Nansen: Avalanche (Avalanche) set off a “gold rush” from the data to see the potential of avalanche


Avalanche is a Layer 1 platform compatible with EVM, focusing on speed and low transaction costs. It aims to solve the scalability problems currently faced by Ethereum today. It can realize their vision through some of its core functions, such as sub-second determinism of transactions, unique consensus protocol upgrades through Snowball++, high transaction throughput, and more than 1,200 complete block production nodes to verify the network. In short, Avalanche provides users familiar and favorite products at a very low cost.

Under the trend of multi-chain future, Avalanche has established one of the best bridging experiences through their Avalanche Bridge‌. It has made it safer, cheaper, and faster to bridge assets from Ethereum, and has facilitated the entry and exit of more than 27 billion U.S. dollars worth of tokens in and out of the Ethereum network. It is also important to pay attention to Avalanche’s shared security model, which is handled at the subnet level and allows applications to choose the level of security required by their applications. This is a key difference from Ethereum, where applications often pay too high a price for security.

Just over a year after its establishment, Avalanche has a vibrant native application ecosystem and popular protocols based on Ethereum. Many activities were launched in the $180 million liquidity mining incentives announced in July, but we have seen continuous growth and activity in TVL, transaction volume, cross-chain bridge activity, and many other indicators. In TVL alone, Avalanche has grown from less than US$200 million in July to well over US$13 billion today-a 65-fold increase in less than 6 months.

Sorting DeFi applications according to TVL scale, 6 of the top 10 applications are native to Avalanche. These applications are usually forks of Ethereum peers and provide incentives for income farming. The popularity of these native apps highlights the community that has formed around Avalanche as the premier first layer. It should be emphasized that Trader Joe is a local AMM product that allows users to trade, farm, pledge, and even allows you to use Zap to receive LP token pairs with just one click. Trader Joe has consistently ranked among the top 5 in all DEXs, with an average daily trading volume of approximately US$750 million. These features and user activity on Trader Joe and the $2.5 billion TVL show the growing developer community and profitable LP environment in Avalanche.

Major Ethereum projects such as Aave and Curve also migrated to Avalanche through revenue farming incentives, which further promoted the flow of the chain. Avalanche is quickly becoming a home base for DeFi, encrypted dApp, and enterprise solutions.

Avalanche ecological map and head dApp

The Avalanche ecosystem is very powerful, covering all major aspects of the blockchain, from DeFi, NFT, DEX, P2E, etc. CCK Ventures can see the breakdown of the ecosystem in the figure below.

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: CCK Ventures

Due to its compatibility with EVM, major Ethereum DeFi projects such as Aave and Curve can be easily migrated to Avalanche, further promoting on-chain traffic. The TVL of all Avalanche projects exceeded US$13.9 billion, with Aave accounting for the largest share, reaching 25.82%, and TVL of US$3.59 billion. Followed by Trader Joe and Benqi, they are Avalanche’s native projects and are also very popular.

Other well-known Avalanche native dApps include Wonderland (the most successful OHM fork project, with a pledge deposit of more than 2 billion US dollars), Cradaba (a casual and fighting game of playing and earning, surrounding an underwater world full of fierce fighting hermit crabs) .

Avalanche Bridge

In the future of multi-chain, an important feature of L1 and even L2 is accessibility. It is very important for users to be able to transfer tokens from one blockchain to another quickly, safely and at low cost. This can be done through a so-called blockchain bridge, which is a connection that allows tokens or arbitrary data to be transferred from one chain to another, thereby achieving interoperability between networks.

For the transfer of ERC20 tokens from Ethereum to Avalanche’s C-Chain, users can use the Avalanche Bridge. It is a trustless bridge and supports multiple ERC-20 tokens, the most famous being WETH, USDC and WBTC. The transfer takes 10-15 minutes in total, and the fee is 3 USD (from Ethereum to Avalanche). More detailed information on fees and other frequently asked questions can be found here.

The avalanche bridge activity can be monitored on Nansen Dashboards. After the Avalanche Foundation announced the 180mm DeFi in mid-August, we saw a surge in Avalanche Bridge’s transaction volume, reaching a transaction volume of more than 370mm on August 27 alone. With the launch of more dApps and the support of reputable venture capital firms and liquidity mining programs (Curve, Aave, Trader Joe, Benqi), Avalanche has become more and more popular-activities on the bridge continue to grow and maintain high volumes , Reaching a peak volume of more than 600 mm on September 23.

Avalanche bridge transaction volume (Eth to Avax only)

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: 丨As of December 3, 2021

Transaction and gas fees

The scalability issue is the main issue that limits the growth and adoption of many blockchain networks. On the Ethereum network, the high gas cost caused by congestion has prompted many developers to migrate to other L1 chains and L2 solutions. When the cost of completing a simple transaction is higher than the value of the transferred asset, the high gas cost becomes very prohibitive. High gas fees cost retail participants and make the business model financially infeasible, thus cannibalizing the business model. Large token holders and robots are setting prices for retail, forcing them to bear high gas costs and base layer congestion (and poor user experience). This of course limits the growth of the network, thereby stifling innovation in the broader field of encryption. The graph below shows the increase in gas prices over the past two years, which is easily available on Nansen’s gas tracker dashboard.

Ethereum gas median price (Gwei)

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: 丨As of December 3, 2021

Avalanche’s transaction throughput exceeds 4,500 tps, and the transaction end time is less than 2 seconds. Compared with other blockchain networks, this is very promising.

Comparison of transaction throughput and finality

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: as of December 3

The chart below highlights how the daily transaction volume on the Avalanche network has grown steadily over the past six months. This attraction corresponds to more and more projects joining the ecosystem, from DeFi primitives (such as DEX, currency markets, asset management agreements) to NFT and corporate adoption.

Daily trading volume

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: Nansen.ai丨As of December 3, 2021

At the beginning of August, you can see a significant increase in daily trading volume. This coincided with the launch of the “Avalanche Rush” program-a $180 million DeFi incentive program that attracted blue-chip DeFi applications to be deployed on Avalanche. In addition, another major increase can be seen in November, as major announcements such as the partnership with Deloitte were also issued during this period. In addition, with the recent collaboration with Fireblocks, a leading digital asset custody and settlement solution provider, the number of daily transactions is expected to increase significantly in the coming months.

Gas fee paid daily丨Ethereum vs Avalanche

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: Nansen.ai丨As of December 3, 2021

From the above figure, we can also observe that in August, the daily gas payment on Ethereum began to increase significantly. This is mainly due to the rise of the NFT project deployed in Avalanche in the summer. The high gas price of Ethereum forces many projects to seek to expand on other networks, and deploying projects on these networks will be cheaper and easier to obtain.

Avalanche is able to create fast, low-cost and Solidity compatible dApps. Therefore, various NFT projects have been deployed using the network. Examples include Topps NFT market (designed for the size and speed of global sports fans), Kalao (an NFT ecosystem unlocking the full potential of the Metaverse experience), Venly Market (a peer-to-peer, blockchain-agnostic NFT market) and Crabada (a game where you can earn NFT while playing). In addition, part of the US$200 million recently raised by the Avalanche Foundation will be dedicated to NFT and cultural applications. However, it is worth noting that the most active applications on Avalanche are still DeFi dApps, such as Trader Joe and Pangolin (both DEX), which account for 23% and 7.5% of all on-chain activities, respectively.

The transaction ratio between Avalanche and Ethereum has been increasing significantly, especially since August.

Ethereum vs. avalanche transactions

Nansen: Avalanche (Avalanche) set off a "gold rush" from the data to see the potential of avalanche

Source: Nansen.ai丨As of December 3, 2021

The ratio rose from 1% in early August to a peak of 54% on November 26. To highlight Avalanche’s performance, let’s refer to the previous chart showing daily gas cost. On November 26, the daily gas paid on AVAX was US$1,311,682, while on Ethereum it was US$51,389,748. Although AVAX’s transaction volume on the day accounted for more than half of Ethereum’s transaction volume, the cost of processing these transactions was more than 20 times cheaper than Ethereum’s equivalent. This comparison highlights the performance of the Avalanche network at a fraction of the cost.

in conclusion

In view of the growing demand for block space, many Layer 1 and Layer 2 have been exploring new scalability design methods. Some of the defining characteristics of the scaling solution revolve around different consensus mechanisms and execution environments, resulting in higher performance and lower costs.

Generally, liquidity mining incentives are used to encourage users to use these chains as a mechanism to guide liquidity. As we have seen time and time again, liquidity is not loyal. When these incentives are used up, it will be interesting to see which players in the market will stand out. Avalanche has gained tremendous traction in the past 12 months, and we are very happy to see its role in the future of cryptocurrency.

Posted by:CoinYuppie,Reprinted with attribution to:
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