While Ethereum continues to plod along by first-mover status, several smaller projects have started circling. Avalanche, a relative newcomer to the scene, drew attention as their price skyrocketed in the past several weeks. Ostensibly yet another entry in the “Ethereum Killer” sector of the cryptocurrency industry, Avalanche and their AVAX token have carved a new niche – and reaped the rewards of their innovation. As is to be expected of any theoretical “Ethereum Killer’ “Avalanche offers faster transactions and comparable security and decentralization.
However, Avax’s focus trends more towards the DeFi space and tokenization of assets, compared against the larger, more grandiose decentralized applications built on Ethereum. Further, the decision to make the AVAX token inflationary ensures that the price remains buoyed – particularly during scenarios like the current rally. As part of their promotional blitz, Avalanche also announced their “Avalanche Rush” – an incentive program to draw more developers to their platform.
The Avalanche Rush
Pledging an initial $180 million towards the program, Avalanche Rush has brought tempted both the Aave and Curve DeFi projects. Both received a hefty amount to encourage their participation in the Avalanche ecosystem. Beyond these two heavyweights, Avalanche set aside a portion of the incentive program to attract native development.
The Avalanche Rush announcement came alongside an upgrade to the Avalanche Bridge – a cross-chain system that allows developers and investors to easily bring assets from Ethereum to Avalanche. To date, more than $1 billion in assets have crossed the bridge into the Avalanche platform.
Combining Smart Contracts and Deflationary Tokenomics
Many current-generation tokens have adopted an auto-burn mechanic to all but ensure deflation over time. AVAX is no different in this regard, although staking emissions will outstrip auto-burn in the short term. Mostly, this mechanic is unique for a system designed to host smart contract-based applications. Driving the price higher could be a risky gamble, given the current apprehension by average investors to engage with Ethereum’s high transaction fees.
Success over time will ultimately depend on Avalanche’s ability to scale. As it is already a faster, cheaper, and more efficient blockchain than many of their competitors, they have an advantage in this aspect. In the end, if this is their only drawback, they are still leagues ahead of other so-called “Ethereum Killers.”