In the speculative market, the asymmetry between fundamental aspects and the market’s perception of value is what creates opportunity. Cryptocurrency investors can benefit from finding asymmetries and positioning accordingly.
Interestingly, Avalanche (AVAX) has one of the largest Total Value Locked (TVL) in DeFi, with a suggested asymmetry to its market capitalization. In particular, it gets stronger when comparing Solana’s (SOL) higher market cap and lower TVL.
It is important to understand that value investing involves many nuances, and investors must consider multiple factors when fundamentally evaluating projects. However, Finbold picked TVL as a benchmark to provide insights on a possible value asymmetry in the cryptocurrency market.
In this context, TheCoinPerspective shows that AVAX would be priced at $66.71 if Avalanche had Solana’s $24.4 billion market capitalization. This would result in an upside of 222%, considering a price of $20.75 per AVAX by press time.
Avalanche and Solana’s TVL to measure market cap
The two competitors are aiming to meet a similar demand for layer-1 blockchains to Decentralized Apps (DApps), Decentralized Finance, and Web3. Therefore, we can use the total value locked in Avalanche and Solana to spot potential asymmetries on the market cap.
Solana’s TVL surged by 73.19% in one month to $620.2 million, giving it the 8th highest value, according to DefiLlama. Notably, Avalanche still has a higher $652.17 million TVL for a smaller monthly growth of 22.37%.
This means that investors are locking $32 million more value in the Avalanche ecosystem of 346 protocols than in Solana’s 115.
From another perspective, AVAX has $16.81 billion less capitalization than SOL, with a $7.59 billion market cap for the former. Essentially, Avalanche has an 11.75 market cap for each TVL, while Solana has 39.88 MCap/TVL. Looking at this metric alone, AVAX could be 3.4 times cheaper than SOL at the time of publication.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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