At New Order, Multi-chain DeFi is in our DNA. But, up until now, we’ve had our DAO smart contracts exclusively on Ethereum.
It is time to take the next step towards realizing the future of multi-chain DeFi. Empowered by a recent governance decision.
New Order is going to be bridging NEWO to Avalanche network ahead of staking vaults and other DeFi opportunities which will be deployed there.
So, what makes Avalanche an exciting network to build on? The rest of this article tells the story of Avalanche using data and metrics, as well as going over key concepts that made Avalanche a successful chain and makes definitive conclusions about the main drivers for going from $10 in June to near $140 in November 2021.
What is Avalanche?
Avalanche is a layer 1 blockchain that was launched in September 2020. Like many other L1 protocols trying to resolve the Scalability Trilemma, Avalanche has its own vision and an idea of how to solve it. Essentially this comes down to the basic technology of Avalanche; its mainnet is made of three separate blockchains: X-Chain, C-Chain and P-Chain. Each of these chains serves a different purpose in order to improve scalability and reduce centralization.
In short, X-Chain, aka the Exchange Chain, serves the purpose of managing assets, including creating new assets, exchanging between assets, and cross-subnet transfers.
C-Chain, aka the Contract Chain, is where smart contracts are made and run. It’s Ethereum compatible, making it fairly easy to create new applications on the Avalanche ecosystem. The C-Chain sees the most daily traffic out of Avalanche’s three blockchains.
P-Chain, aka the Platform Chain, is used to coordinate validators and to keep track of active subnets.
This architectural structure improves Avalanche's transaction throughput to 6500 TPS and gives a finality time of under one second.
Beginning of the hype - laying the foundation
The beginning of Avalanche’s moonshot started in June, when their symbolic roadmap laid down a strong path for the future, focusing on critical areas:
- Bridging infrastructure improvements
- Platform updates to significantly improve stability, performance, and fees
- Further Smart Contract development
- Improving the wallet and user experience
- Boosting liquidity and growing the ecosystem
Avalanche started delivering significant results immediately: launching the Avalanche Bridge (AB), Chainlink price feeds, and AVAX Staking in July. On the side, a lot was done for ease of app development. This made it possible for different DAO-s and applications to be launched quickly.
Applications lead the chain to success
The success of the chain can be measured by the number of active applications - to measure the vitality or liveliness of the chain. Avalanche has been an unquestionably good example so far, having a very active launch schedule for new applications.
The key factors here are the following:
- Ease of development - Avalanche has done a lot for infrastructure, launching many tools to simplify and accelerate development. In July, DappStarter and Tenderly were launched on Avax, in September Moralis, Pocket Network, and much more.
- Code auditing - In august, Rugdoc expanded to the Avalanche network, providing important code auditing and education for DeFi users, essential for the overall trust in the applications on the Avalanche ecosystem.
- Development incentives - Avalanche Rush has been a popular incentive program with a massive 180M investment, but it isn’t nearly the only one. To point out a few, there is the Moralis Avalanche hackathon in December and the Avalanche Developer Contest for new and smaller projects.
- Trackability - SnowTrace was launched in November, which is an implementation of Etherscan for the Avalanche network. SnowTrace replaced the proprietary C-Chain Explorer and gives users full transparency over Avalanche transactions. It is highly performant and gives users a great experience wandering around in the blockchain. This strongly signals that Avalanche has matured to be one of the best chains.
- Multi-sig wallet - The most popular multi-signature wallet Gnosis Safe launched on Avalanche in December; together with SnowTrace, these two have been used to track the treasuries of decentralized autonomous organizations (DAO) and improve the overall trustworthiness of projects. The Gnosis Safe has become the industry standard for DAO-s.
- ChainLink integration - The thing that glues everything together and makes DeFi possible - Oracle price feed. Chainlink feeds went live on the 21st of July. After this update, a jump in new apps is visible during the August-September period.
What we believe to be a successful path for a chain is the following: focusing on development and auditing, adding oracle price feeds at first, then launching strong incentives for development/hackathons, lastly, adding multi-sig wallet integrations. Pursue this road and the volumes/transactions will come to the chain.
Inflows and deposits lead the chain to success
Since the release of the Avalanche Bridge, it has been possible to track bridging data. After an active two months of summer, the early hints of a potential moonshot could be seen - the price of Avalanche was steadily rising in tandem with the overall crypto market towards the end of the summer.
The DeFi landscape started to blossom in August, with the launch of Bengi, supported by the Avalanche Launch program with $3M Liquidity mining initiatives. The real explosion of interest came a couple of days after, on the 18th of August, when Avalanche Rush - an Avalanche Foundation $180M DeFi Incentive Program, was launched. Avalanche Rush supported blue chip DeFi projects, including Aave with $20M and Curve with $7M. Benqi joined Avalanche Rush a day later. These three launches with large incentives were the main drivers behind the explosive flow of funds to the Avalanche chain - raising from around 100K (31st of July) to 1.37B (31st of August).
The explosion of interest with the launch of the 3 colossal projects can be seen on multiple other graphs - the number of deposits, the number of bridges, the jump in the Avax price, total value locked on Avax, etc. For example, the number of bridge transactions, which surged from around 10-25 at the beginning of August to around 100 in the middle of August and to 7719 transactions on August 22, was directly caused by the Avalanche Rush incentive program. **Sushi **joined the Avalanche Rush program with a combined $15M incentive program allocation (24th of August), followed by Paraswap, the DEX aggregator, at the end of August on the 31st.
In September, the Avalanche Rush program saw strong headliners, with Kyber Network ($5M allocation), Pangolin ($2M allocation), **Trader Joe **Incentive program (up to $20M) and finally $100K developer incentives for Yield Yak - which all are still very heavily used applications.
In addition to the Avalanche Rush program, two investment projects with the ambition to improve Avalanche-based DeFi platform liquidity were launched. Firstly, Wonderland, which should be known for anyone in DeFi since it did spark the OHM fork hype and grew larger than Olympus DAO itself. Secondly, Polychain Capital and Three Arrows Capital led a $230M liquidity-focused investment in Avalanche Ecosystem. These two additions made a positive impact on the DeFi on Avax - by the end of September the bridging net inflow was 2.4B and the TVL peaked around 3.6B.
Finally, Avalanche was listed on Coinbase and Coinbase Pro, which in our opinion, is essential for driving up the price. Combine that listing with positive articles like “leading DeFi chain”, “Ethereum killer” and you have a nice shot at going parabolic with the price.
Vibing DeFi scene lead the chain to success
During October, the DeFi incentives were high, the bridging, inflows and TVL kept on raising as more and more people learned about Avalanche. During these times, Avalanche had already a solid foundation beneath itself, but its ecosystem still kept growing at a fast pace. Multiple other projects such as Tether, Alpha Homora and Oh! Finance became part of Avalanche’s ecosystem. Additionally, Snowbank DAO, another OHM fork, launched on Avalanche.
Furthermore, what really helped Avalanche to peak over $100 level, hitting multiple all-time highs, on 1st of November Blizzard was released. Blizzard is over a $200M fund dedicated to boosting development, innovation and growth on Avalanche.
In December, as the cryptocurrency markets stumbled and BTC lost nearly 20% of its value, AVAX managed to hold its loss at 10%. This is not just a coincidence though.
To start the month off, Fireblocks - a Crypto and Digital Asset Platform for Institutions, launched support for Avalanche, giving banks, hedge funds and financial institutions access to Avalanche’s DeFi.
On December 10th, Avalanche’s AVAX was listed on the FTX exchange. In addition to that, Circle quickly followed Tether to launch its own stablecoin USDC in Avalanche. USDC adoption in Avalanche was huge, as in January, it accounted for more than 40% of the total token deposits made to Avalanche’s ecosystem.
However, in January, as the whole crypto market collapsed, AVAX was not one to differ. During these times, AVAX dropped around 35%, bringing it down over 50% from its all-time highs.
Nevertheless, its ecosystem kept on growing with 1inch and Celsius deploying on Avalanche. What’s more, UST - a decentralized stablecoin expanded to the ecosystem. In addition, another OHM fork, Magnet DAO was launched. What makes Magnet interesting is that 10% of its bonded assets are directed to an Innovation Fund used to incubate and invest in new projects. This further benefits Avalanche's ecosystem as it makes it more possible for upcoming innovative projects to find funding.
As we can see from the chart above, up to this day, there are more deposits between Avalanche-Ethereum bridges to the Avalanche blockchain than withdrawals. This illustrates that as Avalanche is maturing, the interest in it is still strong, making it a prime target for launching new projects on Avax.
Conclusion & Future
So what makes a blockchain successful - we think that strong & scalable fundamentals and a promising roadmap with strong execution, ease of development, effortless bridging, and staking are the keys to success. Avalanche showed that you can fast-track the whole process by incentivizing app development and DeFi yields. In our research, we concluded that the DeFi scene with increasing TVL will have a positive impact on inflows and liquidity. Even though Avalanche has had a successful 2021, 2022 shows no signs of slowing down: DeFi Kingdoms (the top 1 TVL app on Harmony chain) was shouted out in December, UST launch was just last week and a big Avalanche focused event called Avalanche Summit will happen on March 22-27.
New Order Opportunities
Deploying on Avalanche offers a plethora of opportunities to NEWO holders. The NEWO token’s gas trading fees would be near zero. All NEWO transacting activities including sending, staking, claiming and re-staking NEWO tokens would be significantly cheaper. Also, this deployment opens up the possibility of creating new partnerships that capture value for our community. One of these partnerships involves bootstrapping Trader Joe’s Avax/Newo LP with $250K in capital. This is our first step in the quest to claim our multi-chain thesis. Reaching to a new L1 will open access for new exposure and incubation opportunities through collaboration and growth in the ecosystem.