2021 was an explosive year for cryptocurrency in general. Specifically, Avalanche, as a $200 million market capitalization project, has grown tremendously to the top 5 largest ecosystems in the market with over $17 billion total value locked.
Coin98 Insights are pleased to present the Avalanche ecosystem report for 2021. The report tells us how the journey of Avalanche began and grew to be one of the largest ecosystems in the market. Some of the key highlights over last year will be mentioned.
Note: The full Avalanche 2021 Report is available to be downloaded at: c98.link/Avaxians-Avalanche2021Reportv1
Looking back at Avalanche in 2021
How it began
Avalanche got off to a modest start in early 2021 with just $200 million in market capitalization. However, with outstanding features such as the ability to support up to 4,500 transactions per second or the ability to hold up over 1,000 validators in their network, Avalanche showed a huge potential to grow as the market became bullish afterward.
In addition, the concept “Internet of Blockchain” brings great potential for Avalanche to scale up and promise to be a top-tier blockchain with innovation and creativity.
At the beginning of January 2021, Avalanche had only been mainnet for 3 months, so the ecosystem was still quite small with no outstanding projects in DeFi or other sections. However, many people have seen the potential of Avalanche with its advanced features as mentioned above.
Typically, when NFT and GameFi were under the radar, there were a few basic AMM projects such as Pangolin appearing on Avalanche and other projects that deployed multichain alongside the Avalanche-Ethereum Bridge (AEB).
There are a few highlight statistics of Avalanche in early 2021 (According to State of Avalanche Q1):
- 800 Validators on the network at the end of January.
- 981 assets have been issued on the X-Chain.
- Trading volume peaked at $2 billion USD in early February.
- Users have moved more than $100M in assets from Ethereum to Avalanche, including $8.2M within the first 24 hours.
- Pangolin alone has executed just under $400M in trading volume and has reached over $200M in liquidity on the platform at peak, with even higher numbers across the multiple DEXes on Avalanche.
- Smart contract activity boomed, with transactions increasing by 848% to over half a million.
- Unique wallet addresses engaging with smart contracts saw similar fast growth increasing by 1530% to exceed 35,000.
- Almost 25,000 $AVAX have been burned in transaction fees through smart contracts alone.
- The Total Value Locked increased significantly from early 2021 and peaked at $400M before the market crash in May 2021.
How it is growing
In just one year, we have seen the outstanding growth of Avalanche. The project, which only released the mainnet at the end of 2020, has now entered the top 10 projects with the largest market cap in the market.
It is considered one of the fastest-growing blockchains with an impressive $30 billion market capitalization at an all-time-high price.
Avalanche's ecosystem is also constantly blooming with nearly 400 projects in all areas from DeFi, NFT or Infrastructure and Tooling segments.
The project management board has been very successful in calling for capital to promote the development of the ecosystem. Typically, the $180M Avalanche Rush fund or most recently, the launch of two support packages of $200M and $230M with the participation of large venture capital firms such as PolyChain and Three Arrows Capital.
Avalanche ecosystem development in 2021:
- Following the concept of "Internet of Blockchain" initially, but the Ava Labs team developed an EVM Compatible Chain which is a C-chain with the concept of General Smart Contract building an ecosystem similar to other DeFi Ecosystems such as Ethereum, BSC,… with a few projects belonging to the basic puzzle pieces such as AMM, Yield Aggregator, Lending,…
- Before May 2021, there weren’t any outstanding activities about Avalanche as the ecosystem was still in the developing phase.
- Avalanche's turning point took place around August 2021. With the implementation of Avalanche Rush, along with the upgraded version of Avalanche Ethereum Bridge, the Apricot update, etc., the project has attracted huge money flows into the system along with the launch of many new projects.
- When DeFi 2.0 became more popular, the Avalanche ecosystem was also highlighted in the market with Wonderland (TIME) being the first Native token of the system to enter the top #100 on the market capitalization board.
- By the end of 2021, Avalanche has really resonated in the market with the amazing growth of AVAX. Many programs were deployed to attract liquidity as well as developers, taking place continuously along with a series of projects in different categories.
The number of users in the ecosystem constantly increased when the number of Daily Active Address and Daily Transaction Count also continuously peaked.
We can look at the following impressive numbers at the end of December to see what Avalanche has achieved and how it is growing:
- 396 projects in just 15 months.
- Total Value Locked peaked at $21B.
- Market Capitalization peaked at $30b (Top 10th).
- 13,000 developers on the network.
- 134,000 daily active addresses.
- More than 1,200 validators.
With such rapid growth, Avalanche has become one of the blockchain platform projects with the best ROI according to Coin98 Analytics. If you invested $1,000 at the beginning of the year, by the end of the year that investment has become $39,000.
Avalanche's Key Milestones in 2021
The Avalanche ecosystem has tremendously expanded in just one year. The key highlights on a monthly basis will be listed to give you a brief overview of the whole ecosystem.
- AvalancheGo v1.1.1 released - patch includes minor bug fixes, performance improvements, and preparations for the remaining Apricot upgrades
- Cross-chain transfers from X-Chain & P-Chain to C-Chain are live on the Avalanche wallet.
- The X-Chain passed 1 million total transactions!
- The Avalanche <> Ethereum Bridge has been deployed.
- AvalancheGo v1.2.0 released - Critical update. The patch fixes performance issues related to interchange transfers between X, C, and P chains.
- 1032 assets have been issued on the X-chain.
- Pangolin, a Uniswap style Dex, launched. Total liquidity currently sits at $45 million.
- Crypto.com listed AVAX.
- The Avalanche Wallet now allows you to send, store & see ERC20 tokens on the C-Chain.
- TUSD went live natively on Avalanche.
- SushiSwap went multi-chain and was deployed on the C-Chain
- AvalancheGo v1.2.1 released - The patch includes stability, performance, and monitoring improvements.
- Some important infrastructures such as Covalent APIs, Figment,… integrated with Avalanche.
- BENQI built an algorithmic liquidity market protocol (like AAVE) on Avalanche.
One of the first launchpads in the ecosystem, Avalaunch, was starting to build up from the very first steps. Other important updates can be found here:
- Apricot Phase One, the next major upgrade, activated on Mainnet on March 31st, 14:00 UTC. The upgrade included a 50% reduction in transaction fees.
- Covalent launched a “1 Million Wallets” Avalanche-focused Hackathon where devs can win $15k in prizes. The Hackathon took place on April 6th - 19th, 2021.
- Avalaunch listened to their community and natively launched their smart contracts and tokens exclusively on Avalanche and Pangolin.
- Apricot Phase 2 went live.
- USDT natively launched on Avalanche.
- Avalanche Twitter reached 100k followers.
- Over 100,000 AVAX burned from transaction fees.
- Avalanche’s new roadmap got released with the promise of upgrading many features.
- Trader Joe, a new DEX, got ready for their launch.
- BENQI got ready for their launch.
One of the top AMMs in the ecosystem, TraderJoe, launched this month. Shortly after, it surpassed Pangolin in all aspects to become the top AMM in the ecosystem. July recap can be found as:
- USDC, Coinbase's stablecoin, announced that they might soon be natively available on Avalanche.
- Next-generation Avalanche Bridge (AB) was announced.
- Avalanche reached 1000 validators.
- Trader Joe launched and reached 20M TVL.
- Shopping.io integrated Avalanche, which allows ordering from Amazon, Walmart and eBay using AVAX.
Avalanche Rush is the stepping stone for projects in the Avalanche ecosystem to enter the DeFi space. Aave and Curve also joined along with other early-stage projects such as TraderJoe, Pangolin and BenQi.
This is the recap of August:
- Avalanche Foundation announced a $180M DeFi incentive program dubbed Avalanche Rush, which will be used to incentivize providing liquidity for Aave and Curve.
- Avalaunch, a premier launchpad on Avalanche, announced its first IDO with YAY Games.
- BENQI, the first lending protocol on Avalanche, launched and reached 800M TVL.
- AEB to AB token migration completed, which allows old bridge tokens to be transferred to the new bridge tokens without the need of going back to Ethereum.
- Around $1.5B was locked in Avalanche DeFi protocols.
- Three Arrows Capital added AVAX to their portfolio.
- Polychain Capital and Three Arrows Capital led a $230M investment in Avalanche.
- Avalanche had a major upgrade (Apricot Phase 4) which significantly reduced the contention in the consensus engine and the c-chain fees.
- Moralis, a platform that aims to simplify dapp development, integrated Avalanche.
- Pangolin received a $2 million allocation from the Avalanche Rush program.
- Trader Joe raised $5 million from investors.
- Wonderland, a “decentralized reserve currency protocol”, launched on Avalanche.
- Trader Joe surpassed $1 billion TVL.
- Vee Finance had an exploit of $35 million worth of ETH and BTC.
Avalanche doubled its Total Value Locked in just under a month. The NFT space started to shine with many collaborations this month, set out to be exploded:
- Avalanche reached $11 billion USD Total value locked.
- AVAX was listed on Coinbase.
- Trader Joe joined the Avalanche Rush with a $20M incentive program.
- Penguin Finance joined Avalanche Rush Program with $2.5M in incentives.
- Aave launched on Avalanche with $20M in Rush incentives.
- Curve went live on Avalanche with an incentives program.
- Topps launched the 2021 MLB Series 2 Baseball NFT collection.
What a month for Avalanche. The $200 million fund incentive with many great news this month pushed AVAX price to break many all-time highs in November and peaked at $138 on 21st November. The key highlights of this month include:
- Avalanche Foundation launched Blizzard, a new ecosystem fund worth over $200M with Polychain and Three Arrows in the investor’s list.
- AVAX broke ATH.
- Crabada, an upcoming play-to-earn game, will distribute its tokens through an Avalaunch IDO.
- Avalaunch reached $50M TVL.
- Tether token (USDT) natively launched on Avalanche.
- Binance announced to list BENQI (QI).
- Apricot Phase Five was announced to release.
- Moralis announced to launch a $350k hackathon for developing Avalanche dapps using Moralis.
The fastest-growing stablecoin - USDC, launched on Avalanche in December with many other bullish news such as:
- Nansen, a premium DeFi analytics tool, integrated Avalanche.
- Olympus DAO expanded to Avalanche.
- Alpha Finance Lab, the leading leveraged yield farm protocol, joined Avalanche Rush with a $6M allocation.
- Ava Labs got selected for Mastercard Start Path Program.
Avalanche in 2022
In 2021, Avalanche has developed mainly in the following areas:
- DeFi: Especially building on the concept of General Smart Contract, developing DeFi Stacks like other ecosystems such as BSC, Ethereum,... which has not had its own highlights.
- Infrastructure: In 2021, Avalanche is still consolidating the infrastructure for the "Internet of Blockchain" concept to prepare for the upcoming Multichain and Cross-chain era.
- Real-life Use cases: In addition, the Avalanche team is also quite active in integrating their Blockchain technology with real-life problems.
Thus, 2021 is a successful year for Avalanche and I think that in the next year, the ecosystem can completely have resources to develop further. Below are some of my analyses and projections for the Solana system in 2022.
Resources for development
As I have analyzed above, Avalanche is currently one of the leading ecosystems in the market with TVL ~$14B (ATH) and ~$12B at the end of 2021 (according to DefiLlama).
This is a very rich resource in terms of liquidity, diversity in many areas of projects as well as the number of users.
In addition, the network infrastructure updates are still being continuously conducted by the team to meet the increasing needs of users, including:
- Apricot updates improve transaction fees, C-chain instability.
- X-chain and P-chain improvements for asset storage and network security.
- Deploying Subnets to realize the concept “Internet of Blockchain”.
In addition, with a budget of up to $220M from the Blizzard program led by Polychain Capital and Three Arrows Capital and a $180M Liquidity Mining program, Avalanche will have ample financial resources to be able to attract more developers in the future.
A diversified and complex DeFi landscape on Avalanche in 2022
In general, DeFi on Avalanche currently only stops at fairly basic products and already exists on most other Blockchains.
As you can see DeFi is evolving with more complex products like Derivatives, Asset Management, Structured Products, etc. have not appeared on Avalanche yet.
However, in the DeFi 2.0 trend, we can also see more complex products that have gradually appeared on the ecosystem such as Wonderland, Pendle Finance or some other DeFi 2.0 Protocol, etc. This shows that, if the resources above have been optimized, Avalanche is fully capable of attracting more Builders with more innovative DeFi products in the future.
NFT, GameFi & Metaverse
NFT and Play to Earn are two categories with very strong growth in the Crypto market around the period from mid-2021 and still resonate until now.
However, if we look at this array on the Avalanche ecosystem, we have not seen any projects that have really achieved certain successes. The top successful Gaming project on Avalanche, Crabada, has so far only achieved modest achievements with about $50M in market capitalization.
In the Metaverse category, there are currently no outstanding projects on the Avalanche ecosystem about building a Metaverse like Decentraland or The Sandbox. However, with the "Internet of Blockchain" infrastructure platform for high multi-chain interoperability, Avalanche can become a promising land in the future of building Metaverse.
We’re glad to deliver the 2021 report including some 2022 predictions for Avalanche and its ecosystem. Hope you get the development overview of Solana in 2021 and what will come next. Like in 2021, 2022 is going to be wild for Avalanche as well as the crypto space.
This Year In Review Series includes 2021 reports (with predictions) for other blockchain platforms. You can check them out here: c98.link/Avaxians-Avalanche2021Reportv1
For more 2021 Report of other Ecosystems, do not miss The 2021 Year In Review Report Series
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