source: avax.network
Introduction
Avalanche is a Proof-of-Stake (PoS) smart contract blockchain for decentralized applications and custom interconnected blockchain networks (subnets) that distinguishes itself by introducing a new consensus family known as 'Avalanche consensus.' Avalanche blockchain, launched in September 2020 by Ava Labs, founded by Cornell University professor Emin Gün Sirer, has a multichain structure employing three chains: the P, X, and C chains. While delivering the same capabilities as a single network, each chain serves an important and distinct function within the Avalanche ecosystem.
This article will outline the latest major developments on Avalanche's ecosystem and network performance analysis.
Network Overview
On-chain data will assist us in evaluating network performance by analyzing quantitative parameters such as daily active users, transactions, and network revenues. This will incorporate C-Chain and Subnets.
Daily Active Users
snowtrace, avax explorer - messari.io
We can observe daily active users on the main C-Chain, which is used for smart contract and decentralized apps and is currently the primary value driver for AVAX, and two of Avalanche's subnets, DFK and Swimmer networks above.
C-Chain daily active addresses have dropped to an average of 38k per day, down from 63k in Q2, as user activity shifted from the C-Chain to subnets, as previously, DFK and Swimmer subnets were the C-Chain's top user, transaction and revenue drivers.
Even so, there has been four times as much address activity on the C-Chain as there was a year ago.
Daily Transactions
snowtrace, avax explorer - messari.io
As transaction volume migrated away from the C-Chain and toward subnets, particularly DFK, Avalanche's average daily transactions on the C-Chain fell from 540,000 last quarter to 186,000 in Q3.
However, the total number of transactions throughout the whole network, including subnets, exceeded 1.7 million on a daily average.
Network Daily Revenue
messari.io
Network revenues average around $23k per day. As we can see above, total network revenues fell due to declining number of transactions as subnets generate traffic on their own networks as opposed to the main chain. This is essentially by design, as part of Avalanche's ability to scale horizontally, as each newly formed subnets require AVAX to be locked up, freeing up the main chain from high transaction fees, thus making main chain cheaper, as it scales.
Since the network's beginning, Avalanche had to strike a balance between security, transaction costs, income, and network value.
Avalanche burns 100% of all network transaction fees on the main chain, and because AVAX has a limited supply, with increasing adoption and scalability, value is created for AVAX coin through increasing coin scarcity.
Network Security - Validators and Delegators
subnets.avax.network
The number of validators and delegators changed significantly. The validator count fell from 1,629 to 1,238 representing a 24% drop in network security participants.
Delegators have increased to over 52,000 from roughly 24,000 a month earlier. It's vital to remember that the validators are the ones who operate the nodes, making the network more secure. Validators profit from others delegating to their nodes since delegators implicitly trust validators to be online and valid.
Although total AVAX staked has fallen from its all-time high of 302 million coins in March 21, it increased from 243 million in July 22 to over 268 million today, indicating sustained engagement, reliability, and network integrity.
Latest Developments
DeFi Ecosystem
defillama
Current total value locked (TVL) in Avalanche's ecosystem has recently averaged 86 million AVAX ($1.39Bil). This has demonstrated sustainable utility, despite the crypto winter, uncertain macro climate and a highly competitive L1 smart contract blockchain industry.
Back in August 2021, Avalanche has announced $180 million liquidity mining incentive program, named Avalanche Rush. The program aimed to encourage more applications and tokens to move to Avalanche’s decentralized finance platform. Program included $20M AVAX tokens for Aave and $7M AVAX tokens for Curve over a 3 month period. At the same time, the Avalanche Foundation sponsored the launch of Benqi’s DeFi protocol native to the Avalanche network with a $3M allocation starting August 19. This has boosted their DeFi ecosystem, as Aave and Benqi, make up the top three largest DeFi protocols on Avalanche.
NFTs
docs.opensea.io
OpenSea, the world's largest NFT marketplace, revealed in October that it has debuted natively on the Avalanche blockchain. OpenSea will operate on the blockchain alongside existing platforms like NFTrade and other Avalanche-focused NFT marketplaces, including Joepegs and Kalao. With Avalanche, OpenSea users will be able to settle NFT transactions in under a second with low transaction fees. Despite the fact that Ethereum still dominates around 80% of the secondary NFT market, Avalanche managed to break into the top ten by all-time sales volume in early 2022.
Tokenizing Real World Assets on Avalanche
Avalanche has made significant progress in bringing real-world assets (RWA) onto its blockchain.
What Are RWAs?
RWAs are assets such as stocks, real estate, private debt, art, private funds, wholesale bonds and etc, that have been tokenized and placed on a blockchain in order to be traded.
Advantages for asset tokenization are factors such as limited affordability for mass investors, lack of wealth manager expertise, limited access such as when assets are restricted to elite cliques (in the case of fine art and vintage cars), regulatory hurdles and other scenarios in which users have difficulty acquiring or trading an asset. Tokenizing real world assets is an important step toward equalizing access to investing for retail investors.
kkr.com
KKR & Co, a renowned global investment firm with $450 billion in assets under management, has established a partnership with Securitize, a digital-assets specialists to tokenize a portion of KKR's Health Care Strategic Growth Fund and place it on Avalanche's public blockchain.
What Is Securitize?
Securitize is a digital asset securities firm that provides access for investors to invest in private market digital asset securities (security tokens), and provides companies with a fully-digital end-to-end suite of compliant solutions leveraging the advantage of next generation blockchain technology.
What Are They Doing And Why?
Securitize announced that it tokenized an interest in KKR's Health Care Strategic Growth Fund II. The security token was issued on the Avalanche public blockchain and Securitize Capital manages the tokenized fund.
This allows for a broader pool of investors, as currently under the regulations, only accredited investors with a net worth of more than $1 million are able to take advantage of such funds. It's a way for individual investors to get access into a high-quality private equity fund, from a very reputable firm, like KKR, that otherwise is not available to them.
This is a significant development and, if successful, would likely lead to a broader scale of tokenization of such funds on Avalanche and beyond.
Future Of Asset Tokenization
BCG report
According to Boston Consulting Group by 2030 the on-chain asset tokenization opportunity could reach $16.1 trillion, made up largely of financial assets. Avalanche is among the earliest movers in the asset tokenization sector owing to its sub network architecture which supports permissioned spaces. Each subnet can be tailored to the precise needs of the application, including tweakable gas fees, economics, validator sets, KYC requirements, and much more, giving Avalanche a major competitive advantage.
Film Finance Offerings on Avalanche
whitepaperfilm.com
Republic, a platform that has raised over $1 billion in funding since 2012, has facilitated an offering that makes use of a new digital asset: a Film Finance Offering (FFO) built on Avalanche. In August, the first tokenized FFO received financial commitments, ushering in a new age of film finance.
White Paper Films and filmmaker Chris Cannucciari used FFO on Avalanche to fund the production of "I Am Not Satoshi," a feature-length documentary aimed at providing a comprehensive look into the quest. Cannucciari has also directed "Banking on Bitcoin," a popular Netflix documentary.
“I Am Not Satoshi”, which is now in production, marks Avalanche’s first steps into the growing Web3 film world, with tokens and NFT collectibles used to help crowdfund development of movies.
Blockchain Games on Avalanche
medium.com/avalancheavax
In Q4 2021 Avalanche has launched 'Blizzard', a $200 million fund dedicated to accelerating development, growth, and innovation of creators and users of the Avalanche public blockchain, attracting blockchain game publishers. Along with RWAs, GameFi is clearly starting to find its place in Avalanche’s ecosystem.
SHARPNEL
shrapnel.com
SHRAPNEL is an upcoming AAA first-person shooter built on Avalanche by a team with a background in developing major titles such as Halo, Call of Duty, Star Wars and more.
It's the first blockchain-enabled competitive multiplayer first-person shooter bundled with a rich set of player-creation tools, combining combat, creation, curation, and connection into a community where players own the platform and decide its future. SHARPNEL enables player-created content, from purely cosmetic items to custom maps that can be minted into NFTs, giving players the tools they need to shape SHRAPNEL to their vision and profit from their creations.
However, above all SHAPRNEL gameplay below is a great demonstration of a level of gaming quality that is currently being developed on the Avalanche network.
YouTube-Sharpnel
Steve Harvey's 'Family Feud'
businesswire.com
Steve Harvey, celebrity host of "Family Feud" is making his blockchain debut in the world of play-to-earn gaming, a rapidly growing industry that allows players to receive rewards in the form of crypto tokens and NFTs.
Steve Harvey is a founding partner of streaming platform Gamestar+, which has recently announced a multimillion-dollar partnership with blockchain developer Ava Labs and venture capitalist firm Faculty Entertainment to launch interactive versions of popular TV game shows like "Family Feud," "Jeopardy!," "Wheel of Fortune" and "Deal or No Deal" on the Avalanche blockchain.
Aside from SHRAPNEL and Steve Harvey's Gamestar+, a number of other games, such as Cosmic Universe and OpenBlox, and notable game publishers, such as GREE, a Japanese media and game publishing giant, are entering the Avalanche ecosystem.
Blockchain Games Market Potential
The blockchain gaming industry grew 2,000% in the past year, according to a DappRadar and Blockchain Game Alliance report from Q1 2022. The report added there were $2.5 billion in investments for the blockchain gaming space last quarter, compared to the $4 billion raised for the sector across all of 2021, showing a significant acceleration in money pouring into this space.
Games created on the blockchain give more power to the players, handing the control to the community. Thanks to smart contracts players can become the actual owners of in-game assets, as opposed to traditional games, where developers own and control all the assets. Furthermore, such in-game digital assets will allow compatibility in different digital realms and no longer be restricted to a single game ecosystem.
Developers can leverage models where the in-game economy runs on blockchain, creating sustainable environments without everything being under the control of a centralized entity.
Considering all of the above, it's possible that traditional game publishers will chose blockchain for publishing their titles going forward. According to Grand View Research, the global video game industry was valued at USD 195.65 billion in 2021 and is predicted to increase at a compound annual growth rate of 12.9% from 2022 to 2030.
Key Technical Developments On Avalanche
Infura x Avalanche
docs.infura.io
Infura provides the tools and infrastructure that allow developers to easily take their blockchain application from testing to scaled deployment - with simple, reliable access to Ethereum. Infura, used by over 400k blockchain developers, have recently announced support for the Avalanche's C-Chain, allowing developers with an easy-to-use tools to leverage the C-Chain.
Configurable Fees
Configurable subnet fees were introduced in July 2022 with no need for a hard fork. One of the most frequently requested features since the subnet-release EVM's has been the ability to change fees without upgrading the network. In Q3, configurable fees became a reality, enhancing the user experience and the value of the subnet.
Cosmos Subnet Built On Avalanche
The Landslide Network is an Avalanche subnet which decreases the finality of Tendermint consensus, and will port over the majority of the Cosmos and Terra ecosystems to run any Tendermint-based dApp natively within the AVAX ecosystem. Expected to launch in Q1 2023.
Financial Partnerships
wisdomtree.com; robinhood.com
WisdomTree, the exchange-traded fund (ETF) and exchange-traded product (ETP) sponsor, has added Avalanche to the indices tracked by the physically-backed cryptocurrency basket ETPs, that are listed on Börse Xetra, Euronext exchanges in Paris and Amsterdam and SIX, the Swiss stock exchange.
Alexis Marinof, Head of Europe of WisdomTree, said:
“Our crypto baskets were designed to provide investors with exposure to an evolving crypto asset landscape. By rebalancing quarterly, additional coins like AVAX, can be added to the indices. Before being included in our indices, coins are reviewed by a Committee and must meet a number of criteria including sufficient liquidity, practical use case and critical mass."
Robinhood, a popular trading app, has enabled trading and transfers of the Avalanche blockchain’s native asset AVAX token on its platform in Q4 2022. As of March 2022, Robinhood had 22.8 million funded accounts and 15.9 million monthly active users.
Avalanche's Layer-2 Solution
medium.com/avalancheavax
Boba Network is a blockchain Layer-2 scaling solution and Hybrid Compute platform offering lightning fast transactions and ultra low fees. Boba launched in September 2021. Its L2 scaling and augmenting platform uses optimistic rollups to unlock greater throughput, lower fees, and scaling.
Boba network has expanded support to Avalanche and is Avalanche’s first L2. The integration gives Avalanche developers yet another powerful option in their scaling toolkit. On Avalanche, Boba will be available for dApps built on C-Chain.
Banff: Elastic Subnets
medium.com/avalancheavax
With the introduction of Banff, an AvalancheGo upgrade, brings elastic subnets to the ecosystem. Banff unlocks the ability for subnet creators to activate Proof-of-Stake validation and uptime-based rewards using their own token on their own subnet. This setup gives builders more options when designing their subnets. Enabling elastic validation on a subnet is entirely optional and at the discretion of the creator. Banff activated successfully on Avalanche mainnet on October 18th.
Banff, similar to IBC on Cosmos, will help to unlock value across the Avalanche ecosystem in terms of interoperability. It will allow cross-subnet asset transfers, permissionless subnets, and validator rewards in their native tokens.
Fuji Network
Fuji Network is the official testnet of the Avalanche ecosystem. It simulates most conditions of the mainnet, where developers can deploy demo smart contracts. Over the coming months, many of the subnets on the Fuji testnet will begin transitioning onto the Avalanche's mainnet. This will include Caste Crush, a free-to-play iOS/Android game with over 75 million-lifetime downloads and 1.4 million active monthly users, which announced its expansion onto Avalanche's subnet in May 2022. This migration will result in a growth of the P-Chain validator set.
Summary
Avalanche has maintained a highly robust DeFi ecosystem that has proved durability and stability, establishing itself as the fourth largest network in decentralized finance by total value locked. However, Avalanche has extended beyond DeFi and NFTs, with real-world assets, GameFi, and unique cases such as film finance offerings, all of which could potentially drive significant activity on the network's C-Chain and expand the validator set through subnets.
The development engagement measured by unique smart contract verifications has yet to catch up to the progress seen in RWA, GameFi as well as with many subnets on the Fuji testnet transitioning onto the Avalanche mainnet.
Finally, there is the value case for Avalanche's subnets, which are a significant value proposition for developers in addition to being a good approach to scaling the network. Subnets enable developers to easily spin up uniquely tailored blockchain environments and allow decentralized applications to leverage Avalanche's consensus and infrastructure.
It appears that subnets were determined to be the ideal solution for DFK and Crabada and the hundreds of others under development on the Fuji testnet, including Castle Crush with millions of active users, otherwise they would have found a different solution.
Growth and adoption of subnets brings enormous value onto the network, as subnets require validators, and each validator must have a minimum of 2000 AVAX. Other value may come from utilizing AVAX as gas for eventual cross-subnet communication or subnets choosing to use AVAX as their native tokens.
With advancements in network functionality, such as those with elastic subnets, the case for subnets continued to grow, and Avalanche’s mission towards a mass adoption looks bright.
DISCLAIMER: The information contained in this article is for educational purposes only and does not constitute any form of advice or recommendation by Wheatstones, and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.