Is Avalanche A Good Investment? 

Last Updated February 2nd 2022
14 Min Read

There are several cryptocurrency success stories out there. Of course, many “regular” people have become millionaires by investing in cryptos. It started with Bitcoin, which has created several millionaires over the years. The best part of the story is that Bitcoin is not the only millionaire-maker coin. There are several other coins that have yielded mouthwatering ROI for investors. 

As inspiring as most crypto success stories sound, it is important to note that there abound bitter experiences in the industry. Yes, many crypto projects have failed, and many people have lost money by investing in cryptos. The success stories will always fly higher and reach further. Investors, therefore, must always remember that the chances of losing are always there. 

It is possible to improve the chances of making profits and minimize the chances of experiencing losing in cryptocurrency investing. Often, it comes down to buying the right coins. You will also need to get your timing right most of the time. You need to be sure that any coin you want to buy is a good investment. Here, we are going to focus on Avalanche AVAX

Though there are persons who are gifted in spotting good investment opportunities, any ardent reader can determine whether a digital coin is a good investment or not. It may take a lot of research, but there are key factors that will show you whether a digital coin is a good buy or not. We will discuss Avalanche AVAX in a manner that will help you determine whether it is a good investment. 

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What Is Avalanche? 

Avalanche is an open, programmable smart contracts platform that allows developers to build decentralized applications and custom blockchain networks as subnets. It has been described as the “platform of platforms” because it can host a wide range of blockchain projects, including non-fungible tokens (NFTs). It is similar to Ethereum and other smart contracts platforms but is unique in many ways. 

One of the most spectacular things about Avalanche is its unique design. The protocol actually features three built-in blockchains, unlike most other platforms that deploy a single blockchain. These three blockchains form the core of the Avalanche ecosystem and perform three distinct functions. They also use three different consensus mechanisms for their respective functions. 

Though it has become really popular and grown to become one of the top 15 cryptocurrency platforms by market capitalization, Avalanche is a relatively new project. Its mainnet was launched on September 21, 2020. A year and a few months afterwards, it has secured hundreds of individual projects, attracted more than 500,000 community members from across the globe, and produced more than 750 individual block-producing validators. It is fast becoming one of the biggest DeFi platforms. 

Just like every other cryptocurrency project, Avalanche has a native currency. Simply called AVAX, this native currency powers the network in many ways. It is primarily used to pay transaction fees and can also be staked to secure the network. As is the norm in the blockchain industry, AVAX is the primary investment vehicle in the Avalanche ecosystem. It is available on many platforms (including cryptocurrency exchanges and brokerages) and can be traded by anyone. 

Check Out: What Is Avalanche? Should You Invest In AVAX And Where To Buy It?

How Does Avalanche Work? 

To understand the potentials of Avalanche and determine whether it is a good investment, we have to take a peek at how the entire thing works. As mentioned earlier, it is similar to Ethereum and other smart contracts platforms like Solana, Cardano, Cosmos, etc. It allows developers to create and launch a variety of projects on it, including DeFi protocols, NFTs, stablecoins, and many more. Avalanche is attractive for many reasons. It is compatible with the programming language used by Ethereum (Solidity), which means Ethereum developers can easily build on Avalanche. 

As mentioned earlier, Avalanche's core comprises three distinct blockchains that perform three distinct functions and use different consensus protocols. The Platform Chain (P-Chain) coordinates network validators, allows for the creation of subnets, and tracks active subnets. It uses the Snowman consensus mechanism. The Contract Chain (C-Chain) hosts smart contracts and decentralized applications. It also uses the Snowman consensus mechanism. The Exchange Chain (X-Chain) is responsible for creating and exchanging the native token (AVAX) and other assets in the ecosystem. It uses the Avalanche consensus mechanism. 

By dividing the major computing tasks among the blockchains, Avalanche is able to improve several things. It achieves higher throughput without compromising decentralization. It also improves scalability. Avalanche can handle more than 4,500 transactions per second (tps), which is significantly better than Ethereum’s 14 tps and Bitcoin’s 7 tps. 

As mentioned already, AVAX is the native currency of Avalanche. It powers the network and serves as the primary investment vehicle. AVAX can be used for several things in the Avalanche blockchain, including settling transaction fees and securing the platform through staking. It is also the digital currency you will acquire in order to invest in Avalanche. 

How Do You Invest In Avalanche? 

Investing in Avalanche doesn’t mean you have to buy the shares of the company behind the network. Ava Labs raised $42,000,000 through a successful ICO, even though the target was $9,000,000. For regular investors who didn’t participate in the ICO, the obvious way to invest is to buy the token, AVAX. 

AVAX has become a desirable cryptocurrency, thanks to the exceptional mainnet and the benefits Avalanche offers developers. After experiencing several bullish trends, it has become a very popular digital asset. What does that imply? AVAX is now easily available for cryptocurrency investors. The coin is now available across several cryptocurrency exchanges, brokerages, and other trading/investment platforms. 

Buying AVAX is the first step in Avalanche investing. You can choose what you want to do with the coin in order to make a profit. Depending on your investment strategy, you can sell the coin after some hours, days, or weeks. You can also wait for months or years before selling your AVAX holding. Investors can also choose to stake their AVAX and earn some returns. It is all about how many opportunities you know about and your willingness to take the risks involved. 

How Do You Make Money From Avalanche? 

Just like most other cryptocurrency platforms, Avalanche AVAX offers more than one way of making money. Corporate bodies and developers can create projects are monetize them, but the regular investor will focus on the digital asset, AVAX. So, what are the different ways of making money with AVAX? We will briefly discuss them below: 

1. Trading 

Trading is the commonest way to earn from most cryptocurrencies, including AVAX. Trading simply means buying and selling digital assets like AVAX and the rest. To trade AVAX for profit, you should buy the coin when the price is low and sell when the price gets high. 

There are different approaches to trading AVAX and other digital coins. Day-trading involves buying and selling your digital token or any other financial instrument within the same trading day. HODLing, on the other hand, means buying the asset and keeping it for a long time before selling. In Day-trading, the profit margin is often low, but traders can make profits or losses on daily basis. HODLing can yield huge returns over time, but it can also bring disappointment after several months or years of being hopeful. 

Trading AVAX can be very rewarding, but you need to choose your strategy carefully. If you choose day-trading, then you must improve your knowledge of the game and always keep your eyes on market trends. If you are willing to wait for months or years before cashing out on your AVAX investment, then HODLing is the right approach for you. However, you must understand the risks and monitor the marker from time to time. 

2. Staking 

Staking in cryptocurrency involves locking your digital asset to secure and support a blockchain network. Staking AVAX means you will lock your tokens for a given period and earn AVAX tokens in return. It is the most straightforward way to make passive income from AVAX investment, but is there any catch? 

Staking means you are committing your assets to the network. Staked tokens may be used for validating transactions and other activities. Throughout the period you stake AVAX (or any other cryptocurrency), you will not have access to it. At the end of the period, you can stake it again, leave your asset in your wallet, or even sell for profit. You can earn up to 11% APY on staked AVAX. 

3. Lending 

Like other cryptocurrencies in the DeFi subsector, AVAX can be used for lending and borrowing. You can use AVAX as collateral to collect a loan from a number of DeFi platforms, and you can also lend your AVAX holding to another user and earn interest from it. 

There are different platforms that allow users to lend and borrow AVAX. Depending on the one you choose, you can earn 12% APY as interest. It can be higher or lower, but the fact remains that you will always earn interest when you lend AVAX to others through a secured platform. 

Is Avalanche (AVAX) A Good Investment? 

Avalanche is one of the hottest new coins in the cryptocurrency market. AVAX has been available for a little over one year but has become a very popular coin. Besides popularity, the coin has joined the league of top 10 cryptocurrencies by market capitalization. That’s a lot, but does it mean that we should conclude that AVAX is a good investment? 

To be called a good investment, a financial instrument should be able to return profits to investors. There may be hiccups from time to time, but a positive return to investment is expected from any asset that should be classified as a good investment. In this regard, AVAX has been a good investment for the time it has been on the market. According to Coin Market Cap, Avalanche ROI is 14,456.88% at the time of writing this piece. 

It is also important to consider the uniqueness and usefulness of any cryptocurrency project before classifying its native currency as a good investment. Avalanche is an incredible smart contracts platform with superb infrastructure to host several other projects. With three blockchains at its core sharing computing tasks, the platform is solid. So far, it has been a successful project and looks set to expand further. 

Every experienced investor also understands that an investment must be secured to be considered safe. Avalanche AVAX is generally considered a safe investment for several reasons. For a start, it is well designed and its mainnet is incredible. 

It is important to state that there are elements of risks in AVAX investing. Just like other cryptocurrencies, AVAX is a volatile asset. This implies that the price of the coin is constantly fluctuating. Volatility can be good or bad for AVAX investors, depending on when they buy and when they sell. Volatility, alone, does not mean AVAX is a bad investment. There are other risks associated with trading and staking AVAX – you just need to understand these risks and how best to manage them. 

Does Avalanche Have A Future? 

Another critical factor to consider before investing in AVAX or any other cryptocurrency at all is its future. In other words, does AVAX have a future? Is it going to gain or lose value in the coming years? Is the platform going to expand further or is it going to be relegated to the background? 

From what we know about Avalanche, the project is created for the future. It has been called the platform of platforms because of its unique design, robust infrastructure, and excellent functionality. It looks very much like a project that will not only stand the test of time but will expand to become an important part of the DeFi industry. 

Though Avalanche will serve as a platform for decentralized apps, custom blockchains, and other types of DeFi protocols, its usefulness will go beyond the blockchain industry. Projects that can improve other industries can be created and hosted on Avalanche. Since it is interoperable, Avalanche will face less competition in the future. Instead, it can be integrated with other projects to offer more value. 

How about the future of AVAX as an investment instrument? As the network continues to expand, we believe that AVAX will gain value in the coming years. It has already grown at a remarkable pace, but we expect that it will grow further. AVAX can reach new heights in five years' time. Even if the growth in value doesn't happen as fast as it has happened in the last 12 months, AVAX will steadily gain value with time. 

Don't Miss: Avalanche Price Predictions

What Are The Good Sides Of Avalanche Investment? 

It is important to find enough reasons to invest in a cryptocurrency before making the commitment. At this point, you should know some of the good sides of Avalanche Investment as we have alluded to them severally throughout the article. For the sake of emphasis, here are some of the good sides of investing in Avalanche AVAX: 

Avalanche is a well-built decentralized platform that compares favourably with Ethereum. It is bound to become one of the busiest smart contracts platforms, judging by what it has achieved so far. It is a promising future for the network and, in extension, its native token AVAX. 

Avalanche is a secure platform, which also means that investing in its token is safe to a great extent. Investors just need to buy from the right sources and store their assets in safe digital wallets. 

Avalanche is energy-efficient, which means it doesn’t pose any problem to the environment, just like Bitcoin and other older cryptocurrencies. 

There are several ways to earn when you invest in Avalanche. You can choose any of the two popular trading approaches (day-trading or HODLing), you can lend your AVAX token through reliable platforms and earn interest, and you can also stake your AVAX to earn passive income in the form of more AVAX tokens. 

Avalanche is an expanding platform that is bound to accommodate several (potentially valuable) projects. Invariably, the success of future projects will rub off on the value of AVAX. 

What Are The Bad Sides Of Avalanche Investment? 

While there are several reasons to be excited about investing in AVAX, there are also reasons to think twice before investing. In fact, there are bad sides to investing in Avalanche, just as with every other digital coin. Some of the potential bad sides include: 

AVAX is a volatile asset, which means it is risky to trade. Though this is a common issue in the cryptocurrency market, investors must recognize the risks and learn how to manage them. 

AVAX has become a little pricey for a coin so new on the market. This also means that investors need more funds to buy a reasonable quantity of AVAX. 

Should You Invest In Avalanche (AVAX)? 

When you consider the merits and demerits of investing in AVAX, you can decide on the best action to take. However, from what we have discussed so far, most experienced crypto traders and investors will accept that AVAX is a good investment option. There are so many positive things about Avalanche, and the native currency has performed wonderfully well on the market. 

Coming to the future of Avalanche, there are several reasons to be positive. The network has the potentials to become the busiest smart contracts platform, thanks to its features and functionalities. The native currency (also the primary investment vehicle), AVAX, is also set to explode, even as the network continues to expand. Investors can expect their investments to grow meaningfully in the coming years. 

Potential Avalanche investors must also recognize that there are risks involved in trading AVAX. It is a volatile asset, which means losses are common, especially when day-trading. The risks of impermanence loss are also there, even if investors decide to HODLe. 

Read Also: Will Avalanche AVAX Make Me Rich In 10 Years?

The Best Way To Invest In Avalanche 

Overall, Avalanche AVAX looks like a pretty good investment option. Though there are risks involved in investing in the digital coin, it can be incredibly rewarding when you make the right moves at the right time. You should choose your strategy carefully and monitor the market closely to minimize the attendant risks. 

You should also know that where you buy your AVAX coins matters a lot. Though AVAX is available across a wide range of platforms, you need to choose wisely to minimize the risks of playing into the hands of scammers or losing your investment to hackers. It is best to buy your digital assets from reliable platforms like eToro and store them in a safe digital wallet

eToro – The Best Platform To Buy Avalanche

eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

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