don’t look now, but avalanche (Avax 1.72%) — The once domineering cryptocurrency, which collapsed more than 90% in 2022, is making a comeback this year. In mid-January, Avalanche announced major partnerships with: Amazon (AMZN 2.99%) This essentially makes it the default blockchain of choice for all Amazon Web Services (AWS) clients. Avalanche is currently the first blockchain to partner with Amazon’s cloud computing platform.
It’s safe to say this is a big deal. In his first 24 hours after the deal was announced, Avalanche’s price was up more than 13%. If Avalanche fully realizes its plans to bring blockchain solutions to businesses and governments around the world, there could be even more benefits in the long run.
why avalanche?
One of the most interesting aspects of the partnership is that Amazon chose to partner with Avalanche and not Avalanche. ethereum, which was a natural choice. When it launched in September 2020, Avalanche was billed as the “Ethereum Killer” due to its superior speed and scalability. But this announcement from Amazon definitely comes as a surprise, as the last year has not been kind to this emerging blockchain.
The best-in-class speed of the Avalanche blockchain definitely played a role in Amazon’s decision, but one of the key factors was the foundation of the Avalanche network, which actually includes three different blockchains (exchange chain, platform). It is related to the structure of chain, and contract chain. Platform Chain (“P-Chain”) allows developers to create their own customizable blockchain networks called subnets.
Avalanche describes these subnets as “sovereign networks” with their own rules and tokenomics. As a result, each Avalanche subnet is scalable and can be customized to meet client needs. In the past, subnets were primarily used by blockchain games, but they are now being used by large corporations and government agencies as well.
Image Source: Getty Images.
Imagine thousands of companies operating thousands of customizable subnets all on the Avalanche network. This vision of the future seems like a great way to attract Amazon’s new business clients looking for customized blockchain solutions. In fact, as part of the deal, Avalanche will become part of his AWS partner network and will be placed prominently within the AWS Marketplace. This makes Avalanche the perfect partner for those who want to work with Amazon on their blockchain projects.
Win-win?
The deal appears to be a win-win for both Amazon and Avalanche. On Twitter, one of Avalanche’s co-founders, his Emin Gün Sirer, succinctly stated: Avalanche will now have access to his AWS assets and capabilities, giving Amazon the opportunity to offer “Blockchain as a Service” to all of its partners around the world. If you thought Amazon was dominating when it comes to the cloud, wait until Amazon gets involved with blockchain.
That said, there are certainly criticisms of the partnership. Judging by the remarks and comments across social media, some blockchain developers are concerned that decentralized blockchains are suddenly partnering with centralized technology companies such as Amazon. There are concerns that Amazon will one day exercise excessive power and control over Avalanche. This is a story we’ve seen time and time again in the tech industry. Things change as hot tech start-ups that promise to change the world are assimilated into big, established tech companies focused on profitability.
future growth avalanche
The new partnership aims to win more companies, governments and corporations using blockchain and the cloud. If Avalanche becomes the go-to blockchain for businesses and governments, it will be huge for Avalanche’s future growth prospects. One caveat, however, is that it is not clear whether the partnership has exclusivity. If not, other blockchains may also partner with Amazon. Avalanche still has a first-mover advantage, but it will be significantly more competitive.
That said, I’m bullish on Avalanche in the long term.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dominic Basulto has positions at Amazon.com and his Ethereum. The Motley Fool has positions in and recommends Amazon.com, Avalanche, and Ethereum. The Motley Fool’s U.S. headquarters has a disclosure policy.
