Since Bitcoin's launch in 2009, the crypto market has created tremendous wealth. In fact, the value of all crypto assets currently sits at more than $1.7 trillion, representing roughly 500% growth in the past two years. Understandably, some people have trouble wrapping their head around that figure. But cryptocurrency is still relatively small compared to other asset classes.
For instance, the global real estate market surpassed $325 trillion in 2020, and the collective equity market cap sits at $120 trillion, according to the nonprofit trade group Sifma. If cryptocurrency is the disruptive force that many believe it to be, the market itself could grow 10-fold or even 50-fold during the next few decades.
With that in mind, Fantom (FTM 4.96%) and Avalanche (AVAX -3.13%) are two of my favorite blockchain projects, and both could generate significant wealth for long-term investors. Here's why.
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1. Fantom
Fantom is a smart contract platform powered by the FTM coin. Its core innovation is a proof of stake (PoS) consensus protocol known as Lachesis, which allows each node (computer) to capture the time-order of events on the blockchain. In turn, those nodes can verify transactions independently, without a time-consuming message exchange, which accelerates throughput.
To that end, Fantom can process thousands of transactions per second, while finalizing those transactions in about one second. In fact, the Fantom Foundation -- the organization behind the platform -- believes it's the fastest public blockchain in the crypto industry. That scalability keeps transaction fees low. While you might expect to pay $20 per transaction on Ethereum, you'll pay just a few cents on Fantom.
Furthermore, Fantom is compatible with Solidity, the coding language used to build decentralized applications (dApps) on the Ethereum blockchain. That means developers can easily deploy Ethereum-based software on Fantom, and many have done just that. Most notably, Ethereum-native Yearn Finance -- a yield farming decentralized finance (DeFi) protocol -- went live on Fantom in October.
Here's the bottom line: Fantom is fast, cheap, and compatible with Ethereum -- the largest network of dApps and DeFi products -- and those qualities have fueled significant adoption. Over the past year, daily transaction volume has jumped from less than 10,000 to nearly 1 million, and Fantom currently ranks as the fifth most popular DeFi ecosystem, with $8.1 billion invested on the platform. As more consumers adopt products and transact on Fantom, demand for the FTM token will rise, causing its price to rise too. That's why this cryptocurrency looks like a smart buy.
2. Avalanche
Avalanche is a smart contract platform powered by the AVAX coin. Its core innovation is the Snowman protocol, a type of PoS in which a small subset of nodes are randomly and repeatedly sampled until consensus is achieved. That differs from most other PoS protocols in which every node must confirm every transaction with every other node, a much more time-consuming process.
Like Fantom, Avalanche also brands itself as the fastest smart contract platform in the blockchain industry, citing throughput of 4,500 transactions per second and a finalization time of less than two seconds. To that end, transaction fees on the platform are typically just a few cents. But that's not the only similarity. Avalanche is also compatible with Ethereum smart contracts. In this case, that compatibility has allowed the Ethereum-native lending protocol Aave and stablecoin exchange Curve to be deployed on Avalanche. Perhaps more noteworthy, Ethereum-native USD Coin -- the second most popular stablecoin in the cryptoeconomy -- is also available on Avalanche.
The organization behind Avalanche, Ava Labs, has an ambitious growth strategy. Chief Executive Officer Emin Gün Sirer has said the long-term goal is to disrupt traditional finance, while the near-term motivation is improving DeFi. And so far, Ava Labs has made tremendous progress. Since launching in September 2020, Avalanche has become the fourth-most-popular DeFi ecosystem, with $11 billion invested on the blockchain.
The value proposition of fast, cheap transactions should bring more developers to Avalanche, expanding its ecosystem of software and services. And as more consumers and investors adopt dApps and DeFi products on the platform, demand for the AVAX coin should rise, sending its price higher. That's why this cryptocurrency could make you richer in the long run.
