The fascinating story of Avalanche’s rise from nowhere to $19bn market cap in 2 years

It’s a journey that is just getting started.
Image: Angel Garcia/Bloomberg

Of the growing number of so-called “Ethereum-killers” out to displace Ethereum’s dominance of the new financial system known as DeFi, Avalanche (AVAX) deserves special attention.

The first thing to notice is the speed with which it emerged from nowhere to muscle its way into the top 10 cryptos as measured by market cap. With a market value of around $19 billion, which is half of what it was in November 2021, AVAX is now seen as a must-hold in diversified crypto portfolios.

“There’s a fascinating story behind AVAX, given the fact that it is just two years old and already has a market value of around $19 billion,” says Brett Hope Robertson, head of investments at Revix.

“Every great crypto story starts with a mad scientist trying to change the world for the better.”

In this case, Avalanche founder Emin Gün Sirer, associate professor of computer science at Cornell University, with 24 peer-reviewed papers on free economies to his name, was a man before his time.

He built the first proof-of-work (the blockchain system that drives Bitcoin) cryptocurrency called Karma in 2003, four years before the launch of Bitcoin itself. After being told by his university peers that a competitor to the US dollar would never receive funding, he shelved it.

When Bitcoin was launched in 2009, Sirer dusted off his earlier work and set out to solve the problems that Bitcoin posed as a global currency and payments system – notably the ability to handle potentially millions of payments at once without burning massive amounts of energy, and all the while staying true to Bitcoin’s promise of a decentralised, secure and private means of transacting and storing wealth.

These were the same challenges Ethereum and the so-called “Ethereum-killers” that followed – Polkadot (DOT), Cardano (ADA), Solana (SOL) – set out to solve.

Avalanche was a relative latecomer to the market, appearing only in 2020 once Sirer had subjected Avalanche to the most rigorous of tests. Avalanche is the name of the network, and AVAX is the native token that fuels transactions on this network.

“Instead of relying on one blockchain to handle the needs of the network, Sirer and his team split the network tasks across three core blockchains, sharing the load while increasing the capacity. While the Avalanche blockchain has three core chains, countless blockchains can be added to the network as it scales to the world’s needs. That’s what makes it unique and so exciting,” says Hope Robertson.

Blazingly fast network speed and low costs

Any blockchain aspiring to support a global financial system must, at a minimum, be able to match or beat Visa’s 1 700 transactions per second. Avalanche nailed this with 4 500 transactions per second at near zero cost, more than a hundred times cheaper than Visa. And that’s before Avalanche scales up to handle even larger volumes.

While Bitcoin is “mined” using costly computer equipment which solves complex mathematical puzzles in return for cryptos, Avalanche uses a process known as “staking”. Instead of miners, you have validators who are required to “stake” or feed some crypto into the system to participate in the rewards, hence the term “proof-of-stake”. Staking is more energy-efficient and doesn’t require massive computing power.

Avalanche launched one of the first “proof of stake” blockchain systems (as opposed to the original “proof of work” system that drives Bitcoin and other cryptos, which are heavy on computer equipment and electricity usage). This made Avalanche one of the most eco-friendly networks on Earth.

“Comparing Avalanche’s carbon footprint to that of the financial sector makes the banks look a bit like a network of coal mines. This is the innovation our planet needs,” says Hope Robertson.

“In a nutshell, what Avalanche has achieved is the closest we have seen to a cryptocurrency solving the blockchain trilemma of scalability, security and decentralisation. It is doing this through some very clever architecture which has proven itself capable of scaling at speed, with the ability to handle huge volumes of transactions at extremely low cost. This is definitely one of the more interesting crypto projects to emerge in recent years.”

There is typically a trade-off between speed and decentralisation. Decentralisation is vital for maintaining security and privacy of transactions. Avalanche has been able to demonstrate thus far that it is a serious contender to host the world financial system of the future, adds Hope Robertson.

The following chart shows how a $100 investment in AVAX compared with Bitcoin over the last two years.

Source: Revix

Revix launches AVAX in South Africa

Last week, Revix, the Cape Town-based investment platform (backed by JSE listed Sabvest) became the first company to bring AVAX to South Africans. The key to truly understanding the value of the Avalanche blockchain and its cryptocurrency AVAX is in the innovation driving it and the story of the community building it. This isn’t just another crypto. For discerning investors, Avalanche is a challenger to the throne.

To celebrate the launch, we’re offering you zero fees* when you buy AVAX over the next two weeks. This means that from the 22nd of April to the 8th of May 2022, you can invest in AVAX completely fee-free!*

About Revix

Revix brings simplicity, trust and excellent customer service to investing in cryptocurrencies. Its easy-to-use online platform enables you to securely own the world’s top cryptocurrencies in just a few clicks. Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.

Remember, cryptocurrencies are high-risk investments. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

This article is intended for informational purposes only. The views expressed are opinions, not facts, and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any cryptocurrency.

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