- 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
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
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin whales could prevent BTC price first monthly loss of 2023 through this move
Bitcoin price is inching towards the first monthly loss of 2023. At press time, BTC price is 4.4% below $29,233, its price on May 1. If BTC fails to regain lost ground, the asset is in for its first monthly loss of the year.
Cardano price rallies with surge in DEX volume and new meme coin launch
Cardano-based decentralized exchange Minswap registered a large spike in transaction volume since the beginning of May. Between May 1 and 30, transaction volume surged from $10 million to $72 million.
Shiba Inu eyes recovery as holders pull more than 44 trillion tokens off exchanges
The reserve of Shiba Inu tokens across cryptocurrency exchange platforms has consistently declined between March and May. SHIB holders have pulled 44.53 trillion tokens off exchanges.
XRP likely set for price rally as network activity heats up
XRP Ledger’s native token XRP registered an increase in address activity on Monday, when more than 490,000 addresses interacted on the network, signaling an impending price rally.
Bitcoin: BTC delays inevitable crash to $25,000
Bitcoin price is delaying a crash that has been brewing for roughly two weeks. A failure to push higher could result in a steep correction next week. The troubling macroeconomic conditions could be key in catalyzing and trigger a nosedive for BTC holders.