The whole “buy low, sell high” thing sounds great. However, in practice, it’s really not that easy to invest in assets that are falling in price. Many have said that the markets for risk assets are among the markets investors tend to avoid when things go on sale. However, in this macro-environment, this appears to be increasingly true.
There’s reason to be bearish on higher-risk growth assets right now. Whether it’s cryptocurrencies, tech stocks, or any other asset that relies on future prospects, higher discount rates and more expensive borrowing rates make for less cheap capital flowing in the system. Cryptos that have relied on such a deluge of liquidity in recent years to surge as high as they have are clearly at a disadvantage.
That said, there are some high-quality crypto projects that are getting thrown out with the bathwater right now. Among the three tokens I’ve got on my buy list right now are Solana (SOL -4.48%), Avalanche (AVAX -4.80%), and VeChain (VET -2.15%). Here’s why I think investors may want to give these tokens a hard look right now.
One of the top “Ethereum killers” in the market, Solana has experienced one of the most impressive surges in recent years among large-cap tokens as a result of how this project was built.
Using a unique proof-of-history consensus mechanism, Solana has found a way to offer incredible transaction speeds alongside rock-bottom transaction costs. For users looking to place smaller transactions, or who simply want to avoid the sky-high gas fees with other networks such as Ethereum, the benefits of Solana’s network are obvious.
These advantages have led to impressive growth in total value locked (TVL) across the Solana ecosystem over the past year. Total value locked refers to the amount of capital deployed in decentralized applications across a given network. Currently, the Solana ecosystem has approximately $5.4 billion of value locked in Solana-based applications. While this is well off from its high of $15 billion late last year, it still represents impressive growth from TVL of around $1.6 billion a year prior.
Unsurprisingly, some might say that Solana’s deteriorating value since late last year may be the root cause of much of this TVL destruction. Transaction volumes remain high, and this network is still very popular. So popular, in fact, that Solana has experienced a number of outages that have shaken investor confidence in this network’s ability to scale.
That said, Solana has proposed a series of mitigation efforts to combat these concerns. And as far as problems go, seeing astronomical volume on a particular network may be considered the kind of growing pains investors want to see.
Avalanche is yet another “Ethereum killer” that’s seen similar price action to Solana of late. What makes this project unique is the use of subnets (or subnetworks) on Avalanche’s network, which create a network of interoperable blockchains supported by custom validator sets.
In plain speak, subnets allow for increased scalability, relative to more existing “siloed” blockchains that don’t talk to each other. By having multiple subnetworks tied to Avalanche’s main network, interoperable projects are made much easier. Additionally, there are a number of benefits from the application development side. Developers can use these subnetworks to build-out projects, issue their own tokens, and secure and validate their network with their own validators. What’s equally impressive is that each of these subnets benefits from the security and stability of shared staking on Avalanche’s mainnet.
For investors considering Avalanche, this means that as Avalanche’s ecosystem grows, so too will staking demand and rewards. As more tokens get locked in via staking contracts, less supply should mean higher prices over time. And as we’ve seen, Avalanche’s ecosystem is robust, actually one spot higher than that of Solana, at fourth place in the rankings among top projects sorted by TVL.
Down nearly 65% from its peak, Avalanche is starting to look very attractive at these levels. This is a top token I’m considering adding to the portfolio in this environment.
Another token I’ve had on my buy list for some time is VeChain. This project is one I’d put in the “utility” bucket. That’s because VeChain was built with a single purpose in mind — to use blockchain technology to improve supply chains.
VeChain’s concept is to utilize the digital ledger, which is blockchain technology, to help streamline the tracking of shipments of goods around the globe. By integrating the blockchain into QR codes, VeChain has found a way to improve the business processes for key clients, which are mostly located in China.
With the negative view the Chinese government has taken toward crypto, VeChain’s tokens have lost a tremendous amount of value since their peak. However, for those taking the view that technological adoption in China and around the world for such services will pick up, this platform is one that I think has some serious growth potential.