Exploring the Top 10 Protocols on Avalanche (AVAX)

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Introduction

Avalanche, launched in 2020 by AVA Labs, is a Layer-1 blockchain that aims to address the blockchain trilemma by achieving scalability, security, and decentralization simultaneously.

It supports smart contracts and decentralized applications (dapps) through its unique Proof of Stake (PoS) consensus mechanism. Avalanche’s architecture comprises three core chains: the Exchange Chain (X-Chain), the Contract Chain (C-Chain), and the Platform Chain (P-Chain).

The native token, AVAX, plays a vital role in facilitating transactions, system rewards distribution, and governance. Currently, more than $1.3 billion worth of crypto is locked in various Avalanche protocols, representing nearly 3% of all chains.

Over the past 90 days, Avalanche has experienced an impressive daily active user (DAU) growth rate of 247.5%.

Top 10 Protocols on Avalanche

Let’s take a closer look at the top 10 DeFi protocols built on Avalanche:

1. Aave V3

Aave, a decentralized lending protocol launched in 2017 and rebranded in 2018, enables users to lend, borrow, and earn interest on digital assets. Its V3 iteration introduced significant improvements and new features, such as the Portal for cross-chain liquidity, Efficiency Mode for high-efficiency borrowing, and Isolation Mode for controlled risk asset listings.

2. Trader Joe

Initially a decentralized exchange (DEX) leveraging the Avalanche Network, Trader Joe plans to expand into a comprehensive ecosystem encompassing various DeFi services, including yield farming, lending, staking, and a non-fungible token (NFT) marketplace.

3. GMX

GMX is a spot and perpetual contract trading platform offering low swap fees and no price impact. Launched on Arbitrum in September 2021 and later expanded to Avalanche in early 2022, GMX provides up to 50x leverage and features a unique multi-asset liquidity pool that generates rewards from multiple sources and redistributes them to liquidity providers.

4. Stargate

Stargate Finance is a cross-chain liquidity protocol enabling rapid swapping of stablecoins across multiple Ethereum Virtual Machine (EVM) compatible networks, including Ethereum, Avalanche, BNB Chain, Arbitrum, Optimism, Fantom, and Polygon. Liquidity providers depositing stablecoins can enjoy attractive rewards of up to 8% APY.

5. Benqi

Benqi is an exclusive DeFi protocol developed on the Avalanche network. It consists of two core elements: BENQI Liquid Staking (BLS) and BENQI Liquidity Market (BLM).

BLS enables the tokenization of staked AVAX, allowing users to participate in DeFi applications without cross-chain transfers or locked capital. BLM operates as a lending and borrowing protocol, facilitating over-collateralized, permissionless deposits, loans, and interest accrual on crypto assets.
6. Pangolin

Pangolin is a DEX operating on Avalanche and Hedera. As a fork of Uniswap, it utilizes the automated market maker (AMM) model, but leverages the underlying Avalanche network to offer faster and more cost-effective trading experiences. With Avalanche’s rapid transaction finality and low fees, Pangolin caters to the needs of retail traders.

7. Platypus Finance

Platypus Finance introduces an innovative single-sided Automated Market Maker (AMM) protocol for stablecoins on the Avalanche network.

This platform employs a unique mechanism that enables Liquidity Providers (LPs) to contribute using only one token type, minimizing impermanent loss risk and reducing slippage for traders while enhancing capital efficiency.

8. CIAN

CIAN is an automation platform focused on optimizing yield strategies in DeFi. It primarily targets liquid staking tokens, allowing users to build, manage, and refine strategies across various cryptocurrencies, including popular liquid staking tokens and stablecoins.

By leveraging CIAN’s automated strategies, users can earn passive income based on their tokens without the need for locking them up.

9. Vector Finance

Vector Finance complements the services offered by Trader Joe and Platypus Finance. It enables users to achieve amplified returns from their stablecoin or liquidity pool deposits with Trader Joe and Platypus without the requirement of owning or staking JOE or PTP tokens.

10. Yield Yak

Yield Yak is a decentralized yield farming platform designed to enhance DeFi yield on Avalanche. Its key feature is auto-compounding farm rewards, ensuring independent operation of farms. Yield Yak offers two main products: the Farming Aggregator and the DEX Aggregator, both of which provide seamless liquidity across the ecosystem.

Conclusion

Avalanche emerges as a strong competitor in the DeFi sector, challenging the dominance of Ethereum. By addressing the blockchain trilemma and offering scalability, security, and decentralization, Avalanche presents an attractive alternative.

With a growing ecosystem of protocols and a substantial increase in active users, Avalanche has the potential to surpass Ethereum’s position. As a pioneer in the DeFi sector, its unique architectural model and supportive ecosystem make it an enticing option for investors seeking next-generation blockchain solutions.

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