TBEN Consulting: How Avalanche is reinventing DeFi


This is not the first time that the native Avalanche blockchain token has encountered wild fluctuations. In February, AVAX hit only $ 60 to hit a nadir in June-July. But after hitting a low of $ 9.34, AVAX is now above $ 60 and is currently trading at $ 76. This earned it a place in the top 20 cryptocurrencies by market cap with $ 16 billion, according to TBEN Markets Pro. Avalanche is among layer one blockchains labeled as “Ethereum killers” that appear to have recently reduced the dominance of top altcoin in terms of total locked-in value (TVL). Of TVL’s $ 170 billion, Ethereum currently controls 67% based on data from Defi Llama. But while the number seems high, it is actually much lower than in February when it contained around 96% TVL.

Background on avalanches

Avalanche was developed by Cornell Associate Professor of Computer Science Emin Gün Sirer and Ava Labs in 2018. The blockchain protocol offers high throughputs and fast final time. In 2019, it received seed funding through the sale of 18 million AVAX tokens priced at $ 0.33 each, or nearly $ 6 million. The following year, an additional 24.9 million tokens were auctioned in a private sale, this time at $ 0.50 each, bringing in an additional $ 12 million in funding. In July 2020, Avalanche raised an additional $ 42 million through a public token sale. And on September 16, 2021, Avalanche’s most recent funding raised $ 230 million from various investors led by Polychain and Three Arrows Capital. This brings a total funding amount of $ 290 million for Avalanche despite its launch on the Mainnet which just celebrated its first anniversary.

How Avalanche is reinventing DeFi?

Avalanche is caught in the midst of increasingly intense competition, with Binance Smart Chain (BSC), Polkadot and Terra vying for greater market share from their main competitor, Ethereum. And just like its counterparts, Avalanche’s scalability is just as crucial. Avalanche claims 4,500 transactions per second (TPS) with a finality of less than three seconds. On the other hand, Ethereum processes 15 to 30 transactions per second with a finality greater than 1 minute. Additionally, transaction fees are much more desirable on Avalanche than on Ethereum. Avalanche’s fees range from 75 nAVAX to 225 nAVAX ($ 0.000048 to $ 0.0000144 at the coin’s current value).

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However, it takes more than lower costs and faster transactions to compete with first-mover in Etheruem. Developers keen to build apps on Avalanche are needed to drive adoption. In this regard, it is clear that Ethereum has the upper hand with 2,585 listed decentralized applications (DApps). But despite being only one year old, Avalanche has already attracted 320 projects.

Source: Avax-Projets

Projects such as SushiSwap, Chainlink, Circle and The Graph have benefited from the smart contract infrastructure provided by Avalanche. Non-fungible tokens, or NFTs, have also found a place in Avalanche; for example, Topps, a sports-themed trading card company, created a Major League Baseball Avalanche NFT collection called “Inception.” Topps has also partnered with the German soccer league Bundesliga, posting video moments of the league in two available card packages, all as NFTs on the Avalanche blockchain. In addition, the $ 230 million raised by Avalanche in 2021 will be used to support this flourishing ecosystem of decentralized finance, or DeFi.