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The widespread use of the Avalanche blockchain to build play-to-earn (P2E) games is the reason for the recent meteoric rise in the value of its associated cryptocurrency.
Yesterday, Avalanche burst into the top 10 most valuable cryptocurrencies, with AVAX with a total market capitalisation in excess of $30bn, and individual tokens priced at about $125 each.
AVAX was launched in 2020 and its speed and scalability make it ideal for use in blockchain games.
Avalanche activity at all-time high
According to Chen Li, CEO of DeFi (decentralized finance) investors Youbi Capital, AVAX’s recent spurt in value is attributable to the underlying blockchain use in multiple P2E games.
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AVAX to US dollar (AVAX/USD)
“The value of the blockchain is typically based on the on-chain activity. Avalanche’s own activities, and also the number of smart contracts that are deployed on its chain has reached all time high. So that’s why Avalanche has outperformed its rivals.”
Last week Bank of America analysts said that Avalanches scalability due to its transaction speed but while remaining secure meant it is a viable rival to Ethereum.
Scalability is key
Li agreed that scalability was key to Avalanche’s recent strong performance.
“The value of the blockchain is typically based on the on-chain activity, because each activity results in transaction fees. There is a direct correlation between scalability and a crypto’s price.
“Because the more scalable a token is the more transactions it can support and therefore the token becomes more valuable,” he said.
The most high profile P2E game is Axie Infinity, backed by Vietnamese developers Sky Mavis. It is a decentralized application on the Ethereum blockchain.
Rapid expansion in blockchain gaming
Players earn money by growing digital animals, known as Axies, which are non-fungible tokens which can be swapped into Ethereum, and then hard cash.
According to an article by Coindesk the game soared into popularity among Filipinos during the Covid lockdown, attracted by the chance to earn the equivalent of $300- 400 a month online.
There has been an explosion in similar blockchain games following Axie Infinity’s success, many of which are based on the Avalanche blockchain such as Avatars and Heroes Chained.
A more in-depth interview with Youbi Capital’s Li will appear on Capital.com this week.
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