Want a cryptocurrency that can stand the test of time? Look no further than Ethereum (ETH 2.23%) and Avalanche (AVAX -1.85%). These assets look positioned for long-term success because of their strong branding and innovative designs. Let's dig deeper.
With a market cap of $362 billion, Ethereum is the second-largest cryptocurrency, giving it a level of scale and mainstream acceptance that will be crucial to its long-term success. The platform's ambitious upgrades will keep it ahead of newer, faster rivals.
Never underestimate the power of a first-mover advantage. Being first to market can give trust and name recognition that new rivals will struggle to replicate. Launched in 2015, Ethereum was the first public blockchain to support decentralized applications (dApps), which are programs that use self-executing smart contracts to offer services on the blockchain. Now it is the leader in multiple dApp categories, including decentralized finance (DeFi), where it represents 54% of the market with $117 billion in total value locked.
The platform is also home to OpenSea, the largest non-fungible token (NFT) marketplace, which boasts a 24-hour trading volume of $74 million worth of digital art assets at the time of writing.
To keep Ethereum relevant against increasingly stiff competition, its developers are working on an update called the consensus layer, which will upgrade its energy-hungry proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) system where miners verify transactions using coins they own instead of by solving computational puzzles. It is unclear when the consensus layer will go live, but it is expected to dramatically improve Ethereum's speed and scalability.
Avalanche is a dApp platform designed to be faster and cheaper than its biggest rival, Ethereum. But while there is no shortage of potential "Ethereum killers," Avalanche stands out because of its compatibility with Ethereum and deflationary design, which will help ensure its native token's price grows as the platform attracts more users.
Avalanche boasts a transaction speed of 4,500 per second, putting it far ahead of Ethereum's 15. It achieves this through its consensus mechanism, Snowman -- a PoS protocol compatible with Ethereum. Smart contracts designed for Ethereum can be easily adapted to Avalanche, potentially boosting its development activity and user demand. But Avalanche has another trick up its sleeve, which will be particularly exciting for long-haul investors.
The platform automatically burns its transaction fees, which means coins are sent to an inaccessible address, removing then from circulation. This could increase the token's scarcity relative to demand and boost its price. According to its website, the network has already destroyed roughly 1.3 million units of AVAX worth $111 million.
Will crypto bounce back?
Up roughly 13% to bout a$1.9 trillion in the last 30 days, crypto is showing signs of recovery. And that isn't surprising, considering challenges like high inflation and geopolitical uncertainty could potentially boost the sector. Ethereum and Avalanche allow investors to hedge their portfolios against these macro headwinds while also benefiting from asset-specific advantages that position both cryptocurrencies for long-term success.