While it’s too early to call an end to the bear market, cryptocurrency is beginning to show some signs of life — the market’s total capitalization has increased about 17% in the past 30 days to $2.15 trillion. Let’s explore why Avalanche ( AVAX -0.93% ) and Polkadot ( DOT -2.35% ) can help power continued recovery in April and beyond.
1. Avalanche
Launched in 2020, Avalanche is a blockchain designed to host decentralized applications (dApps), which are programs that use self-executing smart contracts to offer on-chain services. The network sets itself apart with its unique coin-burning mechanism.
Image source: Getty Images.
In crypto, burning involves sending a token to an inaccessible address, removing it from circulation. This process, which is similar to corporate share buybacks, can boost a token’s price by reducing supply for a given level of demand. Avalanche burns all transaction fees on its network, so the more people use the platform, the faster the token supply falls.
According to its official website, burnedavax.com, Avalanche has burned almost 1.2 million units of AVAX worth $112 million. The AVAX supply is capped at 720 million, which means no new coins can be created — further boosting the impact of the coin-burning mechanism. The network can also handle 4,500 transactions per second (TPS), leaving the current market leader, Ethereum (which has a TPS of 15), in the dust.
With a market cap of $25 billion, Avalanche is the 10th-largest cryptocurrency. But the asset still has room to grow because of its respectable technical specs and deflationary design.
2. Polkadot
With a market cap of $22 billion, Polkadot is another relatively large cryptocurrency. But it likely has more room to grow because of its unique spin on dApp development. The asset’s respectable speed and vibrant developer ecosystem are icing on the cake.
Polkadot operates two types of blockchains: its main network (the relay chain) and at least 100 sub-blockchains called parachains, which can be used to create dApps.
This design gives developers more privacy and control over their projects while also benefiting from the security of the main network. Polkadot began auctioning off parachain slots in November 2021, and the platform already boasts a vibrant ecosystem of projects ranging from decentralized finance to non-fungible tokens (NFTs), which are digital proof of ownership stored on the blockchain.
Polkadot’s relay chain boasts a TPS of about 167 — more than 10 times faster than Ethereum, but significantly slower than other newer blockchains like Avalanche. Polkadot’s unique parachain design helps make up for its shortcomings in speed because each parachain can function similarly to a separate blockchain, easing challenges with congestion.
Betting on unique technologies
While Avalanche and Polkadot are great ways to bet on a cryptocurrency rebound, they have some key differences. Polkadot is an investment in the technical side of blockchain technology because it introduces a novel method of dApp development. Avalanche, on the other hand, is focused on optimizing investor returns through its unique coin-burning mechanism.
Both assets could fit well into a diversified crypto portfolio.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
This news is republished from another source. You can check the original article here
Be the first to comment