A Comprehensive Guide to the Best 5 Projects on Avalanche (AVAX)
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more
AVA Labs introduced Avalanche, a Layer-1 blockchain, in 2020. By simultaneously attaining scalability, security, and decentralization, it claims to solve the so-called blockchain trilemma. Avalanche is one of the formidable competitor of Ethereum. The main reason for this is because it enables smart contracts and uses a unique Proof of Stake (PoS) consensus process.
Three core chains are part of Avalanche’s distinctive architecture:
Platform Chain (P-Chain) is in charge of organizing validators and overseeing subnetworks.
Exchange Chain (X-Chain) is used for asset production and exchange.
Contract Chain (C-Chain) facilitates smart contracts and ensures cross-chain interoperability.
AVAX is the native token of Avalanche, and it plays key role on the ecosystem since it facilitates transactions, system reward distribution, and governance possible.
The Avalanche ecosystem has garnered major investments and developed into a significant participant in the Decentralized Finance (DeFi) field following a successful public sale that raised $42 million in July 2020.
In this article we’ll discuss some of the most well-known of the hundreds of DeFi projects that Avalanche hosts. The top five of such projects are given below.
Aave V3
Users can lend, borrow, and earn interest on digital assets using the decentralized, non-custodial AAVE system. The protocol debuted in 2017 and underwent a rebranding in 2018. Aave released its third edition, version 3, last year. This version includes several new features and major improvements, including the Portal for cross-chain liquidity, Efficiency Mode for high-efficiency borrowing, and Isolation Mode for restricted-risk asset listings.
Avalanche is one of the chains that offers Aave V3. Aave V3’s total value locked (TVL) on Avalanche as of mid-June was over $180 million, placing it second only to Ethereum in terms of value. The amount of crypto locked with the most recent iteration is roughly $1.7 billion, which is less than half of the $3.6 billion locked with V2.
Trader Joe
When Trader Joe’s first began, it was a DEX that used the Avalanche Network. It does, however, want to develop into a bigger ecosystem with a range of DeFi services like yield farming, lending, staking, and a non-fungible token (NFT) market.
Its native token, JOE, which is used for staking, yield farming, and governance, has a variety of functions thanks to its ecology. Plans for an improved trading engine, Liquidity Book V2.1, aimed at expediting depositors’ token additions to liquidity pools, have recently surfaced.
GMX
Low swap fees and no price impact are features of the spot and perpetual contract trading platform GMX. In September 2021, it was first introduced on Arbitrum, and in early 2022, it was also made available on Avalanche.
It contains a special multi-asset liquidity pool that generates rewards from diverse sources and then redistributes them to liquidity providers, and it allows leverage of up to 50x.
The platform combines cutting-edge DeFi technology with crypto exchange features, and it supports popular stablecoins and digital assets like ETH, WBTC, LINK, UNI, DAI, USDC, and FRAX. It depends on two functional tokens: the GLP token for trading liquidity and the GMX token for governance.
Stargate
A cross-chain liquidity protocol called Stargate Finance allows for the quick exchange of stablecoins across several networks that are compatible with the Ethereum Virtual Machine (EVM), including Ethereum, Avalanche, BNB Chain, Arbitrum, Optimism, Fantom, and Polygon. For deposits of stablecoins from liquidity providers, it offers an alluring incentive of up to 8% APY. The majority of locked tokens (almost 85%) are USDC and USDT.
The security issues that arise so frequently across bridges are addressed by Stargate. It makes use of omni-chain tokens rather than the wrap-token technique and relies on cross-verification technologies between LayerZero and Oracle.
Benqi
The DeFi protocol BENQI was created only on the Avalanche network. BENQI Liquid Staking (BLS) and BENQI Liquidity Market (BLM) are its two main components.
With the help of BLS, a liquid staking solution, users can participate in DeFi applications without the requirement for cross-chain transactions or locked money.
In terms of BLM, it’s a protocol for lending and borrowing that enables users to deposit, loan, and earn interest on their crypto assets in an unauthorized, over-collateralized way.
Low fees, simplicity of usage, and greater access to financial products inside the DeFi area are the main goals of the protocol.
Conclusion
Avalanche sees itself as a serious rival in the DeFi market. It was built from the ground up to challenge Ethereum’s hegemony by solving the infamous blockchain trilemma and showcasing a dependable balance of scalability, security, and decentralization. But can it bring Ethereum down?
For investors looking at next-generation blockchain solutions, Avalanche’s distinctive architectural approach and supportive ecosystem, as a pioneer in the DeFi space, present a viable opportunity for growth. Even though it now seems unlikely, the ecosystem’s expansion makes this possible Ethereum rival interesting to follow.
