Avalanche Blockchain Rewards Validators Despite High Costs
Avalanche, a proof-of-stake blockchain, pays a significant amount to incentivize its validators. Token Terminal data reveals that the platform has paid over $275 million in AVAX tokens to compensate validators in the past year, despite generating only $11.5 million in user fees.
The Importance of Incentivizing Validators
Paying a premium to validators is crucial for Avalanche to secure its network and ensure the confirmation of transactions. As a proof-of-stake network, Avalanche relies on node operators for security and decentralization. By offering generous rewards, Avalanche maintains a strong pool of nodes and a robust network.
Avalanche’s Market Cap and Liquidity
Avalanche has a market cap of over $9.8 billion and ranks among the top 10 cryptocurrencies by liquidity. It surpasses competitors like Polygon and Polkadot, thanks to its incentivization strategy that attracts validators and strengthens the network’s operation.
The Role of Validators and Staking on Avalanche
There are currently over 1,539 validators staking more than 248 million AVAX tokens on Avalanche, earning an annual percentage yield (APY) of 7.84%. The network has a staking ratio of 57.11%, indicating high participation in securing the network.
Simplicity and Security on Avalanche
Operating a node on Avalanche doesn’t require complex hardware, making it more accessible compared to Ethereum. Additionally, staked AVAX tokens are not at risk of being slashed or penalized as long as all network requirements are met. This feature contributes to the increasing number of validators on the network.
Rise in AVAX Price
AVAX prices have been steadily rising, reflecting the overall market trend. Currently trading above $26, AVAX has experienced a growth of over 200% in the last three months. The coin is at a new high for 2023 and shows a bullish breakout formation in the daily chart.
Hot Take: AVAX’s Potential for Further Growth
If AVAX breaks above $30 with increasing trading volume, it may serve as a foundation for further price gains. There is potential for the coin to reach $90 or even higher in the near future. When AVAX peaked in 2021, it reached as high as $145.
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