Top 5 Use Cases of the Avalanche (AVAX) Blockchain
Avalanche is among the most popular Layer 1 blockchains out there. It’s fast, scalable, offers low transaction fees, and quickly gaining traction.
But what’s the reason behind the high-speed Layer 1 blockchain's recent popularity? Let's break down the basics of Avalanche and explore its 5 most compelling use cases.
What Is Avalanche (AVAX)?
Avalanche is a high-performance Layer 1 chain that was launched in September 2020. To solve the blockchain trilemma, it leverages the unique Avalanche Consensus algorithm and a multi-chain architecture with a Primary Network and several sovereign networks called Subnets to achieve enhanced scalability, decentralisation, and security.
Avalanche's Primary Network consists of the Contract Chain (C-Chain), the Platform Chain (P-Chain), and the Exchange Chain (X-Chain), which collectively make up the Avalanche Mainnet. Together with Subnets, the Mainnet forms a heterogeneous network of blockchains for creating and deploying decentralised applications (dApps).
With the fastest consensus mechanism in the crypto market, Avalanche features low transaction fees and can achieve finality in 2 seconds. It is also compatible with the Ethereum Virtual Machine (EVM), enabling seamless dApp deployment for developers and interoperability with other EVM chains.
Avalanche is powered by its native AVAX token, which you can currently buy and stake on VALR. In a recent article, we compared Avalanche and Bitcoin (BTC) based on factors related to both their blockchains and their native digital assets.
Avalanche's Top 5 Use Cases
Now that you know what Avalanche is, let's see the top 5 use cases the Layer 1 blockchain fulfils, potentially contributing to its recent spike in popularity.
1. Tokenised Real-World Assets (RWAs)
Real-world asset (RWA) tokenisation, which refers to bringing tangible financial instruments existing in the physical world on-chain, is one of the hottest trends in the cryptocurrency market. In the field of RWAs, Avalanche is currently ranked as a top chain.
According to RWA.xyz's data, Avalanche ranks as the sixth-largest blockchain network for real-world asset tokenisation, accounting for a total RWA value of $37.22 million as of November 14, 2024. This represents a substantial growth from November 2023, when only a little more than $500,000 of RWAs resided on the high-performance Layer 1 chain.
Avalanche had multiple positive events on the RWA front this year. The multinational investment bank Citigroup partnered with Ava Labs, the for-profit company contributing to Avalanche's development, as well as other blockchain projects and financial institutions to complete a proof-of-concept for the tokenisation of private equity funds.
In addition to the Avalanche-based Homium home loan tokenisation protocol's $10 million Series A raise in April, Franklin Templeton's OnChain U.S. Government Money Market Fund (FOBXX) also expanded to the Layer 1 blockchain in August. A few days ago, the project also announced the launch of a tokenised US Treasury bill (T-Bill) fund on Avalanche.
2. Payments and Decentralised Finance (DeFi)
In terms of use cases, Avalanche also excels in payments and decentralised finance (DeFi). The L1 blockchain currently ranks eighth based on the market capitalisation of stablecoins, which presently stands at $1.73 billion.
In March, Avalanche was featured in the news for a joint project with Chainlink Labs and the Australia and New Zealand Banking Group (ANZ) to connect the Layer 1 blockchain and Ethereum for on-chain settlement solutions. While the project integrated its C-Chain network with Stripe in April for seamless fiat-to-crypto on-ramping, the Avalanche Foundation non-profit organisation introduced a Visa crypto card in October for spending WAVAX, USDC, sAVAX, and other digital assets.
Regarding DeFi, Avalanche is currently ranked as the ninth-top chain, with $1.21 billion total value locked (TVL), which has grown by over 10% in the last 30 days. Some of the top AVAX-based dApps in this market include BENQI, AAVE, LFJ, GMX, and GoGoPool.
3. Non-Fungible Tokens (NFTs) and Web3 Gaming
With $560,000 of non-fungible token (NFT) sales in the last 30 days and 81 Play-to-Earn (P2E) games, Avalanche is not among the most popular blockchains in the NFT and Web3 gaming sectors. That said, the L1 network is still busy in these markets and has shared multiple positive news in these fields in 2024, including:
Over 100 million Avalanche inscriptions minted by January 2024
Sports Illustrated's SI Tickets moved its Box Office NFT ticketing platform from Polygon to Avalanche
South Korea-based video game publisher expanded its MapleStory massively multiplayer online role-playing game (MMORPG) to Avalanche
Japanese video game developer Konami partnered with Avalanche to launch its new Resella NFT platform
4. Memecoins
Memecoins are high-risk investments due to the massive hype around them, the prevalence of fraudulent activities targeting users, and their extreme price volatility. Yet, it is one of the top sectors of the cryptocurrency market due to the rising investor interest.
It seems that the Avalanche Foundation has identified this trend by expanding its $100 million Culture Catalyst fund with memecoins. Originally, the fund was meant to invest in NFT artists, but the non-profit now seeks to extend it with meme-based projects to generate additional traction in this market.
5. Vouchers and Vehicle Title Transfers
In addition to the use cases explored earlier, Avalanche expanded its blockchain to vouchers and vehicle title transfers with two partnerships this year.
Regarding the latter utility, the L1 blockchain successfully digitised 42 million car titles in collaboration with the California Department of Motor Vehicles (DMV). A few months earlier, the project partnered with the online payment platform Alipay to create a Web3 technology-powered voucher program.
Buy AVAX on VALR
Avalanche is a leading Layer 1 blockchain that offers a fine balance of scalability, security, and decentralisation. As it is gaining traction, corporate and institutional clients, alongside end users, leverage its network for various use cases—from DeFi, NFTs, Web3 gaming, and RWAs to memecoins, payments, vouchers, and vehicle title transfers.
Looking to gain exposure to Avalanche?
Or Trade AVAX on VALR’s Futures market and get exposure of up to 10x leverage.
Stake AVAX on VALR
Want to make the most of your AVAX? Staking Avalanche (AVAX) on VALR lets you earn up to 5.79% APR with rewards paid out hourly. Enjoy the flexibility to stake or unstake anytime while your AVAX grows seamlessly in the background.
Frequently Asked Questions
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AVAX addresses the blockchain trilemma by leveraging its Avalanche Consensus and multi-chain architecture, enabling enhanced scalability, decentralization, and security. It supports fast transactions, low fees, and interoperability, solving issues like slow finality and high transaction costs on traditional blockchains.
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Avalanche provides high-speed transactions with 2-second finality, low fees, compatibility with Ethereum Virtual Machine (EVM), and a scalable infrastructure that supports various use cases like DeFi, NFTs, Web3 gaming, real-world asset tokenization, and more. Its multi-chain architecture and consensus mechanism ensure flexibility, security, and decentralization.
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The AVAX token powers the Avalanche blockchain by serving as a medium for transaction fees, staking rewards, and governance. It also facilitates interoperability within Avalanche’s ecosystem, supports DeFi applications, and enables the operation of Subnets and dApps on the network.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate.
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