8-Avalanche gains momentum as blockchains battle breaking out
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Sep, 2021, simon@footprint.network
All chains see unprecedented growth
It looks to be another blockchain summer.
New chains are cropping up and concepts like GameFi, NFTFi and SocialFi are gradually emerging.
Besides Ethereum and Binance Smart Chain (BSC), some emerging chains such as Polygon, Terra, Avalanche, and Fantom are also gaining prominence and attracting attention.
In this article, we take a closer look at the DeFi data of each chain on Footprint Analytics.
Since the blockchain crash in May, DeFi has experienced a brief period of depression.TVL data from Footprint Analytics shows that the top 10 chains recovered to their May peaks in mid-August after a stagnant three months. Of course, Ethereum leads the other chains and continues to gain momentum, with 140.5 billion in TVL as of September 13.
Ethereum occupies about 75% of the TVL of all chains, with the remaining 25% divided primarily between BSC, which comes second with about 10% of the TVL, followed by Terra with 4% and Polygon with about 3%.
Polygon is highly regarded as the native Layer2 of Ethereum, enabling Aave, Curve, Sushiswap and other head protocols on Ethereum to be easily transferred over. Polygon has some important advantages over the congestion and high Gas fees on Ethereum.
Polygon had its big breakout in May, riding on the momentum of Ethereum. TVL rocketed to 5025% in less than six months since Polygon announced the launch of its $100 million DeFi fund in April.
According to the number of protocols by blockchains included on Footprint Analytics, Ethereum has 276 protocols, 3.14 times more than second place BSC, followed by Polygon, Fanton, and Avalanche.This second echelon of blockchains should not be underestimated in the future.
The main vertical for blockchains is decentralized exchange, being the category with the most protocols, followed by yield farming and lending.
In August, a financial inclusion program called "DeFi for the People" was announced, with head DeFi protocols such as Aave, Curve and SushiSwap.
Among the top 30 protocols by TVL, 18 of them are on Ethereum, including Aave in first place. Then comes Polygon, followed by InstaDApp, Curve, and Compound. BSC has eight protocols in the top 30, with PancakeSwap ranking first with a TVL of 5.97 million, followed by Venus with only half the TVL. Terra is ranked third with four protocols, led by Anchor in the Lending category on this blockchain, followed by Lido and Mirror, which are also deployed on Ethereum.
The token price of each blockchain reflects how the blockchain is valued by users and also affects the cost of user transactions. Also the token price is affected by the volume in the exchange market. It is clear from the Footprint Analytics data that ETH is way ahead of other tokens, currently at $3941 of which price level is decided by the adoption of its ecosystem as well as its recent upgrade from POW to POS and the EIP 1559.
From the above chart of Token Volume, we can see the increasing growth of SOL since August from historical average $40 to the highest level of $160. Same with the AVAX. The increasing trading volume of these tokens is caused by the stronger demand for higher speed and better efficiency, especially when NFT and more protocols were introduced.
On the contrary, Polygon's token MATIC is currently only $1.68, and as a side chain of Ethereum, the transaction fee consumed by users in Polygon can be said to be worlds apart compared to Ethereum.
Avalanche gaining momentum, AVAX leaps to fourth place
BSC began to explode in February of this year. Three months later in May, Polygon also began to grow at a high rate. In August, Avalanche skyrocketed.The fastest growth rate of each blockchain since Q2, except for Polygon, is Solana and Avalanche, with 1,497% and 1,124%, respectively. Solana has been researched in detail in the previous analysis (details can be found at this link).
Avalanche saw spectacular growth in August 19, which is inextricably linked to the updated Ethereum cross-chain bridge and Avalanche's liquidity mining reward program. On August 18, the Avalanche Foundation announced the launch of its $180 million liquidity mining incentive program, Avalanche Rush, and the following day the Lending protocol Benqi went live, joining forces with the Avalanche Foundation to launch a $3 million 90-day liquidity mining incentive program that allows users to receive both AVAX and Benqi when they borrow on the tokens Qi. It took only 4 days for the TVL to exceed 1 billion, making it the largest TVL protocol on Avalanche.
Compared to the 66 protocols with TVLs over 100 million on Ethereum, Avalanche has only 4, leaving a lot of room for growth. In addition to Benqi, who benefits from the Avalanche Foundation's incentive program, Trader Joe and Pangolin in the Dex category, and Yield Yak in the Yield category, ranked next.
Pangolin was the first Dex on Avalanche, and after it went live in February, it was still the largest Dex protocol at the time, although it happened to be affected by the explosion of the BSC at that time, and it remained lukewarm until August. Trader Joe protocol started to take off in August, gradually overtaking Pangolin and now leaping to number one in TVL of Dex.
Avalanche's liquidity mining reward program also mentions that it will receive AVAX, excluding ETH and BNB, and compared to other second echelon tokens, AVAX currently has the second highest token price at $47, up 167% from $28 on August 18.
We believe that with the introduction of Aave and Curve in the near future, two highest TVL protocols on Ethereum, Avalanche will gain its next momentum.
With the TVL of Avalanche and tokens on the chain have grown enormously, it’s easy to lose sight of the underlying strengths, namely security. Ethereum's Proof of Work has undergone a longer period of validation, while others with Proof of Stake are new and still need time to be verified.
The premiums of the various blockchains that are currently blossoming are being pushed up continuously, but when the reward programs, whether it will be a mess or continue to thrive, needs to be evaluated more carefully by users.
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