February 27, 2024

Avalanche: Avalanche as an investment in 2023

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Avalanche: Avalanche as an investment in 2023

Opinion

Ethereum developers are justWe managed to update Shapella when one of our main competitors, Avalanche, announced improvements to its ecosystem. What is it and how will it affect the price of AVAX?

Cortina Update

In mid-April 2023, Avalanche developers from Ava Labs announced that on Tuesday, April 25, they will hold on their main network 
update called Cortina.The update is a protocol optimization that is not compatible with versions older than v.1.10.0. If you do not update your node before activating Cortina, you will not be able to confirm new blocks and will appear offline to everyone else, jeopardizing your staking rewards.

The Avalanche team previously testedupdate on the Fuji test network on April 6, 2023. Everything went well. It is worth noting that the developers continue the mountain theme: Fuji is a mountain in Japan, and Cortina is a reference to the Italian ski resort Cortina d’Ampezzo.

Unlike Ethereum's Shapella, whichallowed to withdraw tokens from staking, the Avalanche update is of a technical nature. X-Chain will be migrated from Avalanche Consensus to Snowman++ Consensus. Now all structures (also P-Chain and C-Chain) of the ecosystem will be on a single protocol. There will be a so-called linearization in X-Chain. This will reduce the computer power involved in the process, as well as increase the efficiency of research and development.

Avalanche Warp mechanism will be introducedMessaging (AWM), which will simplify the process of transferring coins from X-Chain to various exchanges. Another innovation will be the Batched Delegator Awards feature. She will allow
simplify the reward distribution system for validators with a large number of delegates. Batched Delegator Awards will be implemented on P-Chain. In addition, Cortina
will increase the maximum block size on C-Chain.

How will the update affect the cost of the AVAX token?

Avalanche technical analysis

Cortina should have a positive impact onthe Avalanche platform itself. It does not involve, like Shapella, the withdrawal of tokens and a large increase in supply. In this regard, it can be assumed that the price of AVAX will rise. Well or at least it will stop falling. Since April 19, the coin has lost more than 20% in value. However, since the beginning of the year, the dynamics are still positive - growth is more than 57%.

From March 5 to April 16 there is a day on the Avalanche networkThe number of active addresses increased day by day. This was accompanied by the growth of AVAX. However, from April 16 to April 22, the dynamics turned out to be negative. Perhaps a rebound in activity will restore investors' faith in Avalanche.

Avalanche: Avalanche as an investment in 2023

Source: avax.network

From a technical analysis point of view AVAXis now in a downward trend. So far there are no signs of a change in trend. The price recently dropped below the 50-day moving average (indicated in yellow), which should not add optimism to the bulls. A return to growth is possible if the resistance level of $17 is overcome. The nearest support level is $16.2.

Avalanche: Avalanche as an investment in 2023

Source: tradingview.com

Avalanche's market capitalization as of April 24 is about $5.5 billion. According to this indicator, the cryptocurrency ranks 16th between TRON and Dai.

Strengthening partnerships

Back in January it became known that Avalanchewill collaborate with Jeff Bezos' company Amazon in the field of cloud computing. However, the platform decided not to stop there.

Avalanche is about to launch a test networkSpruce subnet of Evergreen to attract institutional investors. It is already known that at least four investment companies will participate in the testing: T. Rowe Price, Cumberland, Wellington Management Group and WisdomTree Investments. The test network will allow third-party investors to use the Avalanche platform without the risk of losing their investments.

At the initial stage, investors willuse DeFi applications for currency exchange and interest rate swap trading. At the next stages, it is planned to introduce additional functionality: credit insurance, trading, third-party financing. However, for this, the institutional investors indicated above are precisely needed to provide feedback. By doing this, they will help provide high-quality and convenient service.

In favor of bringing its initiative to life Avalanche
cites as an example the report of Uniswap Labs,behind the exchange of the same name and the company Circle Internet Financial, which is best known for its USDC stablecoin. The report found that about $2.2 trillion of customer funds were at risk on a daily basis on conventional exchanges last year. The indicator is trending upward, since in 2019 only $1.9 trillion was at risk of loss every day. That is why Ava Labs considers it appropriate to introduce Spruce. 

“This innovative collaboration will createa secure, controlled and exciting prospect for global financial institutions. “We look at Spruce, and more broadly, at the Avalanche Evegreen subnetworks, as a significant step in exploring the possibilities of digital finance,” says company president John Wu.

Total:Avalanche continues to evolve technically. Cortina will be updated soon. This may help slow down the decline in the price of the AVAX token. In addition, Ava Labs continues to build mutually beneficial business relationships with large companies.

This material and the information in it are notindividual or other investment advice. The editors' opinions may not coincide with the opinions of the author, analytical portals and experts.