The blockchain space is witnessing intense competition among public chains. While Ethereum and Binance Smart Chain (BSC) dominate discussions, emerging networks like Polygon, Terra, Avalanche, and Fantom are capturing significant attention. Following our analysis of Solana's standout performance, this article leverages Footprint Analytics data to examine Avalanche's position and growth potential within the DeFi ecosystem.
The Expanding Public Chain Ecosystem
After a market downturn in May, the DeFi sector experienced a brief period of consolidation. Data from Footprint Analytics indicates that the Total Value Locked (TVL) across the top ten public chains returned to its May peak by mid-August, just three months later. Ethereum continues to lead the pack with a commanding position, reaching $140.5 billion at the time of writing.
Ethereum dominates approximately 75% of the total TVL market share, with the remaining 25% distributed among other chains. BSC holds second place with about 10%, followed by Terra at 4%, and Polygon at roughly 3%. Polygon gained significant traction as a native Ethereum Layer-2 solution, enabling easy migration for top protocols like Aave, Curve, and Sushiswap. Its advantages over Ethereum's network congestion and high gas fees are clear.
Polygon's growth has been remarkable since May. Following the announcement of a $100 million DeFi fund in April, its TVL surged by 5,025% in less than half a year, even increasing during the market's turbulent period.
Regarding the number of protocols, Ethereum leads with 276, which is 3.14 times more than the second-place BSC. Other chains like Polygon, Fantom, and Avalanche have also initiated incentive programs. Compared to Ethereum, they offer more attractive transaction fees and faster speeds, indicating that these second-tier chains are formidable future contenders.
Across all chains, DEXs unsurprisingly form the foundation of DeFi development, representing the category with the most protocols. Yield farming and Lending follow. This growth was positively influenced by a major initiative called "DeFi for the People," announced in August by leading protocols like Aave, Curve, and SushiSwap.
Among the top 30 protocols by TVL, 18 are on Ethereum. Aave, which has a cross-chain deployment on Polygon, ranks first, surpassing the second-place protocol by nearly $2 billion. InstaDApp, Curve, and Compound follow, each with TVLs between $1.3 and $1.4 billion. BSC has 8 protocols in the top 30, led by PancakeSwap with $5.97 million, followed by Venus at about half that size. Terra ranks third with 4 protocols, led by the lending protocol Anchor, followed by Lido and Mirror, which are also deployed on Ethereum.
The native token price of each blockchain reflects user valuation and influences transaction costs. ETH is far ahead at $3,941, followed by BNB at $498—a difference of 7.9 times. Tokens like Solana's SOL, Avalanche's AVAX, and Terra's LUNA have shown significant upward momentum, priced at $162, $47, and $32, respectively. In contrast, Polygon's MATIC is priced at $1.68. As an Ethereum sidechain, Polygon's transaction fees are substantially lower.
In terms of trading volume, aside from ETH, SOL has shown a trend of gradually surpassing BNB since mid-August. While there's still a significant gap in TVL compared to BSC, this indicates growing activity on the Solana network.
Avalanche (AVAX) Token Price Surges to Fourth Place
BSC experienced explosive growth starting in February. Three months later, in May, Polygon entered a phase of rapid expansion. Another three months after that, in August, Avalanche's accelerated growth captured market attention. From Q2 onwards, besides Polygon, Solana and Avalanche showed the fastest growth rates at 1,497% and 1,124%, respectively. Having previously analyzed Solana, we now turn to Avalanche using Footprint Analytics data.
Avalanche's TVL saw a sudden explosive increase on August 19th. This surge is closely tied to the upgrade of its Ethereum cross-chain bridge and the announcement of a liquidity mining incentive program. On August 18th, the Avalanche Foundation unveiled "Avalanche Rush," a $180 million liquidity mining reward program. The following day, the lending platform Benqi launched, partnering with the foundation to offer a $3 million, 90-day liquidity mining incentive. Users providing liquidity on the platform could earn both AVAX and Benqi's native token, QI. Within just four days, Benqi's TVL surpassed $1 billion, becoming the largest protocol on Avalanche by locked value.
Unlike Ethereum, which has 66 protocols with a TVL exceeding $100 million, Avalanche currently has only four, indicating substantial room for growth. Besides Benqi, which benefited directly from the foundation's program, the other major protocols are the DEXs Trader Joe and Pangolin, and the yield optimizer Yield Yak.
Pangolin was the first DEX on Avalanche, launching in February. Although it was launched during BSC's own explosive growth period, it initially became the chain's largest DEX protocol. However, its growth remained modest until August. Around that time, Trader Joe began to gain significant traction, gradually overtaking Pangolin to become the leading DEX by TVL on the network.
The Avalanche Rush program explicitly includes rewards in AVAX. While the first tier of native tokens is occupied by ETH and BNB, a strong second tier includes SOL and others. Excluding ETH and BNB, AVAX's market price of $50 as of September 15th ranked it second among these second-tier tokens, representing a 178% increase from its price of $28 on August 18th.
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Frequently Asked Questions
What is Avalanche (AVAX)?
Avalanche is a decentralized, open-source proof-of-stake blockchain platform featuring smart contract functionality. It is designed to be a highly scalable platform for launching DeFi applications and enterprise blockchain deployments, aiming to combine fast transaction speeds with low costs.
How does Avalanche differ from Ethereum?
The primary differences lie in the consensus mechanism and architecture. Avalanche uses a novel consensus protocol and a three-chain structure (Exchange Chain, Platform Chain, Contract Chain) to achieve higher throughput (over 4,500 TPS) and sub-second finality, compared to Ethereum's slower transaction times and higher fees, though Ethereum is moving to Proof-of-Stake with its Ethereum 2.0 upgrade.
What was the Avalanche Rush incentive program?
Avalanche Rush was a $180 million liquidity mining incentive program introduced by the Avalanche Foundation in August 2021. Its goal was to encourage more developers and users to migrate to the Avalanche ecosystem by providing rewards for supplying liquidity to specific DeFi protocols like Aave and Curve.
What are the main DeFi protocols on Avalanche?
As the ecosystem grew, key protocols included Benqi (a lending and liquidity market protocol), Trader Joe (a decentralized exchange and lending platform), Pangolin (a community-driven DEX), and Yield Yak (a yield farming aggregator and optimizer).
Is Avalanche considered secure?
Avalanche employs a custom Proof-of-Stake (PoS) consensus mechanism that is designed to be highly secure. However, as a newer protocol, its long-term security is still being tested and proven over time, unlike Ethereum's Proof-of-Work system which has a longer track record, albeit with its own set of challenges.
Key Takeaways and Future Outlook
The momentum from the Avalanche Rush program is expected to continue attracting major protocols. The impending deployment of Aave and Curve, two of Ethereum's largest protocols by TVL, could significantly boost Avalanche's ecosystem and total value locked.
However, amidst this rapid growth in TVL and token price, security remains a paramount consideration. While Ethereum's Proof-of-Work mechanism has undergone extensive testing over time, the Proof-of-Stake models and novel consensus mechanisms used by newer chains like Avalanche require continued long-term validation.
The current public chain landscape is highly competitive, with various incentives driving value and user adoption. The critical question remains: once these incentive programs conclude, will the ecosystems sustain their growth and prove their fundamental value, or will they face a period of contraction? Users and investors must carefully evaluate the long-term viability and technical robustness of each platform beyond short-term rewards.