Avalanche and Solana’s TVL: A Measure of Market Cap
If you’re a cryptocurrency investor, it’s important to find opportunities by identifying asymmetries between fundamental aspects and the market’s perception of value. One interesting case is Avalanche (AVAX), which has a high Total Value Locked (TVL) in DeFi compared to its market capitalization. Comparing it to Solana (SOL), we can see a potential value asymmetry.
Value investing requires considering multiple factors, but TVL can be used as a benchmark to assess potential asymmetries in the crypto market. According to TheCoinPerspective, if Avalanche had Solana’s $24.4 billion market cap, AVAX would be priced at $66.71 per token. This indicates an upside of 222% from its current price of $20.75.
The Importance of TVL in Evaluating Market Cap
Avalanche and Solana are competing to serve the demand for layer-1 blockchains in DApps, DeFi, and Web3. By analyzing their respective TVL figures, we can identify potential market cap asymmetries.
Solana’s TVL has grown by 73.19% in one month to reach $620.2 million, making it the 8th highest among all chains according to DefiLlama. On the other hand, Avalanche has a higher TVL of $652.17 million with a smaller monthly growth of 22.37%. This means that investors are locking more value in Avalanche’s ecosystem than in Solana’s.
Looking at market cap alone, AVAX has $16.81 billion less capitalization than SOL, with a market cap of $7.59 billion for Avalanche compared to Solana’s $24.4 billion. This translates to an 11.75 market cap for each TVL in Avalanche, while Solana has a ratio of 39.88 MCap/TVL. Based on this metric, AVAX could be considered 3.4 times cheaper than SOL.
Hot Take: Avalanche’s Undervalued Potential
Considering the TVL and market cap asymmetry between Avalanche and Solana, there is a strong argument for Avalanche being undervalued. With a potential upside of 222%, AVAX could present a lucrative opportunity for crypto investors. Keep an eye on Avalanche as it continues to gain traction in the DeFi space.
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