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TLDR below. This is not financial advice.
As people gradually realise the shortcomings of Ethereum such as stability, scalability, interoperability, etc., many other layer-1 blockchains areemerging as solutions for the future. Avalanche is one of them.
Avalanche ($AVAX) is a smart contract platform having the same concept "Internet of Blockchain" as Polkadot and Cosmos. Avalanche is an open source platform that enables the deployment of highly decentralised applications, financial products, digital assets, and interoperable blockchains.
Avalanche's outstanding technologies:
Speed: Avalanche's transaction processing speed is in seconds.
Scalability: Avalanche is capable of handling thousands of transactions per second and can accommodate thousands of validators without sacrificing performance.
Security: Avalanche ensures confidentiality and security. Avalanche supports smart contracts created and used by Solidity along with all the tools on Ethereum such as: Remix, Metamask, Trufle, etc.
Users can create their own public or private blockchains.
Built to serve the financial markets. Avalanche makes it easy to create and trade digital assets on complex terms. Assets can represent capital, shares, debt, real estate and many others.
What Problem Does the Avalanche Project Solve?
Currently, the financial market is still fragmented due to regulations and geographical distance. This makes trading difficult and a large amount of asset value is inaccessible for global users.
Avalanche allows financial networks to connect to a common platform that makes launching and trading digital assets easy. This is possible because Avalanche has created a platform for platforms where thousands of different sub-networks (depending on the users' purpose) can connect to create a global market network.
What is $AVAX?
Token Use Case
$AVAX is Avalanche's native token and is used for the following purposes:
Fees: Any activity deployed on a Avalanche subnet will be charged in $AVAX.
Staking: To become a validator or block creator in Avalanche or one of all other subnets requires a minimum of 2,000 $AVAX.
Note: Total tokens are 720 million $AVAX, mainnet provides 360 million tokens. The system will continuously mine until the total supply limit is reached. The $AVAX used to pay the fee will be burned, increasing the scarcity of the token over time.
Securitize, the industry's leading primary issuance and compliance platform for digital securities, has integrated with Avalanche to dramatically upgrade the time and cost savings of blockchain-based financial services to customers.
Securitize is one of the most successful and recognised companies in the digital securities world, with over 150 customers and 50,000 investors currently using the issuance and compliance platform for digital securities.
Issuers using the Securitize platform can now issue and manage private securities using Avalanche with low transaction costs.
BiLira company has launched a stablecoin backed by Turkish Lira, on Avalanche. Previously, TRYB was limited to the Ethereum blockchain, but now, with Avalanche, BiLira will provide fast, efficient and secure transactions allowing for expanded scalability and user adoption.
$UST and $TUSD, leading fiat-backed stablecoins by market capitalization, launched natively on Avalanche in Q1/2021. Tether is also expected to be added soon along with other leading stablecoins.
Lending & Borrowing
Lending & Borrowing is a very important sector of DeFi. In my opinion, the three most important branches in Lending & Borrowing are: Liquidity Pool, Yield Optimizer and Yield Farming.
Liquidity Pool: Currently there is only one project, BENQI. It is a Liquidity Pool similar to Compound built on Avalanche. The protocol allows users to easily lend, borrow, and earn interest by depositing their funds into the protocol.
Yield Optimizer & Yield Farming platform: There are quite a few projects in this group, of which Snowball and Beefy are the two most prominent projects. They are already live on Avalanche and have users. Other projects mostly do not have support or TVL very little (TVL less than $1M).
The yield line from Avalanche is very limited and not very diverse at this stage, so the Yield Optimizer & Yield Farming not working well is understandable.
Pangolin is a DEX running on Avalanche, using a similar AMM model to Uniswap. Pangolin offers three extremely important benefits: fast and cheap transactions, community-driven development, and fair and open token distribution.
Arrow Decentralized Financial Markets
Arrow Decentralized Financial Market (DFM) is the financial engine of the future. They will allow users to create cash payment options on any asset and aggregate any asset. Payments work through a network of decentralised aggregators (DACs) funded by liquidity providers, who lock in collateral in exchange for earnings from the platform.
Prosper, a cross-chain, non-custodial prediction market and hedging platform, has begun integration with Avalanche. The integration will be completed by the end of January 2021.
This integration will benefit both the Avalanche and Prosper ecosystems. Avalanche backers will be able to use $AVAX as the underlying prediction token for all Prosper features and functions. Any AVAX holder can maximise profits or hedge their positions, which also introduces a whole new source of liquidity in prediction market pools.
Price action prediction for $AVAX will be opened on other blockchains shortly after mainnet launch. The Avalanche-based prediction market will use Chainlink as Oracle.
Does not appear much in press releases, but currently on Avalanche there are three supported Oracle platforms:
On the other hand, I have not seen any "home" projects from Avalanche related to Oracle started.
Ava Labs, the development team behind Avalanche, has partnered with Polyient Games to create a decentralised exchange (DEX) for NFT.
The exchange is expected to host proprietary NFT auctions and peer-to-peer trading, with plans for increased NFT liquidity and “NFT adjacent tokens” in the future.
Overview of project teams building NFT-related products on Avalanche:
NFT marketplace: 420Swap, AVAXnft, Snowflake Market.
NFT dex: NFT DEX, Niftyx.
NFT gaming: Alchemy Toys, Lamasticards, Polyient Games.
NFT collectibles: Cryptoseals, Snowies.
Avalanche - Ethereum Bridge
Avalanche-Ethereum Bridge, developed by ChainSafe through the Avalanche-X funding program, is in the final stages of testing before deploying to the mainnet. This will open the gates for simple, secure asset transfers between Avalanche and Ethereum.
Ava Labs has joined the IDB Lab LACChain Alliance, a global organization led by the InterAmerican Development Bank Group Innovation Laboratory to accelerate the growth of blockchain ecosystems in Latin America and the Caribbean (LAC).
DeFi Lego On Avalanche
After about a year of continuous development, Avalanche has emerged with powerful DeFi applications. Proof is through TVL, which has grown by around x13.3 (from $179M to $2.38B)
In my opinion, there are only three sectors that stand out in the Avalanche ecosystem: Lending/Borrowing, DEX and Aggregator. In each sector, they have only 1-2 protocols with >$100M in TVL.
The leader in this glinhx is BENQI, a brilliant rookie who has only been around for about a month. It has launched an attractive incentive programme to attract users to the Avalanche Ecosystem.
BENQI's TVL hit $1.13B, which is about 47.5% of Avalanche's entire TVL. Most of the assets locked on BENQI are $wETH with over $417.14M and $wBTC holding $219.3M
Pangolin is not the only DEX on Avalanche, but it is the most prominent DEX with TVL over $330M. From the chart we can see that the TVL does not seem to have had a strong breakout since the beginning. From the beginning of July to now, TVL has grown by about x3, which is a modest sign when compared to BENQI.
The other DEXs have almost nothing outstanding to say when they are all <$100M. We need to see more.
In this sector we have two projects about one-stop trading and yield farming: Trader Joe and Yield Yal.
Both started to grow strongly in TVL from mid-August, with $650m in TVL for Trader Joe and $208m in TVL for Yield Yal.
More specifically, both of them started issuing incentive programs in August to attract users to join their protocol.
We have discussed about infrastructural development, and we reviewed a few important Legos. In the Avalanche ecosystem, after they develop a solid foundation, DeFI is the next point to look at. The projects in DeFi are still very primitive and few, but the potential is huge if Avalanche makes good use of it.
Currently there are about 30 projects developed on Avalanche, but only 4 have TVL >$100, of which BENQI has surpassed $1B in TVL.