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Why did AVAX grow by 350% in just a month? Here are three main reasons

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First layer blockchain networks such as Bitcoin and Ethereum form the basis of the cryptocurrency ecosystem. They enable the function of smart contracts, which have enabled the creation of new industries such as DeFi and NFT. AVAX is a relatively new solution of the first layer, in which there has been a significant increase in price and adoption recently.

The dominant platform for smart contracts (ETH) continues to struggle with high transaction fees. The problem is also the slower processing time compared to competitors.

TradingView data shows that AVAX has achieved minimum $ 9.47 exactly a month ago (July 21). Since then, the price has climbed more than 350% higher and is currently being traded for over $ 43.00. Its 24-hour trading volume has grown to more than $ 1.4 billion.

AVAX / USDT 1D.  Source: TradingView
AVAX / USDT 1D. Source: TradingView

Why did the token grow so fast? Here they are three reasons significant price increase:

  • the rapidly evolving DeFi ecosystem
  • release of the Avalanche bridge for ETH
  • a unique tokenomic protocol design that offers dynamic fees and a token burning mechanism

Avalanche Rush expands the DeFi ecosystem

One of the biggest advances in the Avalanche protocol was the announcement of the program Avalanche Rush August 18th. It is a $ 180 million stimulus program launched in partnership with Aave and Curve. It is designed to present more applications and assets in its growing DeFi ecosystem.StormGain

Phase 1 of the Rush program is scheduled to begin in the near future and will allow AVAX to be used as a liquidity stimulus for Aave and Curve users for 3 months. A total of $ 27 million in AVAX was allocated through the Avalanche Foundation to fund the program with additional allocations planned for Phase 2.

Proof of growth DeFi in the Avalanche network can be found in the increasing total locked value (TVL) in the protocols in the network.

ETH bridge facilitates property migration

The second reason for growth is issue of Avalanche Bridge (AB) on July 29. This next-generation chain bridging technology enables the transfer of assets between Avalanche and the Ethereum network.

Three weeks after the launch of AB, switched between the two networks a token value of more than $ 100 million. Holders are looking for an environment with lower fees for carrying out their transactions.

It is estimated that AB is five times cheaper than the previous Avalanche-ETH Bridge (AEB). It reportedly offers a better user experience than any cross-blockchain bridges that have been launched so far.

If ETH fails to handle high transaction fees, there is a good chance that assets and liquidity will continue to migrate to chains like Avalanche.

Transaction burning improves AVAX tokenomics

The third reason for the growing interest in the Avalanche network is the unique tokenomic structure of the protocol. It contains mechanism for burning transaction fees which helps to reduce the circulating supply over time.

As mentioned in the above tweet, all Avalanche fees are incinerated for the benefit of everyone in the community. The fixed bid of 720 million AVAX is guaranteed to decline over time. This could help increase the value of the remaining tokens in circulation. At the time of writing, it was burned more than 163,000 AVAX.

The network charging mechanism will also upgrade to the third phase of Apricot, which will introduce dynamic C-Chain charges on 24 August.

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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