Avalanche Pays Premium to Incentivize Validators, Will AVAX Soar To $145?

Dalmas Ngetich

Last Updated: June 11, 2024 2:42 pm

2 mins read

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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.

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.

Avalanche validators | Source: Avalanche.network

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.

Validator client count | Source: Avalanche.Network

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.

Avalanche price trending upward on the daily chart | Source: AVAXUSDT on Binance, TradingView

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

Dalmas Ngetich

Dalmas, a seasoned crypto reporter, brings a unique perspective to the industry. His specialization in NFTs, blockchain, DeFi, and blockchain news for NewsBTC, combined with a background in mechanical engineering and over a decade of experience in journalism, has allowed him to craft over 10,000 news and feature articles over the past eight years. His diverse range of topics, including technology, Forex, and finance, reflects his comprehensive understanding of the crypto landscape.

His technical expertise and analytical skills have been recognized and featured by leading news outlets such as Investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. Notably, he broke key news, including the Ripple and MoneyGram partnership, cementing his position as a thought leader in crypto.
The news exploded. Over 100,000 people devoured this meticulously crafted report, from seasoned investors to curious newcomers. His analysis wasn't just dry facts and figures; it crackled with insight, dissecting the implications of the partnership and its potential impact on the future of finance.

His deep understanding of the financial markets, technological advancements, and blockchain developments has made him a respected voice in the industry.

Dalmas is also the founder of BTC-Pulse, a crypto news site, further demonstrating his commitment to the field. He firmly believes that DeFi and NFTs are here to stay and will continue to drive financial inclusion.

Coming from Nairobi, Kenya, it is easy to see the source of his inspiration: Across Africa, millions lack access to traditional banks. Remote villages, limited documentation, and high minimum balances create insurmountable barriers.

DeFi, not just Maker or Aave, for example, but think of Bitcoin and USDT, cuts out the middleman. Forget banks with their limitations.
Even so, DeFi isn't a magic solution. The continent still struggles with reliable internet access, and educational campaigns highlighting the benefits of this wonderful solution are insufficient. Moreover, even for those interested, understanding DeFi can look like learning a new language.

Dalmas is here to help make the tech easy to understand and digestible, even for beginners.
The story of DeFi in Africa is still being written. Challenges abound, but the promise of a more inclusive financial future is a powerful motivator. With innovation and collaboration, Dalmas firmly believes that DeFi could become the key to unlocking Africa's full economic potential.
This possibility and its immense value motivate Dalmas to continue breaking key DeFi innovations and more across the globe. His engineering background further enhances his ability to deliver well-thought-out pieces that blend technical insight with clear, impactful reporting.

Beyond his professional achievements, Dalmas is deeply passionate about technology and politics. Policies drive adoption, and being at the forefront and keeping up with how they evolve is crucial for the sphere to mature.

When Dalmas is not closely monitoring the latest crypto events, he can be found in nature, exploring the picturesque countryside, and traveling with his family and friends. His love for adventure and discovery perfectly complements his investigative and reporting skills.
You can connect with Dalmas on X: @Dalmas_Ngetich, or contact him on Telegram @Dalmas_Ngetich.

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