Avalanche fights Solana and Polygon for DeFi market share with new $180 million incentive program
|- Blue-chip Decentralized Finance protocols are expected to join Avalanche's ecosystem, starting with Curve Finance and Aave.
- Avalanche competes with "Ethereum-killer" Solana and layer two scaling solution Polygon for higher total value locked and DeFi market capitalization.
- The new $180 million incentive scheme attracts more decentralized applications (dApp) developers and enthusiasts to Avalanche, driving AVAX price and trade volume higher.
"Liquidity mining program incentives" have become increasingly common as cross-chain protocols compete for a larger share of the DeFi landscape. The "security" of the cross-chain protocol now sets it apart from competitors since the most significant risk is the loss of funds due to a hack.
Avalanche's new DeFi incentive program likely to intensify competition in cross-chain protocols
Cross-chain protocols like Avalanche provide liquidity to enable trading on decentralized platforms. Users deposit their capital (two different cryptocurrencies that make a trading pair) on the platform and receive a share of the fees in return.
In addition to the passive income (share of trading fees) earned by liquidity providers, platforms that facilitate liquidity mining may offer incentives in the form of tokens, a dual benefit for users. Avalanche's latest offering involves a total of $180 million in incentives over three months in the "Avalanche Rush" program.
Phase 1 of Rush offers $20 million in AVAX (Avalanche's native token) to Aave (AAVE) users and $7 million worth of AVAX to Curve Finance (CRV) users. The cross-chain protocol has planned additional allocations in the coming months.
The announcement of "Avalanche Rush" is likely to have a bullish impact on the protocol's native token price. It is expected that Avalanche will note a spike in the number of high-value dApp developers and users on the platform.
Avalanche's current offering has triggered a rally in AVAX; the token's price is up nearly 40% in the past 24 hours. AVAX is currently priced at $31.15; it continues to trade 45% below its all-time high from six months ago.
Since the largest DeFi hack in history, where over $600 million worth of cryptocurrencies were stolen from cross-chain protocol Poly Network, users in the community are concerned about "security."
Avalanche sets itself apart from protocols susceptible to hacks by taking additional measures like auditing the code of community projects to protect users from rug pulls and hacks.
.@RugDocIO is on a mission to make DeFi safer on #Avalanche, bringing educational content and auditing code of community projects to help build a healthy, growing ecosystem.https://t.co/wYB330XzDw
— Avalanche (@avalancheavax) August 16, 2021
.@RugDocIO is on a mission to make DeFi safer on #Avalanche, bringing educational content and auditing code of community projects to help build a healthy, growing ecosystem.https://t.co/wYB330XzDw
— Avalanche (@avalancheavax) August 16, 2021
Though AVAX is the "new kid on the block" from the market perspective, it differentiates itself by focusing on rewards, partnerships and security. Its closest competitors are four projects: Polygon, Polkadot, Solana, and Cosmos. Based on on-chain analysis and a comparison of AVAX's price and trade volume, it would be fair to say that AVA's market capitalization is expected to increase further.
Historically, there is a strong correlation between AVA's trade volume and price. The increase in trade volume is likely driving the price surge and vice versa. Therefore, after hitting a market capitalization of $5.6 billion, further growth is possible.
The crypto analyst and trader behind the Twitter handle @Beastlyorion has set a bullish target for AVAX, $500 for the end of 2021.
The way these charts are setting up is something I didn't think we would see for a long time. If things continue the way they are, $ADA looks like it could pump to $30-$40 by the end of the year, $FTM could hit $10-$15 and $AVAX could end up around $500. This is a BIG deal.
— Beastlorion (@Beastlyorion) August 14, 2021
The way these charts are setting up is something I didn't think we would see for a long time. If things continue the way they are, $ADA looks like it could pump to $30-$40 by the end of the year, $FTM could hit $10-$15 and $AVAX could end up around $500. This is a BIG deal.
— Beastlorion (@Beastlyorion) August 14, 2021
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