst.
Avalanche AVAX cryptocurrency symbol golden coin in hand abstract concept.
Skorzewiak / Shutterstock.com

“Avalanche faces a grim outlook,” says cryptocurrency expert at Steno Research Mads Eberhardt.

He elaborates, “With a nearly $40 billion fully diluted market capitalization, its onchain activity is declining, lagging behind competitors like Solana and Ethereum's rollups. There is simply not much to celebrate for AVAX holders.”

About Avalanche

Avalanche, also known as AVAX, was first launched in 2020 as a smart contract platform. This blockchain-based platform allows users to deploy 'smart contracts,' which automatically execute contracts or actions once a predetermined set of terms and conditions are met.

In the simplest terms, consider a vending machine. Once you select a product and pay the cost, the machine automatically dispenses the product.

Moreover, Avalanche is a 'Proof-of-Stake' blockchain, which essentially means that validations can be performed using significantly less computing power than the more traditional 'Proof-of-Work' blockchains.

Avalanche in trouble

Eberhardt points out that Avalanche was once viewed as a cheaper and more efficient alternative to Ethereum, especially when Ethereum struggled to handle a large volume of transactions. However, he also notes that Ethereum has greatly enhanced its transaction handling capabilities through 'Layer 2' solutions, such as rollups, which now outperform Avalanche in terms of activity and even cost less for transactions.

“For Avalanche to navigate through this significant upcoming token unlock and to justify its lofty market valuation, it would require either an exceptionally high level of on-chain activity that leads to a robust market for transaction fees, or significant growth in such activity, ideally both,” says Eberhardt. “However, Avalanche does not currently exhibit either of these characteristics.”

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