The Avalanche (AVAX -3.75%) cryptocurrency is a promising part of the crypto market. The smart contracts platform has enjoyed a surge in app development recently, lifting the digital token's value to levels not seen since the spring of 2022. In fact, Avalanche's price has more than quintupled from the multi-year lows seen in September and October.
Today, you can pick up Avalanche tokens for roughly $46 per digital coin. Is the rocket ride running out of fuel, or is this the perfect time to invest in Avalanche in the middle of a moonshot?
Let's find out.
What's going on with Avalanche?
App developers in the decentralized finance (DeFi) market crave ultra-fast transaction speeds. As a result, the established and reliable, but somewhat sluggish and expensive smart contracts system Ethereum (ETH -0.36%) posted a 38% price increase over the last three months while faster platforms soared much higher:
Ethereum Price data by YCharts
Solana (SOL -5.48%), Cardano (ADA -3.44%), Algorand (ALGO -4.23%), and Avalanche are birds of a feather. These blockchain networks all set out to beat Ethereum at its own smart contracts game with a focus on rapid execution of transactions, and a much larger theoretical capacity for transaction volumes.
Among these, Solana and Avalanche stand head and shoulders over the rest in terms of exceptional performance. Both are already more than fast enough to handle the sum total of all smart contract activity, but the market is fragmented, and Ethereum still dominates the development efforts. And a maturing DeFi market will require a much faster digital infrastructure in the next few years.
Weighing speed against security and stability
The real-world need for more speed should increase as DeFi applications go mainstream, replacing many financial banking services with decentralized, blockchain-based systems without a central authority. DeFi apps promise to settle payments in seconds rather than days, charging minimal fees along the way, and opening the door to a truly global financial market.
Solana holds an edge against Avalanche in terms of pure speed, but Avalanche strikes back with a more sophisticated data security model and a robust operating platform. Network outages have been fairly common on the Solana network, but the three blockchains that make up the Avalanche system rarely go down.
This combination of elite performance and rock-solid stability paints a colorful picture of Avalanche's future prospects. This smart contracts platform may never dominate the market, but it's an attractive Ethereum alternative rubbing shoulders with the best of the best.
So, is Avalanche a buy right now?
I can't say for sure that Avalanche's token price will continue to skyrocket from here. The crypto sector is still incredibly volatile, and Avalanche is no exception to that rule. But, whether the next market swing goes up or down, Avalanche remains one of the most promising "Ethereum killers," and I think this $46 price will look quaintly affordable in a few years.
The DeFi revolution is coming, and Avalanche wants a piece of that tasty pie. From person-to-person lending and advanced insurance solutions to digitally linked ownership of real-world assets, DeFi innovators are cooking up disruptive solutions right now. The worlds of personal and corporate finance will probably look very different five or ten years from now, and the crypto tokens behind the scenes of the new solutions should deliver tons of long-term value to their early owners.
McKinsey analysts see DeFi disrupting a $20 trillion banking sector. Even a small slice of that gigantic opportunity would bring game-changing value to innovative tokens such as Avalanche.
Will Avalanche be one of the wealth-building winners in the long run? Only time can tell for sure, but I like this sophisticated crypto network's chances.
