Avalanche is one of the fastest growing networks in crypto. The network, which is powered by the AVAX coin, is more scalable and efficient than Ethereum. Avalanche is a type of network that is referred to as an “Ethereum Killer”. Ethereum is the second largest network in crypto, with a market cap of over $300 billion, second only to Bitcoin.
Ethereum is a layer 1 blockchain, meaning other projects can be built on top of it. People have built games, DeFi swaps, and even other blockchains by using the Ethereum network. Ethereum has been around since 2015, so with seven years in the crypto space, the network has had a head start over other programmable networks. The main problem facing Ethereum right now is the network lacks scalability. Essentially, the transaction times are slow and the fees are pricey. The fees are expensive because there is a limited amount of mining power in the network. The transactions are competing for the mining power, which is where gas fees come into play. The more people trying to perform a transaction, the higher the gas fees.
Naturally, Ethereum developers are working to remedy the slow transaction times and high gas fees, but with a network Ethereum’s size, that will take time. This is where networks like Avalanche have a decisive advantage. The Avalanche network was launched by Ava Labs in September of 2020. The developers had a chance to look at what Ethereum did right, and what it did wrong. Since the network was designed to be scalable, it fixes a lot of the problems that Ethereum’s network has faced. Transactions on Avalanche take a couple seconds or less, and the network is able to handle over 4000 TPS (transactions per second). In comparison, Ethereum can do 14 TPS.
Not to discredit Ethereum
Ethereum leads in TVL (total value locked) and the amount of protocols running on the network. It isn’t going anywhere anytime soon. However, the main case to be made for the continued use of Ethereum is there’s already so many projects built on it, so why change networks? That’s not a particularly good reason, and I’ve seen people pay more in gas than their entire transaction is worth. If that’s the only option, so be it. Luckily, it isn’t.
With networks like Avalanche, high gas fees don’t exist. I’d much rather pay a couple cents for a transaction than $30, and I’m positive anyone would agree with me on that. Avalanche also runs on a proof of stake consensus protocol, unlike Ethereum which is proof of work. AVAX holders are able to stake their tokens to earn monetary rewards, and they also have the added benefit of making the network more secure.
Total value locked
DeFi Llama is a super cool website that lets you look at all different types of blockchain data. What I’m going to be focusing on is the total value locked in all chains. The Avalanche network, the greyish purple section that is underlined in the circle, accounts for a little over 5%. Not too bad for a network that hasn’t even been around for two years.
What’s really interesting though is how the TVL has changed over the last month. Polkadot is down 80%, Ethereum 3%, Solana 9%. On the other hand, Avalanche is up over 21%. When talking money in the billions of dollars, 21% is nothing to scoff at. With over 170 different protocols running on the Avalanche network now, it seems primed for continued growth. Investors are beginning to realize the advantages of one of the fastest networks currently out there. If the network continues to expand in the way it has been the last month, then there is a good chance of it one day passing Ethereum.
Disclosure: Elijah Pollack holds AVAX tokens.