Is Avalanche (AVAX) a Good Investment for the 2024 Bull Run?

A fascinating study document written by an enigmatic group identified as “The Rocket Team” surfaced in May 2018. The study offered creative answers to several important blockchain problems, including energy efficiency, cost, and speed. One of the main ideas was “Avalanche,” Renowned Cornell University computer scientist Emin Gün Sirer saw the potential of the Avalanche protocol.

To realize these concepts, Sirer created Ava Labs in 2018 with coworkers Kevin Sekniqi and Maofan “Ted” Yin. In 2019, Ava Labs raised $6 million in seed money from prominent backers like Polychain Capital and Andreessen Horowitz. The team released the Avalanche mainnet in 2020 despite several obstacles, including technological difficulties and skepticism from the market.

The Rise and Struggles

With its rapid growth, Avalanche ranked among the top blockchains by Total Value Locked (TVL) in 2021, only surpassed by Ethereum and Binance Smart Chain. However, by 2024, Avalanche had dropped to ninth place in TVL due to the unstable cryptocurrency market and growing competition.

Even with these obstacles, Ava Labs kept coming up with new ideas. They introduced Evergreen Subnets in April 2023, bringing partners like Wellington and T. Rowe in and allowing institutions to build private blockchains. Additionally, they unveiled Avalanche Vista, a $50 million project to buy tokenized assets created on its blockchain to promote enterprise use. The successful tokenization proof-of-concept that Ava Labs and Citigroup collaborated on further demonstrated their continued relevance.

Important Measures

Daily Active Users (DAU): Compared to its 70,000 DAU a year ago, Avalanche now has about 34,000 DAU, a considerable decrease. Compared to rivals like Solana (800,000 DAU) and Ethereum (400,000 DAU), this number is rather low.
Fees Revenues: Transaction fees paid in AvaX, the company’s native token, bring in around $8 million for Avalanche each year.
Market Cap: AVAX is among the top 15 largest cryptocurrencies, with a market value of over $10 billion. It does, however, lag behind other Layer-1 coins, such as ETH, BNB, SOL, ADA, and TRK.

Market Assessment 

Issue Resolved: Avalanche tackles the scalability problems that many current networks are experiencing. Thousands of transactions per second are possible thanks to its special consensus process, which prevents fee spikes and performance issues.
Customers: dApp users and developers looking for a dependable Layer-1 network for their dApps.
Value Creation: With quick transaction times and affordable costs, Avalanche provides a better customer experience.
Market Structure: Ethereum is leading the saturated Layer-1 space. For Avalanche to properly compete, the gap needs to be closed.
Market Size: Given the growing popularity of web3 apps, there is a sizable potential market.
Regulatory Risks: High because of Avalanche’s prominence and the industry’s vulnerability to regulation.

Competitive Advantage

Technology: Avalanche’s distinct consensus process and performance characteristics.
Networks and Contacts: Robust alliances with big businesses such as Mastercard and Amazon.

Management Team: 

Experience: Under the direction of Emin Gün Sirer, the group is made up of specialists from Google, Microsoft, and NASA.
Integrity: The team’s integrity has not been called into doubt by any major scandals.

The Mechanics of AVAX

Usage: Through staking, AVAX provides platform security and transaction fees. Capped at 720 million, of which 443 million are in use at the moment.
Availability: Available on well-known exchanges such as KuCoin, Coinbase, and Binance.

Adoption by Users

Technical Difficulty: Taking on Ethereum Layer-2 solutions and high-performance blockchains like Solana.
Buzz: Well-established on social media, with more than a million Twitter followers.

Possible Dangers

Team: Low risk with a knowledgeable and skilled group.
Financial: Raised over $640 million in investment; however, the amount raised is unknown at this time.
Regulatory: Because of its great prominence and U.S. headquarters, there may be monitoring.
Smart Contract: Manages a bug bounty program and is audited by Halborn.
Traction: Has trouble with DAU but is active on social media.
Behavioral: Hype around this as an “Ethereum killer” slightly piques investor interest.

In  Conclusion

With the help of a strong institutional support system and a competent workforce, Avalanche has proven to be resilient and innovative. It is still a strong competitor in the cryptocurrency market despite obstacles. For it to succeed in the cutthroat Layer-1 market during the 2024 boom, it will be imperative that it can grow and reclaim its user base.

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