• Can These Increasingly Popular Altcoins Compete With Ethereum? Glassnode Examines Three Emerging Platforms

  • The Avalanche Foundation allocated the first $27 million for users of lending and borrowing protocol Aave and decentralized exchange Curve (CRV). The analytics firm highlights the exponential rise of liquidity in AVAX’s DeFi projects since the incentives were announced.

    Glassnode begins by discussing the “surge in interest” in AVAX and SOL.

    “Alternative smart contract platforms such as Avalanche and Solana have seen enormous 30 day token price growth as hints of activity and wagers on a multi-chain future gain traction.”

    Avalanche had drawn modest liquidity across its decentralized finance (DeFi) initiatives until earlier this month, when it introduced a $180 million DeFi incentive scheme, according to Glassnode.

    The Avalanche Foundation set aside the first $27 million for users of the Aave lending and borrowing protocol and the Curve decentralized exchange (CRV). Since the incentives were disclosed, there has been an exponential increase in liquidity in AVAX’s DeFi initiatives, according to the analytics firm.

    However, according to Glassnode, liquidity on Avalanche remains rather low.

    “Projects on Avalanche continue to be distinguished by their status as clones of established projects on Ethereum, luring this growth through incentives and exaggerated yields that may or may not last in the long term.”

    According to Glassnode, Solana has focused on DeFi protocol implementations, which have fostered growth in its ecosystem. Solana also has a transaction processing capacity of 50,000 to 65,000 transactions per second, allowing the network to scale.

    According to the analytics firm, growth in the Solana ecosystem is still quite limited in comparison to Ethereum.

    “In the Solana DeFi space, there are five projects with more over $100M TVL [total value locked].” In comparison, Ethereum has over 60 projects worth more than $100 million TVL.

    Solana is unquestionably an appealing alternate option for projects that require scale. Although, for the time being, it has only scratched the surface of competing with Ethereum for total liquidity.”

    According to Glassnode, Terra has seen “non-trivial indicators of adoption in a few select protocols.” Anchor Protocol, Terra’s largest DeFi protocol, with a total value of more than $3.4 billion locked in.

    According to the analytics firm, Terra, like Solana and Avalanche, has yet to host more than five projects with more than $100 million in liquidity.

    “While some alternative layer one smart contract platforms’ native coins have rallied in recent weeks, actual liquidity on each chain remains restricted in comparison to the Ethereum chain.”

    Glassnode envisions a world where more users migrate to alternative platforms, especially if Ethereum fails to scale its network.

    “As some users migrate to newer and more experimental blockchains, developers will need to analyze the viability and long-term viability of additional users and capital migrating on or off of Ethereum.

    As the race for users, attention, and capital heats up, many developers and protocols may find the trade-offs worthwhile, or even discover untapped value and opportunity in protocol design. In addition, if Ethereum L2s struggle to scale the network or provide a significant barrier to user experience, users may naturally move toward alternate chains in response.”

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