After the Terra collapse, increased risk perception could see AVAX outperform SOL.
Key Points:
- Avalanche is a platform blockchain that can handle 4500 transactions per second. While it has a fast-growing ecosystem of Dapps, AVAX’s price has been affected by the correction in the broader crypto market.
- Solana is one of the most scalable platform blockchains in the market today. While adoption is growing, SOL price has been weighed down by the correction in the broader market.
- While both Avalanche and Solana will do well long term, AVAX could outperform SOL in the short to medium term. This has a lot to do with SOL’s frequent network outages in 2021 and the risk awareness that Terra’s collapse has triggered amongst investors.
Avalanche (AVAX)
The decentralized application space is on a growth trajectory and launch platforms are increasingly in demand. Avalanche is one of those that have experienced rapid growth in a very short time. Although only three years old, Avalanche now boasts one of the largest and fastest growing ecosystems of dapps in crypto. This is due to its strong core metrics. They include low fees and high throughput – up to 4500 transactions per second. Despite the rapid growth of the Dapps ecosystem, the price of Avalanche has plummeted in 2022. This has a lot to do with the bearish nature of the broader cryptocurrency market.
Solana (SOL)
Like Avalanche, Solana is a launch platform for Dapps and has seen a significant level of adoption in the last 2-years. This is due to its scaling capabilities and super-low fees. Solana can handle up to 50k transactions per second, and its fees go as low as $0.001 per transaction. In 2022, there has been an upsurge in investments in the Solana NFTs ecosystem running into 100s of millions of dollars.
Which is a better buy?
Due to the fast-growing nature of their ecosystems, Avalanche and Solana have a strong chance of growth in the future. Now that their prices are at all-time highs from their last all-time highs, chances are that once the broader market rebounds, these two could perform well. However, Avalanche is more likely to outperform Solana in the next bull run.
This has a lot to do with the history of the two networks. Avalanche has been consistently stable since it launched. On the other hand, Solana has suffered several network outages in the recent past that put its reputation at risk. After the recent Terra collapse, the chances are that many investors will be a lot more conscious of the risks associated with the cryptocurrencies they invest in. This could disadvantage SOL over AVAX in the short to medium term.
Conclusion
Although AVAX and SOL are good long-term investments, the odds favor AVAX in the medium term. The collapse of Terra LUNA has made investors aware of cryptocurrency risks, and SOL has more perceived risk than AVAX.
