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In today's issue:Launched by AVA Labs in 2020, Avalanche is a Layer-1 blockchain that aims to address the blockchain trilemma of scalability, security, and decentralization. It supports smart contracts and enables the creation of decentralized applications (dapps) using Solidity, the same programming language used by Ethereum. With over $1.3 billion worth of crypto locked in various Avalanche protocols, it hosts hundreds of DeFi applications.
In today's Ultimate Guide to the Top 10 Protocols on Avalanche (AVAX),we look at the current landscape of the Avalanche ecosystem. We'll unpack ten of the top projects building atop Avalanche to help determine which have value for investors, and how the entire ecosystem can benefit the Avalanche network itself.
To dive even deeper into the important metrics, we recommend you read our Avalanche Investors Scorecard, where we rate the blockchain on items like token mechanics, user adoption, and the management/development team. |
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| | | Must Read Today's most important story for crypto investors. |
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Today's "Must Read" gives some insight into the recent bitcoin ETF application by BlackRock, exploring the potential for approval, how this ETF product differs from other prior attempts by BlackRock and others at approval for a spot bitcoin ETF, and the potential impact on the overall market.
The article consists of an interview with CF Benchmarks CEO Sui Chung, who discusses BlackRock's recent filing for a spot bitcoin ETF and its potential implications on the market. Chung provides insights into the filing and how it differs from previous attempts by BlackRock and others to get approval for a spot bitcoin ETF product.
Chung also explains that the new filing addresses the SEC's concerns about mechanisms to impede and detect manipulative trading, which could lead to approval. There's also an exploration of the potential market for the ETF, with Chung suggesting that a significant portion of the investing public could be interested in a bitcoin ETF. She also goes into the tax benefits of ETFs and their attraction for investors. The approval process for the ETF could last up to 230 days, and if approved, it could have a significant impact on the broader bitcoin market. |
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Investor takeaways: The approval of BlackRock's spot bitcoin ETF would almost certainly open the floodgates for other companies to follow suit. Indeed, there have already been applications filed by Bitwise, Invesco, VanEck, and Wisdom Tree, with rumors of Fidelity also preparing to file for its own bitcoin ETF. These activities have already pumped bitcoin to a more than one-year high.
In addition to the short-term price appreciation, approval of a spot bitcoin ETF by the SEC could provide a number of far-reaching benefits for the crypto markets, including increased institutional adoption, greater accessibility of crypto for retail investors, built-in regulatory oversight, and improved tax efficiency for bitcoin investors. It could also spark applications for ETFs based on other digital assets, providing even greater benefits for investors. |
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| Premium Power-Ups Level up your crypto investing game. |
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| New Blockchain Risk Scorecard: Gala Games (GALA) |
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| Gala Games is a Web3 entertainment company with a focus on blockchain gaming. The team has adopted a "player-first" approach to their products, where the devs strive for the best possible experience and use cutting-edge Web3 technology to give gamers unprecedented freedom to own, earn, and play. Gala Games users can also collect in-game NFTs from in the ecosystem. NFTs provide players with boosts and reward opportunities. |
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In our new Gala Games Blockchain Risk Scorecard, we delve into the financial and team-related risks of GALA while also exploring smart contract and regulatory risks.
Our analysts use this “scorecard” to evaluate the risk level of blockchain-based crypto investments. By rigorously asking the same questions across several different categories, the blockchain investor can spot potential warning flags, and make better long-term investments.
Premium members: Download the Gala Games Risk Scorecard here. Then, visit our Premium page to compare the risks of BNB with other popular tokens.
Not yet a Premium member? Sign up now to join and get access to our library of investor, risk, and NFT scorecards. |
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| The Ultimate Guide to the Top 10 Protocols on Avalanche (AVAX) by Anatol Antonovici |
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Executive Summary: Launched by AVA Labs in 2020, Avalanche is a Layer-1 blockchain that aims to address the blockchain trilemma of scalability, security, and decentralization. It supports smart contracts and enables the creation of decentralized applications (dapps) using Solidity, the same programming language used by Ethereum. Avalanche's unique architecture involves three core chains: the Exchange Chain (X-Chain), Contract Chain (C-Chain), and Platform Chain (P-Chain). Its native token, AVAX, facilitates transactions, rewards distribution, and governance. With over $1.3 billion worth of crypto locked in various Avalanche protocols, it accounts for nearly 3% of all chains and hosts hundreds of DeFi applications. Here we look at the top 10 protocols building on Avalanche.
While the crypto market saw many Layer-2 networks designed to scale Ethereum, the team behind Avalanche created a decentralized chain from scratch to challenge Ethereum’s dominance. Today, Avalanche is one of the most sought-after networks in decentralized finance (DeFi). However, it remains far behind Ethereum, with only 73k daily active users versus Ethereum’s more than 370k daily active users. Yet it is seeing growth, with roughly double the number of daily active users now versus the same time last year. By comparison Ethereum has only seen an increase of 12.9% in daily active users over the same time.
What Is Avalanche (AVAX)?
Avalanche is a Layer-1 blockchain launched by AVA Labs in 2020. It claims to address the so-called blockchain trilemma by achieving scalability, security, and decentralization without compromise. Thanks to a unique Proof of Stake (PoS) consensus mechanism, Avalanche supports smart contracts, making it one of the “Ethereum killer” candidates. It enables the creation of decentralized applications (dapps) through Solidity, the same programming language used by Ethereum developers.
The unique architecture of Avalanche involves three core chains:
Exchange Chain (X-Chain), used for asset creation and exchange; Contract Chain (C-Chain), which facilitates smart contracts and ensures cross-chain interoperability; Platform Chain (P-Chain), which is responsible for coordinating validators and managing subnetworks. |
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Image via Avalanche.
Avalanche's native token, AVAX, plays a key role in the ecosystem, facilitating transactions, system rewards distribution, and governance. Following a successful public sale that raised $42 million in July 2020, the Avalanche ecosystem has attracted substantial investments and evolved as a significant player in the DeFi space.
As of this writing, more than $1.3 billion worth of crypto is locked on various Avalanche protocols, accounting for almost 3% of all chains. While that’s not much, daily active user growth (DAU) is far more impressive. Over the past 90 days Avalanche has seen DAU growth of 247.5%. |
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Massive recent DAU growth. Image via Token Terminal.
Avalanche hosts hundreds of DeFi applications, and we’re about to discuss the most popular. |
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Top 10 Protocols on Avalanche by Total Value Locked
Here are the top 10 DeFi protocols built on Avalanche: |
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Aave V3
Type of dApp: Lending BMJ Score: 4.5
Aave is a decentralized, non-custodial lending protocol that enables users to lend, borrow, and earn interest on digital assets. The protocol was launched in 2017 and rebranded in 2018. Last year, Aave introduced its V3 iteration, which brings significant improvements and new features, such as the Portal for cross-chain liquidity, Efficiency Mode for high-efficiency borrowing, and Isolation Mode for controlled risk asset listings. Aave V3 is available on multiple chains, including Avalanche. As of mid-June, Aave V3’s total value locked (TVL) on Avalanche is over $180 million, which is second only to Ethereum. In total, the latest iteration has about $1.7 billion worth of crypto locked with it, which is almost half of V2’s $3.6 billion. |
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Trader Joe
Type of dApp: DEX BMJ Score: 3.5
Trader Joe started as a DEX that leverages the Avalanche Network. However, it plans to become a broader ecosystem to include multiple DeFi services, such as yield farming, lending, staking, and a non-fungible token (NFT) marketplace. Its unique ecosystem provides multiple uses for its native token, JOE, used for staking, yield farming, and governance. Recent developments include plans for an upgraded trading engine, Liquidity Book V2.1, aimed at facilitating depositors' token addition to liquidity pools. Today, over $65 million worth of crypto is locked with this ecosystem, down from almost $3 billion at its peak in 2021. |
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GMX
Type of dApp: DEX BMJ Score: 4.0
GMX is a spot and perpetual contract trading platform with low swap fees and no price impact. It was initially launched on Arbitrum in September 2021 and further expanded to Avalanche in early 2022.
It offers up to 50x leverage and features a unique multi-asset liquidity pool, generating rewards from various sources and subsequently redistributing them to liquidity providers.
The platform merges advanced DeFi technology with crypto exchange functionalities, supporting top digital assets and stablecoin, including ETH, WBTC, LINK, UNI, DAI, USDC, USDT, and FRAX. It relies on two functional tokens: the GMX token for governance and the GLP token for trading liquidity. As of now, GMX has a TVL of about $900 million, of which $90 million is on Avalanche. |
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Stargate
Type of dApp: cross-chain liquidity BMJ Score: 4.0
Stargate Finance is a cross-chain liquidity protocol enabling swift swapping of stablecoins across multiple Ethereum Virtual Machine (EVM) compatible networks, including Ethereum, Avalanche, BNB Chain, Arbitrum, Optimism, Fantom, and Polygon. It offers an enticing reward of up to 8% APY for liquidity providers depositing stablecoins. USDC and USDT account for over 85% of the locked tokens.
The protocol, spearheaded by LayerZero Labs, competes with the likes of Synapse Protocol and stands out with its native STG token used for governance. Stargate addresses security concerns that are so frequent across bridges. It relies on cross-verification technology between Oracle and LayerZero and uses omni-chain tokens instead of the wrap-token method. |
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Benqi
Type of dApp: Liquid staking & lending BMJ Score: 4.0
BENQI is a DeFi protocol developed exclusively on the Avalanche network. It comprises two core elements: BENQI Liquid Staking (BLS) and BENQI Liquidity Market (BLM).
BLS is a liquid staking solution that tokenizes staked AVAX, thereby facilitating users' participation in DeFi applications without the need for cross-chain transfers or locked capital. As for BLM, it is a lending and borrowing protocol enabling users to deposit, loan, and accrue interest on their crypto assets in an over-collateralized, permissionless manner.
All transactions on BENQI occur via smart contracts, ensuring transparency and decentralization. The protocol is focused on low fees, ease of use, and improved access to financial products within the DeFi space. As of this writing, over $190 million worth of crypto is locked with BENQI. |
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Pangolin
Type of dApp: DEX BMJ Score: 3.0
Pangolin is a DEX operating on Avalanche and Hedera. As a fork of Uniswap, it uses the same AMM model, although it leverages the underlying network to provide a faster, more cost-effective trading experience. Thanks to Avalanche’s rapid transaction finality and low fees, Pangolin is ideal for retail traders.
The platform’s development and management are led by the community. The native governance token, PNG, was fairly launched, with no tokens reserved for team members, advisors, or any entity - all tokens are community-allocated. The platform offers standard AMM features such as token swapping, liquidity provision, liquidity mining, and PNG staking. |
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Platypus Finance
Type of dApp: DEX BMJ Score: 3.0
Platypus Finance is an innovative, single-sided Automated Market Maker (AMM) protocol for stablecoins operating on the Avalanche network. This platform employs a unique mechanism that enables Liquidity Providers (LPs) to contribute using only one token type rather than the conventional pairings. By applying principles of asset liability management, Platypus mitigates impermanent loss risk and reduces slippage for traders while enhancing capital efficiency. It guarantees LPs receive the same amount and type of token originally deposited, along with accrued pool rewards.
The protocol's design allows each token to grow organically based on supply and demand. Platypus' two native tokens, $PTP and $vePTP, encourage long-term staking by boosting LP rewards and fostering protocol growth. In February 2023, Platypus suffered a flash loan attack, forcing its native stablecoin, the Platypus USD, to break its peg with the US dollar. The protocol confirmed a loss of about $8.5 from its main pool. |
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CIAN
Type of dApp: BMJ Score: 3.0
CIAN is an automation platform that aims to optimize yield strategies in DeFi. Focused on liquid staking tokens, CIAN enables users to build, manage, and refine strategies across various cryptocurrencies, including mainstream liquid staking tokens and stablecoins. Users can earn passive income based on their tokens without locking them up, leveraging CIAN's automated strategies. CIAN collaborates closely with liquid staking providers and lending platforms. |
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Vector Finance
Type of dApp: Yield BMJ Score: 3.0
Vector Finance is a DeFi protocol designed to complement the services of Trader Joe and Platypus Finance. It enables users to yield amplified returns from their stablecoin or liquidity pool deposits with Joe and Platypus without having to own or stake JOE or PTP tokens. Vector optimizes the utility of JOE and PTP tokens by enabling their conversion into platform-specific tokens, xPTP and zJOE, respectively. The converted tokens then serve as share contributors in the yield of the Vector protocol. As an added advantage, stakers of xPTP and zJOE receive about 60% of the protocol’s revenue and extra rewards through VTX, Vector's governance token. |
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Yield Yak
Type of dApp: Yield BMJ Score: 3.5
Yield Yak is a decentralized yield farming platform designed to augment DeFi yield on Avalanche. The tool optimizes returns through auto-compounding farm rewards, enabling farms to operate independently. Yield Yak’s main products are the Farming Aggregator and the DEX Aggregator, which provide seamless liquidity across the ecosystem. The protocol implements smart strategies seeking exponential growth. Its native token, YAK, supports the yield mechanism, funding protocol investment, rewarding participants, and fostering project growth. By pooling assets and sharing compounding expenses, Yield Yak enables users to seek higher returns and reduce time commitment while minimizing gas costs. It’s worth noting that Yield Yak operates on unaudited smart contracts. |
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Investor Takeaway
Avalanche positions itself as a real competitor in the DeFi sector. Designed from scratch, it challenges Ethereum's dominance by addressing the notorious blockchain trilemma, demonstrating a reliable mix of scalability, security, and decentralization. Can it really take down Ethereum, though?
With a growing ecosystem of protocols, Avalanche hosts a wide range of DeFi applications, each catering to unique investor needs. And users seem to be flocking to the chain, with growth in active users for the past six months topping 200%. By contrast Ethereum has seen growth of 11.9% over the same period. At that rate it shouldn’t take long for Avalanche to vastly improve on its position versus Ethereum.
As of this writing, AVAX is among the top 20 largest cryptocurrencies by market cap, which is something. However the token has seen significant downside pressure over the past 18 months.
As a pioneer in the DeFi sector, Avalanche's unique architectural model and supportive ecosystem present a potential growth opportunity for investors exploring next-gen blockchain solutions. It may seem like a long-shot now, but the growth in the ecosystem makes this potential Ethereum killer worth watching. |
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