In recent years, cryptocurrency has literally taken over the digital assets space because of its versatility and high profit, but with the numerous platforms now available, it is difficult for traders to choose how and where to invest their money.
In this article, we take a closer look at Avalanche- its pros and cons, how to invest, and what you stand to earn from investing with Avalanche.
Why Invest in Avalanche?
Here are some points that make Avalanche perfect as a decentralized investment opportunity:
1. Avalanche has very low transaction fees, and its technology is unique and innovative.
2. Its chain is potentially infinitely scalable. It is able to scale without compromising decentralization.
3. Avalanche is compatible with applications from other blockchains.
4. Avalanche carries out super-fast transactions. Ava Labs itself boasts that “the platform can handle around 4,500 transactions per second – compared to around seven per second for Bitcoin and 15 per second for Ethereum.”
Methods of Earning on Avalanche
1. Trading native tokens (AVAX):
The foremost method of earning a profit on Avalanche is trading its native token, AVAX. This is simply buying and selling at the right times based on market movements to maximize earnings.
First, you sign up or create an account on an exchange, deposit and trade your digital assets, pay trading and withdrawal fees and transfer your earnings to your wallet. It’s that easy.
2. Staking AVAX tokens for an APY:
Staking AVAX involves locking your digital assets down for them to act as a support to the network’s operations. In turn, you get new coins as a reward. AVAX offers up to an astounding 54% APY – Annual percentage yield – on AVAX coins staked. Naturally, longer staking durations will accumulate greater rewards and vice versa.
3. Exploring DeFi in Avalanche (Investing in DeFi products):
De-fi, or decentralized finance, represents a category of financial services and applications built on blockchain technology. Investors can participate in a variety of financial services, including earning opportunities through yield farming, liquidity provision, token rewards and airdrops, AMM pools, and other offerings. Rewards can then be made based on the performance of your DeFi investments.
4. Lending on Avalanche lending aggregators:
Lending, just like it is common knowledge, involves giving your tokens to borrowers for a period of time in exchange for interest payments. It is an effortless way to earn rewards from your AVAX without having to lift a finger. Lending aggregators that you can lend your AVAX on include Aave.
Steps to Buy AVAX from an Exchange
Follow these steps to buy AVAX from an exchange.
- Sign up or open an account with a reputable exchange (Coinbase, Kraken, or Binance)
- Verify your email address and identity to create your account
- Make a deposit by linking a funding source to the account
- Buy AVAX and store them in your account, or you can transfer them to your crypto wallet.
Steps to Stake AVAX on an Exchange
You can stake your purchased AVAX on many different exchanges with very similar steps. We’ll just use OKcoin as a reference here.
- Create an Okcoin account and visit the Earn page.
- Deposit crypto in to earn.
- Click deposit and stake your AVAX by depositing a minimum of 1 AVAX. The total estimated rewards displayed are dependent on the amount staked.
- Wait for the cycle to begin at 7 pm, and the status should change to “Earning”. Rewards will be distributed to your account daily at 8 pm PST.
Steps to Lend AVAX
With Aave as a use-case, AVAX can be given out to borrowers for use and interest gained in the following simple steps:
1. Visit the Aave website.
2. Connect your Avalanche wallet that holds the funds (AVAX) you want to lend.
3. Once your wallet has been connected, select the “assets to supply” section.
4. Choose AVAX, specify the amount, and click “supply”.
5. Follow your wallet prompts and complete the transaction to begin to earn.
How to Store Your Purchased AVAX
Storing your purchased AVAX securely is inarguably as important as the purchase itself.
Avalanche is a popular cryptocurrency network, so it is supported by many different kinds of wallets.
It is usually advised to store long-term AVAX investments in a cold wallet.
Cold wallets are offline storage solutions, making them highly secure but less convenient for frequent trading. Examples are Ledger and KeepKey.
Hot wallets, on the other hand, are online wallets connected to the internet, providing easy access for quick transactions but at a potential security risk. Examples include Metamask and Trust Wallet.
Either of the two can be used to store your AVAX, depending on your use case.
What to do After Investing in Avalanche
After buying, lending, or staking AVAX, it’s absolutely important to keep an eye on your investments.
Stay in touch with the market trends, be part of Avalanche discord channels, and follow relevant news aggregators for up-to-date information about AVAX.
This will immensely help in decisions of when to pull out to minimize losses or delegate more funds to maximize profit.
And once you’re ready to cash in on those profits, sell your AVAX for Naira or Cedi on Breet.
Risks Involved in Investing in Avalanche
Like many other cryptocurrencies, investing in Avalanche comes with its fair share of dangers, which include:
- The volatility of the digital market
- Regulatory uncertainties
- Vulnerability to cybercrime
- Price fluctuations.
As an investor with Avalanche, one has to embrace these risks and set measures in place to manage them.
Frequently Asked Questions About Investing in Avalanche
Can AVAX reach $100?
Avax has been predicted to reach $65 by the end of 2024 and hit the $80 mark by 2025. Based on AVAX price prediction, the coin can trade in a range of $55.72 to $80.21 for 2025. In 2030, AVAX is also predicted to have an average price of around $223.23, while the minimum and maximum prices may be around $183.01 and $263.45, respectively. So, yes. AVAX can reach $100.
Do I have to pay tax to invest in Avalanche?
Yes. But this tax depends on the type of transactions you have made. However, in most countries, you must generally pay capital gains tax on all Avalanche transactions except transfers between your own wallets.
How long should I stake AVAX for?
The minimum period for staking AVAX is two weeks, and the maximum is one year for both validators and delegators. How long you should stake however, depends on you and your financial goals.
Should I invest in Avalanche or Ethereum?
Avalanche has been proven to be faster and more scalable than Ethereum. With its excellent linear scalability, Avalanche boasts over 4000 transactions per second, leaving Ethereum in the dust at 15. It also has lower gas fees.
What is the minimum amount of AVAX I can stake or lend?
The minimum requirement for delegating AVAX is 25 tokens or $825, with Avax at a current price of $33.
Conclusion
Super fast processing times, major incentives, and significantly high scalability are what make investing in Avalanche profitable and seamless. Even with the risks involved, Avalanche remains an ecosystem worth investing in.
