Apollo’s Moonshots: Avalanche wants users to rush from Ethereum to its speedier platform
David Angliss, an analyst with Australia’s leading cryptocurrency investment firm, Apollo Capital, shares the fund’s weekly take on what’s happening in the fast-changing and volatile cryptocurrency space.
The blockchain wars are heating up with Solana gaining traction, layer two Ethereum scaling platform Arbitrum One readying to launch and Cardano getting ready to unleash smart contract functionality.
Now “layer zero” smart contract platform Avalanche, the No. 27 crypto, is trying to gain a bit more market share in decentralised finance, with the Avalanche Foundation announcing what it’s describing as the biggest-ever DeFi incentive program.
Avalance Rush will be handing out US$180 million in Avax token rewards.
“What the aim of that program essentially is, is designed to scale DeFi, create a more accessible, decentralised and cost-effective ecosystem,” David Angliss says.
Phase 1 of the program involves US$20 million worth of Avalanche token incentives for the leading crypto borrowing and lending platform, Aave, as well as US$7 million in incentives for users of Curve, a platform for stablecoin swaps.
Both Aave and Curve are premier, blue-chip DeFi protocols, Angliss says. Aave has US$15.5 billion in total value locked, making it the No. 1 DeFi asset, while Curve is No. 3 with US$11 billion.
The incentive program is an attempt to lure Aave and Curve users away from Ethereum and onto Avalanche, which is much quicker and cheaper to use, but there’s far less liquidity.
Avalanche is compatible with the Ethereum Virtual Machine and Solidity, its coding language, meaning it is easy for Ethereum projects to launch on Avalanche.
“As DeFi becomes more and more popular, it becomes clear that Ethereum blockchain is currently struggling to fit all the activity,” Michael Egorov, chief executive officer at Curve Finance, said in the announcement.
“Thus, it is important to expand to other chains and L2s. We find Avalanche offering an excellent opportunity with its unique decentralized consensus mechanism, high throughput and low transaction fees.”
Version 2.0 of the “Avalanche Bridge” makes it easier and cheaper for end-users to transfer their ERC-20 tokens to Avalanche as well. The upgraded bridge has transported US$100 million in Ethereum tokens since its launch three weeks ago.
The announcement didn’t include a release date, “but judging from the competitive nature of the market right now, it could be released very soon,” Angliss told Stockhead on Friday.
The news sent the value of the AVAX token soaring from around US$25 to US$35. AVAX tokens began the week around US$18.
Avalanche Foundation is handing out rewards to users of a brand-new platform, BENQI Finance, an “algorithmic liquidity market protocol,” and recently partnered with Stake DAO, a multi-service platform for leveraging DeFi apps such as Curve and Aave.
BENQI, which has US$200 million in total value locked, is getting US$3 million in incentives, which will be given to users who lend and borrow AVAX, ETH, LINK, wBTC, USDT and DAI and the BENQI platform.
How the rest of the rewards will be divided up hasn’t been announced yet, although the foundation said it had reserved a portion of the rewards to current and future native Avalanche applications.
“Essentially, there’s a race at the moment, to capture DeFi market participants, similarly to how Polygon captured a large market share in June/July. We’re pretty excited to watch the progress,” Angliss said.
“We’re expecting to see similar market activity to what was occurring on Polygon, when it was in the limelight.”
Apollo was an early investor in Avalanche, Angliss said. The platform’s mainnet was launched in September by a team led by Emin Gün Sirer, a Turkish-American computer scientist and professor at Cornell University.
5/ The platform is in prime position to offer the best user experience in DeFi– allowing fast speeds and low-costs without making sacrifices in decentralization.
— Emin Gün Sirer🔺 (@el33th4xor) August 19, 2021
It was also a good week for Pendle Finance, whose token jumped from under US50c on Wednesday to over US$1 on Friday after announcing it would tokenise the yield of Sushi liquidity pool positions.
This will allow users to trade and hedge swap fees, hedging against the risk of impermanent loss or speculating on the market’s volatility.
Apollo highlighted Pendle as a “moonshot” in a previous column.
NEW LAUNCH: @SushiSwap LP Tokens
With this initiative, the future swap fees of Sushi LPs can now be traded!
Captain PePendle has also found (Pe,P) – find out more below. 👇 pic.twitter.com/nIDjoZj1E7
— Pendle (@pendle_fi) August 18, 2021