Follow the Money to Avalanche

When degens, Heisenberg, Steve Jobs and politicians of different stripes begin to agree, I really pay attention. Ava Labs, the main developer of the Avalanche blockchain, recently secured $350M of funding at a valuation of more than $5B. This to me is a very important signal that goes far beyond the 15 minute red and green candles we see on the charts. Those of us deep in the web3 ecosystem often forget the importance of cold hard cash and high paying jobs.

Ava Labs, is widely expected to use the money to hire developers to build on the Avalanche chain. This follows in the footsteps of a $200M program last fall when the Avalanche Foundation unveiled “Blizzard”. This aimed to foster growth in 4 key areas:

• DeFi
• Enterprise Applications
• NFTs
• Culture Applications

History tells us, when it comes to technology, the money follows developers. Those companies (or in this case block-chains) who can entice the most (or at least their fair share) of developer talent tend to come out on top. Innovation is the life blood of web3, innovation and liquidity. However, liquidity has a habit of following innovation around. So, let’s think of innovation as the precursor to liquidity. Many episodes of the hit TV show Breaking Bad were focused on the characters looking for precursor. It started with pseudoephedrine in the form of cold medication, switching to methylamine which they heisted from a train.

In the show, once the precursor was stable, the liquidity (huge stacks of cash) flowed. The same can be said for web3. This is why the phrase “devs do something” is thrown around so much. I must say, when I sat down to write this I did not envision using a meth production analogy, yet here we are.

Wen Innovation?

Innovation will come from talented devs progressively building upon each other’s ideas. This is the time tested way for technological advancement to flourish. Web2 companies are fighting tooth and nail for all the best minds in their space offering incentives, ever increasing salaries and a wide variety of perks. When the iPhone launched in 2007, it was the App Store not the phone itself which was the killer feature. To this day, even though there are far more Android devices made each year, the Apple App store reigns supreme. Android in 2021 accounted for 87% of the device market share (compared with Apple’s 13%), yet Apple accounts for 64% ($85B) of the App revenue compared to just 36% ($48B) for Android. I believe web3 will take this to a whole new level, in particular as the block-chain enables ownership and monetization of ideas.

Thinking about developer activity, I was reminded of a report by Electric Capital. They highlight the exponential growth in developer activity in web3. I believe investigating what devs are working on, what chain they are choosing and what those chains choose to focus on provides a glimpse into the future of web3 and see what coins maybe poised for long term trips to the moon.

Zeroing in on Avalanche, they have already been doing a good job of attracting developer talent to the chain. With their focus on DeFi, enterprise applications, NFTs and culture applications, Doubling down on this approach should produce positive advancements for Avalanche.

Electric capital has some further interesting perspectives:

There are several vibrant ecosystems emerging beyond Bitcoin and Ethereum.

• The largest ecosystems are Ethereum, Bitcoin, Polkadot, Cosmos, Solana, BSC, NEAR, Avalanche, Tezos, Polygon, and Cardano, each with 250+ monthly active developers
• Polkadot, Solana, NEAR, BSC, Avalanche, and Terra are growing faster than Ethereum did at similar points in its history

So what?

Even if you are an Eth or BTC maxi, competition will push them to be better and build better. Competition is often the catalyst for innovation while complacency is its antithesis. Having new, growing players in web3 keeps the pressure on Eth to innovate.

Additionally, new chains have the ability to specialize in a niche outside of the strengths of the big 2 chains. My favourite example is how DeFi Kingdoms grew on the Harmony chain and then expanded onto its own Avalanche subnet. A subject which I wrote about here. Play to earn style games that involve many micro transactions do not work in a high gas environment. Given their potential to become a trillion dollar industry, it is a niche worth developing. This is just one out of countless examples of a niche not suitable for BTC or Eth.

Many of our brightest minds have grown up playing a variety of video games. They have also done so while doing their shopping and banking online . These life experiences become the basis to imagine what web3 can be used for moving forward. As we move towards augmented reality as well as metaverses, it is hard to predict what our user experience will be in 5 years. I once heard a futurist say that for most children entering elementary school, the career path they will follow in adulthood does not currently exist in today’s world. This has stuck with me ever since and has never been truer.

Jobs Jobs Jobs

A final point to ponder when looking at developers joining web3 is the ole political adage “jobs, jobs, jobs!”. One thing political stump speeches from all parties have in common is job creation. I believe crypto regulation is a matter of when, and not if. Therefore, it is wise to be invested in companies aligned with political priorities. A company or technology that is creating high paying jobs will be the one getting support from across the aisle.

Similar to how Amazon had cities and politicians competing with one another to be the home of its HQ2. The reason politicians will tie themselves in knots to entice high paying jobs to their jurisdiction is tax dollars. Since many of you degens seem to be doing everything in your power to avoid paying taxes; governments are continuously looking for new revenue streams.

As I wrap this up, I am thinking about how any people ask what Alt coins to invest in. I am ignoring all of you “wen moon” folks with this advice. The answer lies in companies that are primed to grow and innovate. Doing so while mitigating the risk of inevitable regulation is a bonus. Avalanche and others focusing on attracting dev talent are worth keeping tabs on. In the devs we trust, hopefully they will in fact, do something.