Avalanche Pays Premium to Incentivize Validators, Will AVAX Soar To $145?
December 07 2023 - 7:00PM
NEWSBTC
Avalanche, the fourth-generation proof-of-stake (PoS) blockchain,
incurs significant costs to incentivize its validators. Token
Terminal data on December 7 shows that in the past year, the smart
contract platform paid over $275 million in AVAX to
compensate its validators despite generating only $11.5 million in
user fees. Avalanche Is Paying A Premium To Incentivize
Validators Although it appears that Avalanche is paying a premium
for validators, this is critical in securing the network and
ensuring all transactions are confirmed. Overall, and being a
proof-of-stake network reliant on node operators for security and
decentralization, Avalanche’s decision to pay validators a premium
is, as its users demand, to maintain a robust network of
nodes. Related Reading: Bitcoin Shakeout Drives $190 Million
In Losses For Over 81,000 Traders According to CoinMarketCap data,
the network has a market cap of over $9.8 billion. It is currently
in the top 10 by liquidity, surpassing Polygon and Polkadot,
competing low-fee alternatives. As it is, by incentivizing
validators with generous rewards, Avalanche ensures that there is a
strong pool of nodes available to maintain the network’s operation.
Through these validators, AVAX holders can stake and receive
rewards. As of December 7, there are over 1,539 validators
currently staking over 248 million AVAX and earning 7.84% APY. At
the same time, statistics show that Avalanche has a staking ratio
of 57.11%. Most AVAX in circulation are used to secure the network
at this level. While AVAX incentivization might draw more
validators, Avalanche documentation also states that the network
doesn’t require complex hardware to operate a node. At the same
time, the blockchain, unlike Ethereum, states that staked AVAX is
not at risk of being slashed–or penalized by the network–provided
all network requirements are met. This feature could explain the
steady rise in validator count over the past three years.
AVAX Is Up By 200%, Trading At 2023 High While Avalanche grows its
validator count, AVAX prices have also been expanding steadily,
mirroring the general market. Thus far, AVAX is changing hands
above $26, up over 200% in the last three months. At spot rates,
AVAX is trading at new 2023 highs and in a bullish breakout
formation, looking at price action in the daily chart. Related
Reading: Apollo Crypto Predicts Bitcoin Price Of $200,000 This
Cycle, Here’s Why Looking at how AVAX is, bulls might break above
$30. If the accompanying surge is with expanding trading volume, it
might be the base for another leg up that might lift the coin
toward $90 or higher in the sessions ahead. When AVAX peaked in
2021, it rose to as high as $145. Feature image from Canva, chart
from TradingView
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