Better Bet: Solana vs. Avalanche

Here’s my take on whether Solana (CRYPTO:SOL) or Avalanche (CRYPTO:AVAX) is the better bet in this environment right now.

| More on:
crypto, chart, stocks

Image source: Getty Images

The adoption of blockchain technology is growing at a fast pace. Indeed, this sector is seeing growth only accelerate. Accordingly, investors looking at top layer-1 networks Solana (CRYPTO:SOL) and Avalanche (CRYPTO:AVAX) may wonder: which cryptocurrency is the better bet?

That’s a difficult comparison, to be sure. Each network carries its own set of growth catalysts and risks. That said, there’s reason to be bullish on both.

Let’s do a compare and contrast on these two projects for interested investors.

Drawing a comparison

Both Avalanche and Solana are proof-of-stake networks. Accordingly, investors often compare these companies on the basis of staking requirements. In the case of Avalanche, 2,000 AVAX is required to set up a validation node, with delegators able to stake for as little as 25 AVAX. Solana requires a fraction of this amount for a validator to be set up, despite some essential hardware requirements.

Solana’s speed and cost profile are really what drive developers to this platform. That said, Avalanche is starting to see interest explode due to the rise of the network’s subnets. Over time, both have excellent scaling capabilities. Thus, Solana and Avalanche are often viewed as Ethereum competitors for good reason.

So, which is the better bet?

Avalanche’s AVAX tokens are getting burned constantly, and there’s a limited supply as well. Additionally, adoption is picking up, and the network’s subnets are seeing impressive interest. The network’s user community remains strong, and investors have done very well owning AVAX over the medium term. Accordingly, there’s a lot to like about this project.

That said, I’m probably slightly more bullish on Solana. Despite recent outages, which continue to plague the network, the high congestion seen on Solana’s network is for good reason. This network has among the fastest times to finality as well as some of the lowest fees. For those thinking long term about where this sector is headed, I think fee structure is going to be the most important.

Now, Solana has recently stated that it may increase its fees to combat congestion. This may change the thesis over time. Accordingly, both tokens are ones I’ll be watching closely in the coming months and quarters.

Bottom line

I don’t think investors can go wrong owning either token, to be honest. However, I do like the relative positioning of Solana right now.

Over time, I think both projects have excellent upside. Developers are likely to flock to both networks to build the applications of the future. For investors, this is a very good thing.

Accordingly, those looking at the recent dips in Solana and Avalanche have a lot to like right now. These are tokens with excellent upside potential, particularly if the market turns around.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Avalanche, Ethereum, and Solana.

More on Investing

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

Retirees sip their morning coffee outside.
Retirement

Retirees: 2 TSX Dividend Stocks That Have Raised Payouts for Decades

These top TSX dividend stocks now have 7% yields.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, June 25

Besides Canada’s consumer inflation report, the latest U.S. consumer confidence data will remain on TSX investors’ radar today.

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

top TSX stocks to buy
Top TSX Stocks

Could This Undervalued Stock Make You a Millionaire One Day?

Looking for an undervalued stock you can buy today and hold for decades? Here's a great pick with a generous…

Read more »

An airplace on a runway
Stock Market

With Revenue Rising, Is Air Canada’s Sputtering Stock Finally Cleared for Takeoff?

Down 58% from all-time highs, Air Canada stock trades at a discount to consensus price target estimates in June 2024.

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

This 6.1 Percent Dividend Stock Is My Pick for Instant Income

Here’s what makes Transcontinental one of my top dividend stock picks right now for instant income.

Read more »

analyze data
Tech Stocks

Investing in Canadian Fintech: Stocks to Watch in 2024

The Canadian fintech sector is expanding, with more opportunities than ever. Yet this stock remains undervalued.

Read more »