Risk of an Avalanche ETN: You may lose money up to the total loss of your investment due to the extreme volatility of this asset class and the Main Risk Factors of an Avalanche ETN described below and additional risks described in the sales prospectus.
Avalanche is a smart contract blockchain platform supported by Ava Labs, a team founded out of Cornell University. It uses a proprietary breakthrough consensus validation mechanism, allowing it to scale indefinitely by empowering an unlimited number of custom, application-specific blockchains called “Subnets.”
Avalanche contains a rare combination of strengths, explaining its meteoric rise.
Monthly active users more than tripled from 197,000 in September 2021 to 650,000 in November 2021.
Source: Avalanche. Data as of December 2021.
Total AVAX staked, which refers to the total amount of AVAX securing the network, is currently at 234MM AVAX representing 59% of total supply, which is 395MM AVAX. There are 243MM AVAX in circulation and 152MM locked supply.
NOTE: Total supply (395MM) = circulating supply (243MM) + locked supply (152MM). Locked supply is owned by individuals and entities who were early token holders in Avalanche and committed to lock-up periods governed by the protocol.
Source: Avalanche, Coinmarketcap. Data as of December 2021.
The number of projects building on the platform now exceeds 380 and total value locked on DeFi applications reached $13BN as of December 1, 2021 (up from $178M on August 1, 2021).
Source: Avalanche, Defi Llama. Data as of 1 December 2021.
Also outside the financial sector, Avalanche is becoming the platform of choice. An example is Deloitte who chose Avalanche as the platform for natural disaster recovery in the US, and Mastercard, who has selected Ava Labs for its Mastercard Start Path Program.
Avalanche's unique validation mechanism (“Avalanche Consensus”) is completely different from any consensus mechanisms to-date.
Avalanche ETN by VanEck is based on the MarketVector™ Avalanche VWAP Close Index and closely tracks the avalanche price.
Source: VanEck, MarketVector. The performance quoted represents past performance which is not a reliable indicator of future results. Future performance may be lower or higher than current performance. Investment returns will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost.
Lower risk: Typically lower reward
Higher risk: Typically higher reward
Despite all the hype, digital assets are a highly risky investment. Below are key risk factors that need to be considered before making an investment in an Avalanche ETN.
The trading prices of many digital assets have experienced extreme volatility in recent periods and may well continue to do so. Digital assets were only introduced within the past decade and regulatory clarity remains elusive in many jurisdictions. Digital assets' value depends on such regulation remaining favorable, as well with the technological capabilities, the development of protocol networks, competition from other digital asset networks and from forks. Volatility can be strongly amplified by transactions from speculative investors, hedge funds and other large investors. You may experience losses if you need to sell your Shares at a time when the price of the underlying digital asset is lower than it was when you made your prior investment. Even if you are able to hold Shares for the long-term, your Shares may never generate a profit. This is a factor to take into account when considering an investment in an Avalanche ETN.
If the currency of the Product differs from the currency you invest in, your final return depends on the exchange rate between your investment currency and the currency of the Product. That is another factor to consider when investing in an Avalanche ETN.
Trading venues and systems used by market participants to trade AVAX may be subject to hacking and could result in loss of AVAX. That is another factor to take into consideration when making an investment in an Avalanche ETN.
For more information on risks, please see the “Risk Factors” section of the relevant ETN’s prospectus, available on www.vaneck.com.