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Avalanche (AVAX) vs Solana (SOL): Which Is The Better Investment?

Avalanch and Solana endeavor to function as platforms for decentralized apps (Dapps). Both of them were birthed and initiated in the year 2020. I’ll compare them, and decide which one I like best technically and as an investment.

Avalanch aims to take Ethereum’s spot, and I believe it could have the upper hand. Solana and Avalanche strive to sustain decentralization while increasing scalability to a massive level, however, Avalanch aims to take Ethereum’s place by outdoing them in the smart contract sector. The trajectory could go well for both of them and if so, considerable gains are imminent.

In this article, I will compare the similarities and differences between these platforms as well as their mission statements involving the crypto sphere. In the end, I will reveal my personal consensus on which one is the better investment.

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What Are Avalache and Solana:

Avalanche has been called “the Ethereum killer.” They have promised to be 100 times faster than Ethereum and to become the new most popular blockchain for smart contracts.

Besides being another decentralized platform, their coin, AVAX, can be staked with annual rewards of nearly 12%. And if you want to stake short term, the minimum is only 2 weeks.

They have a mission to provide custom blockchains to solve the quandary of decentralization and scalability. Avalanch has designed THREE different blockchains: 1) X-Chain, 2) C-Chain, and 3) P-Chain. And, they all work together (interoperable) to address these problems. 

Solana is a cryptocurrency and a platform that is designed to run decentralized apps and provide solutions through hybrid consensus. SOL (their native token) is used to pay staking transaction fees as well as can be used as a peer-to-peer digital value. Several exchanges like Coinbase and Binance offer the SOL tokens.

Solana has scaled up to completing tens of thousands of transactions per second and has close to zero fees. Read more about the fees and stuff in this article.

They endeavor to keep transactions extremely fast, which in turn lowers congestion and keeps fees low. It is a large task to compete with centralized companies like VISA, but they are up for the challenge!

How Are Avalanche And Solana Similar?

  • OPEN-SOURCE. Both are open-source platforms for launching Dapps.
  • SCALABILITY. Each project focuses on bringing decentralized finance to a global level with less congestion.
  • MULTI-USE. They are both cryptocurrencies and utility tokens with many use-cases: securing the network via staking, payment of things like gas fees, governance participation, and peer-to-peer transactions.
  • FINITE SUPPLY. AVAX has a cap of 720 million and SOL caps at 489 million.

How Are Avalanche And Solana Different?

  • CONSENSUS. AVAX uses a (DAG) protocol to gain consensus and SOL uses a hybrid consensus: proof of history(PoH) combined with proof of stake (PoS).
  • INTEROPERABILITY. Avalanch can share and communicate within their three blockchains; Solana is not interoperable.
  • SPEED FOCUS. Solana can PROCESS 50,000-65,000 per second; Avalanch can CONFIRM smart contracts under a second.

Tokenomics SOL and AVAX:

Both Avalanche and Solana have a short history when comparing them to bitcoin or even Ethereum. That doesn’t mean they can’t continue to take the market by storm. But it doesn’t mean they will be hot forever either. Let’s scan through their individual tokenomics shall we?

SOL Tokenomics:

  • Supply Cap: 489 million
  • Token: SOL. 47.6% of tokens were distributed to seeding, founding, and team members; the remains have been releasing to the public.
  • Incentives: Staking that automatically compounds interest.
  • Inflation: Spanning from 2020 to 2031, Solana has an initial inflation rate of 8% which descends yearly into a long-term outlook of 1.5%. Click this link for a more in-depth look at Solana Tokenomics.

AVAX Tokenomics:

  • Supply Cap: 720 million
  • Token: AVAX. 60% of tokens are for public and staking opportunities. When a user transacts, the amount is burned, increasing the scarcity, thus value.
  • Incentives: Staking rewards up to 11.57% with a minimum of two-week lock up.
  • Inflation: Low yearly inflation in comparison to other competitors such as DOT (10% yearly)

Some numbers might have changed when you read this. The data above is from October of 2021. You can find updated data here: Solana, Avalanche.

Price History Of Solana And Avalanche:

In terms of historical returns, Solana is the winner of the two. On the images below you can see both Solana’s and Avalanche’s returns since August of 2020:

Another thing you should know is which one falls hardest when times are bad. Again, Solana is the historical winner of this category:

  • SOL vs AVAX
  • Avalanche vs Solana

To summarize what we found looking at historical data: Solana has increased almost 9000% in the same time as Avalanche increased “only”1200%. Also, Solana has had softer corrections than Avalanche, despite the lower returns.

The conclusion is clear: Solana is better than Avalanche, historically speaking.

However, historical performance does not guarantee future performance. Moreover, it’s often a better bet to go with the fundamentally strong project with a lot of room to grow.

I’ve written more about Solana, you might be interested in checking out these articles:

Can Solana Reach 1000 Dollars?

Is Solana A Good Investment?

PS:
Join the free newsletter of Solberg Invest, where you get technical analyses on Bitcoin, Ethereum, Cardano, and others. Also, you’ll get some free guides and reviews. Sign up for free below:

Let’s get more into the potential future of these coins:

Future Oulook For Avalanche And Solana:

What is the future of these cryptos? We can only speculate.

Avalanche could have a prominent future, taking Ethereum’s place, possibly being the number one smart contract provider with their profound tri-blockchain methodology.

Solana could have an influential future, replacing central giants like VISA, with their timestamp proof of history system that can support 65,000 transactions a second!

It is tough to say who will outperform the other in the long run, really. They are breaking barriers in the cryptoverse and have solid teams…but it takes a village to raise a child. With NFT opportunities for both, this could sustain a strong community around the platforms, and community is everything in crypto. But who will have the trendiest NFTs available? That’s the thing with trends, nobody knows.

AVAX founders have a deep history in the crypto space. Co-founder, Emin Gün Sirer worked on bitcoin and Ethereum solutions and actually created his own peer-to-peer cryptocurrency concept 6 years prior to bitcoin. This makes me excited because veterans have a lot going for themselves and will avoid newbie mistakes.

Not to downplay Solana’s main founder Anatoly Yakovenko. He was an esteemed software engineer at Dropbox before launching SOL.

Oh, by the way: Check out these articles:

Is Celsius Network Safe? Earn Passive Income With Crypto

My Personal Bitcoin Investing & Trading Strategy

Anyways, all of these factors can help draw some…

CONCLUSIONS

Avalanche and Solana are open-source projects that love DAPPS and essentially created spaces for them to launch on. They both have speeds in their own right.

Avalanch is the first smart contract design that CONFIRMS transactions in under a second. That is killer cool!

Solana, the late but great contender shines pretty brightly with its lightning TRANSACTION speeds and low fees by default.

Large amounts of institutional money have been invested in both organizations. Another plus! However, it’s good to pay close attention…a good rule of thumb, follow the big money and swim with the whales WHILE YOU CAN.

Which one’s a better investment? In my crypto opinion, I would have to go with AVALANCHE because of four reasons:

  1. Avalanch has an ecosystem of THREE interoperable blockchains, which will help solve scalability issues.
  2. They are hunting Ethereum’s spot in the lineup; if they get it, imagine how many investors will say, “I missed out on Ethereum, AVAX is my next best chance!”
  3. I like the array of founders and their credentials.
  4. Avalanche has more room to grow than Solana.

Will I be investing in both? It is always good to spread your risk, so I will own bags from both. That said, my AVAX bag will be heavier than my SOL bags for the time being.

That’s it. I hope you learned some important things about SOL and AVAX. It is always a good idea to get a better understanding of cryptos before you invest. Mitigate the risk and please invest wisely.

I’ll see you in the next crypto avalanche–buy the dips!

Suggested reading:

Cosmos (ATOM) vs Solana (SOL): Which Is The Better Investment?

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