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AVAX price prediction: Will Avalanche fall further?


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Will Avalanche’s decline continue? – Photo: WindAwake/Shutterstock.com

The blockchain network Avalanche (AVAX) has seen its fortunes tumble in 2022. After losing more than 80% of its value in 2022, Avalanche’s native token, AVAX, has fallen off the list of the top 10 most valuable cryptocurrencies by market capitalisation. 

The AVAX token witnessed a sharp sell-off in May caused by Avalanche’s close association with its peer Terra, after Terra’s Luna Foundation Guard had built an AVAX reserve worth $200m. 

Even recent partnerships with Chainlink and Robinhood have struggled to slow the downward trajectory. As of 4 October, AVAX had fallen 5% over the previous seven days. 

In this article, we will talk about Avalanche and why it claims to be “the world’s fastest blockchain network”, plus important updates, price analyses and a look at the possible future of the avalanche coin.

About Avalanche

In the blockchain world, scalability and speed are among the main technical hurdles for decentralised finance (DeFi) projects seeking to go mainstream. Smart contract platforms such as Avalanche and Solana (SOL) have been chipping away market share from the market leader, Ethereum (ETH), by offering users lower gas fees and faster transactions.

Avalanche claims to be the fastest smart contract platform in the blockchain industry, “as measured by time-to-finality”. According to Avalanche, time-to-finality is the time a user has to wait to receive confirmation that a transaction made on the blockchain will not be changed or cancelled. 

Let’s look att Avalanche’s core features and how it differs from other smart-contract platforms.

Snow protocol

Avalanche aims to achieve low-latency, high-transaction throughput and scalability via its native Snow protocol, which combines the properties ofn a classical consensus protocol and Nakamoto consensus.  

Avalanche’s whitepaper says classical consensus protocol offers low latency and high throughput but has problems with scalability because of its reliance on “all-to-all communication” to reach consensus. The whitepaper said that the Nakamoto consensus used by proof-of-work networks such as Bitcoin suffers from high latencies, low throughput and constant energy requirements.

Under the Avalanche Snow protocol, each node polls a small, constant-sized, randomly chosen set of neighbouring nodes to achieve consensus, instead of the “all-to-all communication” seen in classical consensus protocols.

Avalanche said: “To choose among the conflicting transactions and prevent the double-spend, every node randomly selects a small subset of nodes and queries which of the conflicting transactions the queried nodes think is the valid one. If the querying node receives a super-majority response in favour of one transaction, then the node changes its own response to that transaction. Every node in the network repeats this procedure until the entire network comes to consensus on one of the conflicting transactions.”

Subnets

The use of subnetworks, or subnets, on Avalanche helps to reduce network traffic and facilitate customisability on its network. Avalanche says a subnet is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains. 

Validators, also referred to as “stakers” on proof-of-stake (PoS) networks such as Avalanche, can be members of multiple subnets. Each blockchain built on Avalanche is validated by one subnet, and each subnet can validate many blockchains.

Avalanche said that its subnet model reduces network traffic by allowing validators to choose which subnet to join in order to validate a blockchain. Subnets can also be designed to be private subnets by deciding which validators can enter them.

The Avalanche network has a “default subnet” which is validated by all validators. The default subnet, also known as the “Primary network”, validates a set of three predefined blockchains on Avalanche: Exchange Chain (X-Chain), Platform Chain (P-Chain) and Contract Chain (C-Chain).

X-Chain, P-Chain and C-Chain

X-Chain is a blockchain on Avalanche  used for creating and trading digital smart assets.

P-Chain is a blockchain on Avalanche which enables the creation of new subnets, coordinates validators and keeps track of active subnets.

C-Chain is a blockchain on Avalanche that is used to create smart contracts. The C-Chain is an instance of the Ethereum Virtual Machine (EVM), according to Avalanche.

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Ashu Pareek, a research specialist at the blockchain analytics firm Messari, said in a report “Today, the vast majority of Avalanche applications are deployed on the Contract Chain, Avalanche’s EVM-compatibility smart contract platform. However, while Avalanche’s consensus brings speed and low fees, it doesn’t provide a long-term solution for scalability. To accomplish this, Avalanche enables projects to create custom blockchain networks (subnets) using the Platform Chain.” 

Tokenomics: What is avalanche coin?

AVAX is the native coin on the Avalanche platform. It is used for staking, on-chain governance and transaction fees on the network. 

AVAX is also required to create or join a subnet. Avalanche requires a validator to stake a minimum of 2,000 AVAX. Delegators who want to participate in staking can choose to stake with an existing validator by committing a minimum of 25 AVAX. 

According to its whitepaper, the AVAX token has a capped supply of 720 million coins. All processing fees on Avalanche are burned to increase the scarcity of AVAX. Avalanche has said that while AVAX is capped, the rate at which the coin reaches its maximum capacity is subject to governance.

Avalanche’s whitepaper said: 

BTC/USD

20,348.40 Price
+3.600% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 21:00 (UTC)
Spread 66.00

XRP/USD

0.48 Price
+2.720% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 21:00 (UTC)
Spread 0.00660

ETH/USD

1,363.74 Price
+2.770% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee 0.0140%
Overnight fee time 21:00 (UTC)
Spread 5.50

LUNA/USD

2.57 Price
0.000% 1D Chg, %
Long position overnight fee -0.0500%
Short position overnight fee -0.0500%
Overnight fee time 21:00 (UTC)
Spread 0.0515
“The nominal reward rate (for staking) is subject to governance, within pre-established boundaries. This will allow token holders to choose on whether $AVAX is eventually capped, uncapped, or even deflationary.”

As of 4 October 2022, the circulating supply of AVAX stood at over 296 million, representing about 40% of its maximum supply, CoinMarketCap data showed.

Price analysis: AVAX in focus

AVAX/USD, all-time performance

Source: CoinMarketCap

Up until the crypto market crash of May 2022, for which the collapse of the Terra ecosystem was an important catalyst, AVAX had firmly established itself as a top 10 cryptocurrency in terms of market capitalisation.

However, after losing more than 80% in 2022, the avalanche cryptocurrency had fallen toe 17th spot in the list of most valuable cryptocurrencies, as of 4 October 2022.

The majority of the losses came in the months of April and May, as tightening monetary conditions and the collapse of the Terra ecosystem caused AVAX to post monthly losses of more than 40% in April and more than 50% in May. AVAX was unable to stem its decline as the level-1 token posted its third consecutive monthly loss in June.

More recently, AVAX has posted a loss of about 5% overseven dats to 4 October and 8% over the previous 30 days.

At the trading price of $17.41 as of 4 October 2022, AVAX is a long way below its all-time high of $146.22, hit on 21 November 2021, CoinMarketCap data showed.

The Avalanche ecosystem has also seen a massive drop in total value locked (TVL), data from DeFiLlama showed. TVL on Avalanche plunged from its peak of more than $12bn in December 2021 to about $1.61bn, as of 4 October.

Latest Avalanche news

Recently, Avalanche discussed on Twitter its partnership with Chainlink, an oracle network for blockchains. Avalanche revealed that “10 million=plus data points, smart contract automation, and verifiable randomness have helped secure $550m-plus in value.”

The collaboration had also grown Avalanche’s non-fungible token (NFT), gamefi and DeFi offerings, especially when encouraging developers to build on the blockchain.

It said: “With Avalanche’s high-speed network and Chainlink’s highly reliable oracle infrastructure, devs can drive the next wave of Web3 innovation with advanced, secure and scalable dApps.”

AVAX has recently gone live on Robinhood’s brokerage platform. Investors could send and recieve the cryptocurrency via Robinhood from 29 September.

Price predictions for 2022 and beyond

CoinCodex’s short-term AVAX coin price prediction indicated that there was bearish sentiment around the cryptocurrency. CoinCodex’s one-month AVAX price prediction, as of 4 October, saw the token falling 5% to $16.41.

For the longer term, the algorithm-based website WalletInvestor’s AVAX price prediction for 2022 suggested the token would have plummeted to $1.39 by the end of the year. However, Wallet Investor’s AVAX price prediction for 2025 saw the token climbing back above $5 and achieving $21 in five years’ time.

DigitalCoinPrice was bullish in its long-term AVAX crypto price prediction. According to its AVAX price prediction for 2025, the site expected the token to trade at an average price of $70.49. DigitalCoinPrice’s AVAX price prediction for 2030 saw the token rising further to an average price of $242.74.

Finally, PricePrediction.net’s avalanche price prediction as of 4 October 2022 expected an average price of $54.91 by 2025.

Note that analyst and algorithm-based avalanche token price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and investment goals.

Additional material by Raphael Sanis

FAQs

Is Avalanche a good investment?

Avalanche’s native token, AVAX, was the 17th largest cryptocurrency with a market cap of more than $5bn, as of 4 October 2022, according to CoinMarketCap.

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether the AVAX token is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. Never invest money that you cannot afford to lose.

How many Avalanche coins are there?

According to its whitepaper, the AVAX token has a capped supply of 720 million coins.

Will Avalanche go up?

DigitalCoinPrice was bullish in its long-term AVAX crypto price prediction, however CoinCodex said there was bearish sentiment around the cryptocurrency.

In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether AVAX is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. Do not put at risk any money you cannot afford not to get back

Should I invest in Avalanche?

Avalanche’s native token AVAX was the 17th largest cryptocurrency with a market cap of over $5 as of 4 October 2022, according to CoinMarketCap.

Whether you should invest in AVAX is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research and never invest more money than you can afford to lose because prices will go down as well as up. 

Further reading

 

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