Avalanche: Ask Who Is Using It
Avalanche is one of several networks competing to offer faster and cheaper transactions than the established ones. Every such design trades away some combination of speed, security and decentralization, which makes the useful questions what it gave up and whether anybody is actually using it.
How it works
It is one entrant in a crowded category. A network offering transaction settlement, a coin used to pay the fees, and a design intended to be faster than the established alternatives.
The pitch is identical across the category. Faster confirmation and lower fees than Ethereum, which every competing network has claimed and several have delivered.
The three properties trade against one another. Faster settlement generally means fewer validating participants or weaker finality guarantees, and there is no known design that maximizes all three.
So the useful question is what was given up. Every network in this category made that choice, and the documentation says which — the answer is public and it is rarely in the marketing material.
Judging one
Use is what separates a network from a technology demonstration. Capability without users produces nothing, and the category contains a great many capable networks nobody transacts on.
Two public figures answer it. Addresses transacting, and total fees paid. Both are visible on any explorer, both are hard to manufacture in a way that survives scrutiny, and neither appears in most promotional material.
Token concentration is the third figure. A large share held by founders, early investors and the foundation means the tradeable supply is small and the eventual unlocking schedule matters more than anything happening on the network.
In practice
Volume in this category is attention-driven. It arrives with a narrative and leaves with it, and the exit is considerably harder than the entry.
The category has a short history and a repeating pattern. A network is announced as the fast alternative, attracts developers and capital, and is superseded by the next one — several times over now.
A gap can come from an announcement of almost anything. Small, concentrated tokens move violently on news that would not register in a larger market.
A stop in a thin token fills wherever it can. The level you chose describes your intention rather than your exit.
The spread is the dominant cost here. Newcomers tend to picture the exchange fee as the price of a trade; in a thin token the gap between bid and ask usually dwarfs it. Say a $10,000 account buys at an ask 1% above the bid: it is $100 behind the moment the order fills, before the token has moved at all.
A shallow book means your own order moves the price. Position size has to account for the exit as well as the entry, and the exit is the harder one.
One question separates the serious entrants from the rest and it can be asked of any of them: what is being built here that could not be built elsewhere? A network attracting developers because fees are lower has a temporary advantage, since fees fall everywhere over time. One attracting them because it does something structurally different has a reason to persist.
The honest answer for most of the category is the first one. Which is why activity migrates — a developer who moved for cost will move again for cost, and the applications follow the users rather than the technology. Ask what would keep the activity there if fees equalized, and the answer is usually nothing in particular.
A second question is worth asking of the token specifically, separately from the network: what does holding it entitle you to? On some designs it pays fees and secures the network, which gives it a role. On others it is a governance token whose only function is voting on decisions the largest holders already control.
Those are very different instruments with the same appearance. A token required to use the network has demand tied to activity; one that merely votes has demand tied to whether people expect its price to rise. Read what the token is for before deciding what it is worth — the answer is in the documentation and it is frequently less than the marketing implies.
What a competing network is not
It is not necessarily worse. The trade-offs are real engineering.
It is not judged by its technology alone. Use decides it.
It is not liquid because it is listed. Depth is a separate question.
And it is not diversification from the sector. It moves with it.
How this connects
Staking is where a token’s role becomes concrete. On a network secured by participants who lock up its coin, holding the token can earn rewards for that work, with the lock-up and the price risk during it as the costs.
A bull market lifts the whole category and a bear market sorts it. Tokens in this group rise together on sector enthusiasm, and their correlation stays high on the way down, which is when use rather than narrative decides what recovers.
Volatility here is a sizing input, not a detail. Keeping the same risk per trade in a small network token means a far smaller position than in a large coin, because the swings are wider.
Where it is held matters as much as what it is. A balance left on a crypto exchange carries counterparty risk on top of the token’s own, while a hardware wallet removes the exchange from the chain of trust at the cost of handling the security yourself.
Leverage on a small token compounds all of it, because a thin order book lets a sharp move reach liquidation before any stop can respond.
And capital gains tax can apply to every swap. In many jurisdictions exchanging one token for another is a taxable disposal, so rotating between competing networks can create a bill without any cash being taken out.
When it fails
In a flat market these underperform the larger networks. Attention concentrates in the biggest names when nothing is happening, and the smaller ones drift lower against them for months.
The second failure is buying the announcement. Partnerships, upgrades and integrations produce sharp moves that reverse, and the announcement is public before the position is.
A third is ignoring the unlock schedule. Tokens held by insiders become tradeable on a published calendar, and that supply arrives whatever the network is doing.
A fourth is judging on technology. Faster and cheaper describes most of the category, and it has not been sufficient for any of them.
And a fifth is treating several of these as diversification. They correlate with each other and with the sector, so holding five is one position.
The original data
Of the 24,971 trading and investing videos in this site’s corpus, 1 has “avalanche” in the title, at 67,049 views. “Ethereum” returns 13 at a median of 13,212 across 13 channels, “crypto futures” returns 4 at a median of 101,132, and “mining” returns 27 at a median of 94,658. Duplicates are removed first, so no video is counted twice.
The question: Up 300% on a partnership announcement. Real?
One video reaching 67,049 views, against thirteen Ethereum videos at a median of 13,212, describes a category where each entrant gets a brief burst of attention rather than sustained coverage. That pattern is itself the most useful information about the sector. Three public numbers settle most of the question in ten minutes: what the design traded away, how many addresses transact daily, and what share of the token supply is held by the largest holders.
Related
Ethereum is the incumbent and the comparison these are measured against. Crypto is the wider asset class. And Bitcoin is the network that made none of these trade-offs.
Judge these the same way every time, and it takes ten minutes: what did it trade away, how many addresses actually transact on it, and how concentrated is the token. Three public numbers. The answer is usually clear, and it is often not the one the marketing suggests.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.