Avalanche – What it is and why you should keep an eye on it

Avalanche, one of the great competitors for the throne of Altcoins, is making great strides to try to unseat Ethereum, Such as associations of the caliber of Amazon. It certainly has a long way to go, but we must not overlook the great advances that are being made with this innovative blockchain. Let's analyze these steps that you have taken forward and how could it influence in our opinion when investing in it.

What is Avalanche?

Like other projects like Ethereum, Avalanche is a smart contract blockchain. Purely these blockchains allow developers program smart contracts, which allows them create all kinds of decentralized applications (dApps) on the Avalanche network. Its use cases include decentralized finance dapps (DeFi), non-fungible tokens (NFT), decentralized data storage, blockchain games, etc. But what stands out about Avalanche over its competitors? The Subnets, customizable blockchain networks that are hosted on the same Avalanche blockchain. This innovative concept allows individuals, companies or government entities to create and manage their own blockchain networks within Avalanche.

How does Avalanche work?

Perhaps this concept catches you off guard, so let's better explain how Avalanche works in a general framework. This blockchain It is divided into three blockchains to allow it to be fast, scalable and secure. First you have the X Chain, which is considered the main network. This blockchain is responsible for the creation, administration and management of token transactions. This blockchain would be more of an interconnected network of transactions rather than a chain of transaction blocks. Next we have the C-Chain, the network intended for smart contracts in Avalanche. This network is purely a copy of the Ethereum Virtual Machine (EVM). This network was designed to allow any dapp present on the Ethereum blockchain to be transferred to Avalanche quickly and easily. Last (and not least), we have the P-Chain, where the Subnets ecosystem is hosted.

What does Avalanche's partnership with Amazon mean?

As you might expect, it means a lot. Opening the doors to partnerships with large companies like Amazon allows Avalanche the continue expanding its ecosystem to more users, which in turn translates into more activity within the blockchain and, consequently, more revenue. The general idea is that customers can launch their own Avalanche subnets with the push of a button through the AWS Marketplace.

It should also be put into context that, among many blockchains, Amazon has chosen Avalanche for this association, which translates as a great seal of approval, this being the first blockchain to make a commercial association with one of the large companies in the technology sector. If we look at Amazon's quarterly earnings report, AWS represents 16% of total revenue of the company. Therefore, this partnership would allow Amazon to increase its user traffic thanks to the adoption of blockchain technology and Avalanche to increase the number of dapps present in its ecosystem.

How is Avalanche doing on a technical level?

At a technical level we can highlight three factors:

1. There is a potential support prices between 10 and 13 dollars (blue range) which has been defined as the support of the bullish movement.
2. He has managed to get out of a bearish channel (diagonal yellow lines) in which it has been oscillating since August of this last year.
3. Between the price and the Relative Strength Index (RSI, blue line), there is a bullish divergence which suggests to us that AVAX is preparing for a longest rally. As you can see, the RSI is making higher lows while the price has made lower lows, suggesting that the bears have tired of attacking and the bulls begin to dominate.

Is it a good idea to invest in Avalanche?

Let's review the points we have analyzed to determine if Avalanche is a good investment idea. As we have seen, the partnership with Amazon is a masterstroke that in the future it could bring more associations of the same caliber. In turn, the Avalanche token (AVAX) is required to pay transaction fees for the Avalanche network, meaning that the more dapps hosted on the blockchain, token demand will grow in pursuit. Although it is possible that Avalanche subnets could have their own custom tokens, which could be used for commissions.

According to DeFiLlama, Avalanche currently has 957 million of total value locked (TVL) in decentralized finance (DeFi). It is much smaller compared to Ethereum: it is the largest at $25.500 billion. Not to mention that Avalanche's "fully diluted" capitalization is about $11.000 billion right now, compared to Ethereum's $170.000 billion. Based on these figures, AVAX is about twice as expensive as ether right now. That does not mean that these two large blockchains cannot coexist within the cryptocurrency ecosystem, so Avalanche has great potential in the long run.