Smart-contracts platform Avalanche’s AVAX token hit a new all-time high Wednesday and is up 20% on the week, even as bitcoin, the world’s largest cryptocurrency, has suffered a pullback.
Avalanche is an Ethereum competitor that facilitates decentralized applications (dApps) and the creation of custom blockchains on its ecosystem. Launched by Ava Labs in 2020, Avalanche’s native AVAX token has a capped supply of 720 million and is used as part of the consensus mechanism and for paying network fees.
AVAX has soared in price recently, trading at $104.21, up 85% in the last month alone. The gains pushed the token’s market capitalization to about $23 billion, vaulting past Terra’s LUNA token to become the fifth-largest among Ethereum competitors, or so-called layer 1 alternatives.
“Avax has seen significant growth in the past two months consistent with the rest of the Layer 1 market,” said Matthew Dibb, chief operating officer of Stack Funds. “We expect that AVAX will continue to head north in the near term while demand for layer 1′s is still high.”
Avalanche founder and CEO Emin Gun Sirer said Tuesday that Ava Labs will be partnering with “Big Four” accounting firm Deloitte “to build more efficient disaster relief platforms using the Avalanche blockchain.”
Some analysts say the announcement may have propelled the latest leg up in the AVAX coin price.
Avalanche incentive programs
Avalanche has announced more than $600 million of initiatives recently to spur growth on the network. In September, the Avalanche Foundation announced a $230 million raise to jumpstart liquidity in the network’s burgeoning decentralized finance (DeFi) ecosystem. Then in early November, Avalanche developers and investors formed a $200 million ‘Blizzard’ Investment Fund. There’s also Avalanche Rush, a $180 million liquidity mining incentive fund.
Dibb said that the new efforts have spurred “a large transition of projects and applications to move from Ethereum over to Avalanche.”
“Avalanche has received positive news coverage over its new $200 million funding for its DeFi platform and this new Deloitte partnership,” Freddie Evans, sales trader at digital-asset broker GlobalBlock, said in emailed comments.
Juan Pellicer, analyst at IntoTheBlock, said he was “excited to see how Avalanche continues to grow its DeFi ecosystem, for example by launching liquid staking solutions that allow investors and traders to be more capital efficient while helping secure the network in a decentralized manner.“
“This could possibly be a catalyst for the demand of AVAX,” he said.
AVAX price versus ETH price
Ethereum (ETH) is down 8.4% on the week, trading near $4,245 at press time.
Avalanche’s price gains also appeared to diverge from other layer 1 tokens. Solana’s SOL is down 5.6% on the week, Polkadot’s DOT has slid 10% and Cardano (ADA) is off just over 10%.
Grayscale Investments, owned by Digital Currency Group, which also owns CoinDesk, announced earlier this month that it was considering adding Avalanche to its range of investment products.
