Investors are caught between a rock and a hard place.
Financial markets are in a tailspin. But with the U.S. inflation rate at 8.3%, sitting on cash isn't a good idea either. It is unclear when this situation will resolve. But deflationary cryptocurrencies like Avalanche (AVAX 1.73%) and Binance Coin (BNB 2.81%) could shine in this difficult situation.
1. Avalanche
Launched in 2020, Avalanche is a blockchain platform designed to support decentralized applications (dApps), which use self-executing smart contracts to offer services on the network. This field is competitive. But Avalanche stands out because of its blazing-fast speeds and unique coin-burning system.
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With a transaction capacity of 4,500 per second, Avalanche trounces major blockchains like Ethereum and Cardano, which only handle 15 and 250 transactions per second, respectively. And according to its developers, Avalanche is the fastest blockchain on the planet in terms of time to finality -- a metric that measures the duration between when a transaction is entered and fully completed instead of the number of transactions that can run concurrently.
But Avalanche's bull case doesn't end there. The platform is also designed to maximize investor returns by sending transaction fees to an inaccessible address -- a process called burning. This deflationary mechanism will help boost the price of its native token, AVAX, over the long term by restricting supply. So far, the platform has burned 1.73 million units of AVAX worth $64 million at current prices.
2. Binance Coin
Binance Coin is a blockchain network created by Binance, the largest cryptocurrency exchange in the world. The asset's association with this real-world finance company gives it a solid economic moat. And like Avalanche, it boasts a deflationary design.
According to data from coinmarketcap.com, the Binance exchange boasts 22 million weekly visits compared to its closest rival, Coinbase, which only has 2.4 million. As Binance's affiliated cryptocurrency, Binance Coin benefits from this scale. It allows users to save 25% on trading and margin fees along with a 10% savings on futures trading, giving the asset real-world utility and a clear value proposition for investors.
Binance Coin also boasts a healthy dApp ecosystem allowing people to use its native token, BNB, for activities ranging from booking airfare to buying and trading virtual gifts.
To maximize investor returns, Binance Coin periodically burns a portion of the coins in circulation, intending to reach a final supply of 100 million tokens down from its starting supply of 200 million. Currently, the blockchain has roughly 163 million units in circulation, so there is plenty of room for continued deflation.
Understanding supply and demand
A cryptocurrency's price is mainly determined by its supply (the number of units in circulation) and demand (how much people want to buy it). Coin burning only tackles the supply side of this equation. That said, Avalanche and Binance Coin enjoy compelling use cases and impressive technical capabilities, so demand looks likely to grow over the long term.
