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This is not the first time that the native tokens of the Avalanche blockchain have experienced violent fluctuations. In February, the price of AVAX was as high as $60, but it reached its lowest point from June to July. But after bottoming out at $9.34, AVAX has now exceeded $60, and the current transaction price is $76. According to data from Cointelegraph Markets Pro, this makes it one of the top 20 cryptocurrencies with a market value of $16 billion. Avalanche is one of the first-tier blockchains labeled as the “Ethereum Killer”, and these blockchains have recently appeared to reduce the dominance of top altcoins in terms of total locked value (TVL).Of TVL’s $170 billion, Ethereum currently controls 67%, based on LlamaHowever, while this number looks high, it is actually much lower than in February, when it contained about 96% of TVL.
Avalanche background
Avalanche was developed in 2018 by Emin Gün Sirer, associate professor of computer science at Cornell University and Ava Labs. The blockchain protocol has high throughput and fast termination time. In 2019, it obtained initial funding through the sale of 18 million AVAX tokens, each at a price of 0.33 U.S. dollars, and the total amount is close to 6 million U.S. dollars. In the second year, another 24.9 million tokens were auctioned in a private auction, this time at $0.50 each, bringing an additional $12 million in funding. In July 2020, Avalanche received another $42 million through public token sales. On September 16, 2021, Avalanche’s latest round of financing received USD 230 million from various investors led by Polychain and Three Arrow Capital.This brings the total amount of funds US$290 million Although Avalanche’s mainnet has just celebrated its first anniversary, it still serves Avalanche.
How does Avalanche reimagine DeFi?
Avalanche is in an increasingly fierce first-tier competition, and companies such as Binance Smart Chain (BSC), Polkadot, and Terra are all vying for a larger market share of its main rival, Ethereum. Very similar to similar products, Avalanche’s scalability is also crucial. Avalanche has 4,500 transactions per second (TPS) and can be completed in less than three seconds.In contrast, Ethereum processes 15-30 transactions per second End of more than 1 minute. and, transaction fee Compared with Ethereum, it is more popular on Avalanche. The cost of Avalanche ranges from 75 nAVAX to 225 nAVAX (calculated from the current value of the coin from $0.0000048 to $0.0000144).
However, to compete with the pioneers of Ethereum requires more than just lower costs and faster transactions. Developers willing to build applications on Avalanche are necessary to promote adoption.In this regard, it is clear how Ethereum has the upper hand 2,585 Decentralized applications (DApps) listed.But even though it is only one year old, Avalanche already has Be attracted 320 items.
Source: Avax-Projects
Projects such as SushiSwap, Chainlink, Circle and The Graph all benefit from the smart contract infrastructure provided by Avalanche. Non-fungible tokens (NFT) have also found a home on Avalanche.For example, Topps, a sports-themed trading card company, casts Major League Baseball NFT collection It is called “Inception of Dreams” on the avalanche. Topps also cooperated with the German Football League Bundesliga to release the league’s video moments in two available card packs-all of which are NFTs on the Avalanche blockchain. In addition, the $230 million raised by Avalanche in 2021 will be dedicated to supporting this thriving decentralized finance or DeFi ecosystem.
Ethereum Bridge
One of the important steps Avalanche has taken in redefining finance is Cross-chain Ethereum Bridge, In which it promotes “seamless ERC-20 and ERC-721 transfer between Avalanche and Ethereum”. The bridge helps to migrate Ethereum’s DeFi infrastructure to Avalanche, enabling users to conduct faster and cheaper transactions.
Pangolin is a well-known participant in the DeFi field. It is built on Avalanche and benefits from the Avalanche-Ethereum bridge. Decentralized exchanges (DEX) support trading of all tokens issued on Ethereum and Avalanche. This enables users to avoid high and slow transaction times when exchanging assets. In addition to pangolins, other DApps, such as bZx, Union, JellySwap, Prosper, e-Money, etc., have all joined the Avalanche ecosystem.
To date, a total of $1.72 billion in assets has been Transfer in Use the bridge.
More DeFi growth
In addition, in order to further promote its booming DeFi ecosystem, Avalanche introduced two leading DApps on Ethereum into the Avalanche blockchain.Avalanche sprint USD 180 million liquidity mining incentive plan, Partly allocated to Curve Finance and Aave. In the initial phase of the plan, AVAX will be used as a liquidity incentive for Aave and Curve users within three months. The Avalanche Foundation has allocated approximately US$27 million worth of AVAX to fund the project, and plans to provide additional funding for the second phase.
In addition to Aave and Curve Finance, pangolins also join in Avalanche Rush, providing a $2 million AVAX reward for the unilateral pangolin (PNG) pool.
What’s under the hood?
Perhaps the most powerful advantage of Avalanche is its network infrastructure, which is touted to provide better decentralization. Avalanche is composed of three integrated blockchains: transaction chain (X-Chain), platform chain (P-Chain) and contract chain (C-Chain). X-Chain is mainly used to create and exchange assets, while P-Chain is used to create subnets and coordinate validators, and C-Chain is used to execute Ethereum virtual machine contracts. Most transactions occur in the C chain, because Ethereum developers can use this blockchain to easily build applications compatible with Ethereum.
These three blockchains are verified and protected by their main network, which is a special type of subnet or subnet. Anyone can secure the network by staking at least 2,000 AVAX (currently $152,000).Avalanche defines a Subnet As “a group of dynamic validators, work together to reach a consensus on the state of a group of blockchains.” In essence, a subnet is a new network that can host multiple blockchains, and these blockchains can have their own The consensus model and its own virtual machine.
These subnets provide opportunities for certain niche use cases because they are highly customizable. This is useful for different organizations, companies and even governments, because the network architecture also supports private subnets, which means that those who want to deploy private blockchains can do so.
Why has the price of AVAX soared recently?
Avalanche Rush was the main factor that caused the AVAX price to rise 192% in August. But another reason for the recent increase in AVAX prices is due to more upcoming initial DEX products (IDO). AvaXlauncher is the launchpad and incubator of the Avalanche ecosystem. TwitterOne is Oracle on Avalanche, and the other is Gaming Project: Breed, Play and Earn.
With these two IDOs, stakeholders and holders of AvaXlauncher (AVXL) tokens will airdrop a small portion of these IDOs. IDO is a new type of crowdfunding model in the encryption field. Compared with early models such as initial token issuance and initial exchange issuance, it provides instant liquidity, instant trading and lower listing costs.
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Decomposing tokenomics
The token economics behind AVAX may also play a small role in increasing its value. The token supply cap is 720 million AVAX, but it is worth noting that 40% of it has been allocated to private investors and the AVAX team. Then, about 360 million was allocated for staking rewards, of which 10% was used for public sales.
Source: Avalanche
In addition, the cost of each transaction also follows a similar Combustion mechanism Similar to the Ethereum improvement proposal 1559. To date, there have been nearly 278,000 AVAX tokens ($21 million) burn Since its establishment, in addition to limited supply, it has also brought further deflationary pressures. The current total circulation of AVAX is approximately 220 million AVAX.
Source: Avascan
There is no doubt that the increasing popularity of the first layer of agreements is reimagining the DeFi landscape. But even if Ethereum’s dominance diminishes slightly, as evidenced by its reduced TVL, it remains in an enviable position and competitors may be difficult to eradicate. Therefore, it may be too early to calculate Ethereum before Ethereum 2.0. Nevertheless, these “Ethereum killers” are still on the rise, and sooner or later they will become a worthy opponent.
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