Avalanche’s Fast Growth Challenges Ethereum’s Long Standing DeFi Dominance

FinanceFeeds Editorial Team

The crypto ecosystem has fast burgeoned into a $3 trillion market cap, with more projects launching by the day. In recent months, this growing industry has also seen exciting developments as new Layer-1 chains emerged to challenge Ethereum’s dominance. One of the biggest challengers is the Avalanche blockchain; a smart contract focused Layer-1 chain built to support Dapp and NFT development.

Avalanche

The Avalanche ecosystem has grown to host over 320 Dapps within the past year, while the value of its native coin AVAX skyrocketed by over 2,000% to hit $94 as of press time. It is currently the 12th largest coin in market capitalization, according to Coingecko metrics. Well, the good news is that the momentum seems to be just getting started; die-hard Avalanche enthusiasts are optimistic that it could be the ‘Ethereum killer’.

Before jumping into the speculation bandwagon, it is fundamental to understand why Avalanche has been successful so far. This growing Layer-1 chain is an initiative of Ava Labs and Professor Emin Gün Sirer, a Cornell computer science associate professor. With three years of existence, the project has raised a total funding of $290 million led by famous crypto investors, including Three Arrows Capital and Polychain.

That said, Avalanche’s main value proposition lies in the fundamental architecture of its blockchain network. This Layer-1 chain eliminates the shortcomings of Ethereum’s ecosystem by offering users a fast and cheap operating environment. Avalanche touts 4,500 transactions per second (tps) compared to Ethereum’s 15-30 tps. Additionally, the transaction finality on Avalanche takes three seconds, while Ethereum’s could take over a minute.

A Cheaper Dapp Ecosystem

As far as Dapp development goes, Ethereum has been the ultimate Layer-1 chain. However, the ever-increasing gas fee on this blockchain is a significant limiting factor to crypto innovators and developers. Avalanche changes this narrative through its cost-friendly ecosystem where transactions cost as little as 75 nAVAX – 225 nAVAX ($0.000006097 & $0.00001829 as per the prevailing prices).

Unlike Ethereum, which runs on one-chain, Avalanche’s blockchain infrastructure comprises three integrated chains: The Exchange Chain (X-chain), Contract Chain (C-chain) and Platform Chain (P-chain). These chains perform different roles with the X-chain supporting creation and exchange of crypto assets. The C-chain facilitates smart contract creation while the P-chain coordinates network validation through subnets.

Given this architecture, it is no surprise that the Avalanche blockchain has managed to deliver a fast and cheap Dapp building ecosystem. Some of the upcoming Dapps building on this network include Pangolin, a decentralized exchange (DEX) leveraging Avalanche’s fundamentals to introduce a fast and cheap crypto trading environment. Thanks to Avalanche’s Ethereum bridge, users can also trade ERC-20 tokens on the Pangolin DEX.

While Pangolin uses the same automated market maker model (AMM) as Uniswap, the DEX sets itself apart by allowing more retail users to deploy smart contracts or trade crypto assets. Swapping tokens on this DEX only costs a few cents coupled with a sub-second transaction finality. Pangolin’s 100% community-driven native token (PNG) is the platform’s governance tool, allowing the community to vote on development proposals.

This DEX is just one of the few Dapp examples that are building on Avalanche. Other prominent DeFi protocols include Trader Joe, Benqi, Abracadabra and Anyswap. It is also noteworthy that Ethereum natives Aave and Curve Finance launched their protocols on Avalanche following a $180 million liquidity mining program incentive back in August.

Is Avalanche the Future of Layer-1 Chains?

The debate on the future of Layer-1 chains has been going on for some months as Ethereum lags in its 2.0 upgrade. This being the case, the likes of Avalanche and Solana are gradually attracting more capital within their ecosystems. As it stands, over $9.5 billion is locked on Avalanche Dapps, according to DeFi Llama. This value has tripled within the past three months, a sign that Avalanche’s ecosystem is on steroid growth.

Besides DeFi protocols, NFT platforms are also building on Avalanche. Some notable projects include Spores, a cross-chain NFT platform that supports Binance Smart Chain (BSC). This NFT platform and other innovations go on to show a growing interest in Avalanche, not to mention AVAX’s recent surge in price.

The Avalanche foundation has also been making great strides to position the network as a futuristic Layer-1 chain. Just recently, they launched a $220 million DeFi and NFT growth fund dubbed Blizzard to bootstrap more innovation. Ava Labs president John Wu believes that the initiative will go a long way in incentivizing Dapp development on Avalanche,

“Blizzard is entering the Avalanche community at a pivotal moment, where this influx of users and activity demands constant innovation in new applications and use cases on the platform.”

“This is a massive step in the maturation of the Avalanche ecosystem and its support system for builders developing the future of this industry,” added Wu. 

Going by this momentum, it is evident that Avalanche might soon be giving Ethereum stakeholders a run for their money. However, it would also be ignorant to ignore Ethereum’s dominance and reputation as the pioneer Layer-1 to support Dapp building. Only the future can unfold whether we have an ‘Ethereum killer’ or the industry will evolve into one ecosystem where multiple blockchains can communicate.

 

Read this next

Digital Assets

SEC denies First Trust Advisors-SkyBridge application for Bitcoin ETF

The US Securities and Exchange Commission (SEC) has again rejected another bid to list a spot bitcoin exchange-traded fund (ETF), which is widely seen as a proxy into crypto for millions of retail investors.

Technology

Crypto fund Modus.Trade taps Gold-i to manage its technology infrastructure

Modus.Trade, which operates an investor network, online learning platform, and suite of algorithmic trading strategies, has selected FinTech company Gold-i to manage its entire technology infrastructure.

Industry News

Ripple’s “biggest victory” triggers XRP Holders’ request for unprivileged SEC meetings

“The biggest victory for Ripple and XRPHolders, from Judge Netburn’s recent decision, isn’t necessarily the email with the Draft version of the Hinman speech.”

Retail FX

Fintech Alpaca poaches Pepperstone Cyprus head Victor Zachariades

Victor Zachariades, who joined Pepperstone in 2019 to head up its Cyprus operations, has left the FX firm to join Alpaca, a stock brokerage that allows developers to build apps, services, and trading platforms.

Industry News

Public.com acquires HyperCharts to improve broker’s data visualization

“One chart is worth 1,000 numbers. We built HyperCharts to make financial analysis easy, fun, and approachable for the masses by turning complex SEC filings into simple, interactive charts.”

Institutional FX

FX HedgePool launches mid-month roll cycle for better pools of peer liquidity

“By introducing this new cycle, we’re offering the buy-side greater choice with respect to accessing safe and transparent pools of peer liquidity.”

Digital Assets

Robinhood launches Beta version of crypto wallet

Wallets will allow Robinhood users to send and receive their crypto from Robinhood to external crypto wallets, fully connecting Robinhood crypto holders to the greater blockchain ecosystem for the very first time – a major milestone for the broker’s venture into crypto.

Industry News

JKO Play drops out of running to acquire Playtech

A consortium called JKO Play, led by former Formula 1 boss Eddie Jordan and gambling industry veteran Keith O’Loughlin, has pulled out of the race to acquire Playtech.

Institutional FX

ABN AMRO launches fractional investing infrastrucutre, BUX is first broker client

“The launch of fractional investing marks an important new chapter in the normalization of investing in Europe.”

<