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Nansen's Avalanche Quarterly Report - Q2 2023
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Disclaimer: Nansen has produced the following report as part of its existing contract for services provided to Avalanche (the "Customer") at the time of publication. While Avalanche has the right to review and provide feedback to Nansen, Nansen maintains full editorial control over the publication of this report. All views expressed are the independent opinions of Nansen's research analyst(s) who are the author(s) named in this report. This report is intended for informational purposes only and does not serve as investment, financial, professional, or other advice. For more information, please refer to the disclaimer at the end of this report, as well as our Terms of Service.

Overview

Avalanche is a smart contract platform designed for scalability, with a multichain framework consisting of Subnets that scale the network. The primary network includes P, X, and C chains. The P-Chain manages validator and Subnet-level functions, the X-Chain manages Avalanche Native Tokens (which is a digital representation of real-world assets), and the popular C-chain is an implementation of the Ethereum Virtual Machine.

Subnets on Avalanche refer to a subset of nodes or validators that work together to achieve consensus on transactions related to one or multiple blockchains. A Subnet can either be a network that operates within another network or a network built on top of a larger network. Avalanche's Subnet architecture offers faster finality, custom Virtual Machine support, and a wide range of configuration parameters to builders. The subnets introduced this quarter include Evergreen and UPTN.

In Q2 2023, there was notable transaction activity on the Avalanche network's C-Chain with daily active addresses increasing compared to the previous quarter. Despite the surge, the average gas paid on Avalanche C-Chain remained considerably lower than Ethereum.

Key Developments: Q2 2023

  • The Avalanche network launched its Cortina upgrade on April 25, 2023. This upgrade introduced key changes such as transitioning the X-Chain to a fully ordered blockchain running Snowman++ consensus, to better enable Avalanche Warp Messaging support. Cortina also simplified reward distribution for validators and increased the gas limit on the C-Chain for more complex dApps. These updates would streamline operations and foster further development within the Avalanche ecosystem.
  • Ava Labs launched AvaCloud, a Web3 launchpad enabling businesses to create no-code, fully managed blockchain ecosystems. The tool reduces deployment time and costs, offering features like automated blockchain building, validator management, data tools, and chain interoperability. Early adopters include AAA game studio Shrapnel and Korean conglomerate SK.
  • Ava Labs launched Avalanche Arcad3 to help Web2 gaming companies thrive in the Web3 gaming space. The program supports companies in areas like blockchain onboarding, marketing, and tokenomics, connecting them with Web3 studios and providing expertise in NFTs and blockchain gaming strategies. Some notable participants include Republic Crypto, Shrapnel, Gunz Chain by Gunzilla, Dynasty Studios, DeFi Kingdoms, Blitz by TSM, 2dao3, and Avalaunch.
  • The Avalanche Subnet Explorer was upgraded to support Internal Transactions and ERC-1155 tokens, allowing users to view detailed information for specific addresses, including token transfers, interactions, and internal transaction history.
  • On June 13, Ava Labs CEO Emin Gün Sirer testified before the House Financial Services Committee in Washington D.C., advocating for responsible blockchain innovation and a secure environment.

Ecosystem

Avalanche hosts a large ecosystem of dApps and protocols on its C-chain and Subnets, which users can explore on the Avalanche Ecosystem page. In Q2 2023, there were many exciting updates from Avalanche ecosystem projects and protocols, most notably:

DeFi

  • Struct Finance launched on Avalanche C-Chain, offering a customizable interest rate product, which provided fixed and variable returns to suit different risk profiles. This product leverages a 'tranching' mechanism to split yield-bearing DeFi assets, catering to a diverse range of investors in a volatile crypto market.
  • Voltz Protocol, an automated market maker for interest-rate swaps, integrated the Secured Overnight Financing Rates (SOFR) on Avalanche, enabling trading of SOFR-tied products on its platform. This on-chain solution by Voltz expands access to SOFR hedging, bridging the gap between traditional and decentralized finance.
  • GoGoPool, a staking protocol, was launched on Avalanche to simplify the process of launching Subnets, reducing costs and requirements. Users can stake AVAX tokens to receive ggAVAX tokens (LST) and launch validator nodes with lower staking amounts.
  • Circle launched Euro Coin on Avalanche, bringing faster and more efficient payments to users. Euro Coin is a fully reserved stablecoin backed by Euros, increasing liquidity and enabling transactions in both euros and USDC.
  • SushiSwap launched its V3 suite of products on Avalanche, including concentrated liquidity pools, SushiXSwap for cross-chain swaps, and a DEX aggregator. This integration strengthens the collaboration between SushiSwap and Avalanche, offering users more efficient liquidity provision, cross-chain swaps, and improved trading options.
  • Arrow Markets launched Arrow V2, a DeFi Options Trading platform on Avalanche C-Chain Mainnet. Users can join the waitlist for early access and earn points for engagement, gaining priority on the waitlist. Arrow Markets aims to create a user-friendly platform for both new and experienced options traders.
  • Dexalot has launched the first central limit order book Subnet on Avalanche, a major milestone in decentralized trading protocols. The Subnet aims to provide a decentralized trading experience with the convenience of a centralized exchange, offering low fees, fast finality, and support for spot trading pairs. Dexalot also introduced an Incentive Program to reward active traders with up to 4.8 million $ALOT tokens for participating in the platform.

NFTs & Gaming

  • Gunzilla Games has partnered with Avalanche to launch GUNZ, a blockchain-based digital economy platform for gamers. GUNZ offers seamless gameplay, in-game token usage for gas fees, and complete ownership of in-game items as NFTs.
  • Moongate and Ava Labs have teamed up to create dynamic NFT campaigns for the event industry. Attendees can unlock rewards based on real-life interactions using Moongate's NFTs. The partnership aims to revolutionize ticketing and membership systems, enhancing engagement and boosting revenue.
  • Merit Circle DAO is launching Beam, an Avalanche Subnet dedicated to Web3 gaming, leveraging Avalanche’s speed and security. Beam will provide gaming-focused tooling that includes features like token swapping and analytic tools. Sphere, a NFT marketplace is also in the pipeline along with three new games (Trial Xtreme, Walker World, and Hash Rush), with plans to support more Avalanche games in the future.
  • Pixion Games, a Web3 gaming studio, raised $5.5 million in a seed round to develop its flagship Avalanche-based game, Fableborne. Notable investors include Avalanche Foundation’s Blizzard Fund and Shima Capital. The game's public launch is slated for next year.
  • NFT-TiX, a leading event ticketing platform, partnered with Ava Labs and migrated to the Avalanche blockchain. This move enhances ticketing reliability, scalability, and transparency. NFT-TiX also formed partnerships with global festivals like Exit Festival and Transmission, expanding into various event genres.
  • The PBA and Bowlero have launched the League Bowler Certification (LBC) Awards, NFT-based honors to recognize bowling achievements. The initiative, developed in partnership with Layer 3 Labs and using the Avalanche network, aims to create a loyalty program and expand in the future to offer physical products and perks, potentially onboarding millions of bowlers into the Web3 space.
  • Portal Fantasy, a free-to-play pixel adventure RPG, launched its Closed Beta on the Avalanche blockchain on March 28. Players can be Heroes, befriending and raising Porbles, while Architects create and design their own magical worlds.

Enterprise

  • Tokeny partnered with Avalanche to offer a secure solution for tokenized securities, enabling efficient asset tokenization and real-time asset management. This collaboration enhances liquidity and compliance, allowing institutions to focus on their core business.
  • SK Planet launched Avalanche Subnet UPTN, integrating features such as digital collectibles and decentralized communities. The partnership aims to meet the demand for Web3 experiences and enhance e-commerce possibilities, particularly through SK Planet's popular loyalty program.
  • Avalanche launched the Evergreen Subnet "Spruce" with institutional partners like T. Rowe Price Associates and WisdomTree. Spruce serves as a testnet for on-chain trade execution and settlement. Using valueless tokens, institutions can explore public blockchain infrastructure with low risk. On May 2, Fireblocks launched support for Spruce Subnet.
  • Saga and Ava Labs partnered together to automate the deployment of Subnets, Avalanche's appchain solution. This collaboration aims to scale the usage of appchains in Web3 by removing barriers for developers. Saga's infrastructure enables the automated deployment of dedicated block space, ensuring performance improvements and cost savings in gaming and entertainment applications.
  • Snickerdoodle Labs is launching a consent layer on Avalanche to create a more equitable data ecosystem. Their Marketing Platform and Data Wallet enable brands to access customer insights with on-chain consent, while individuals are rewarded for sharing anonymized data. The partnership with Avalanche brings speed and scalability to the platform.
  • Alibaba Cloud established Cloudverse, a metaverse launchpad on the Avalanche blockchain, facilitating the creation and management of metaverse spaces. With Avalanche offering metaverse-building technology, Alibaba Cloud would handle the computing and storage aspects of the platform.
  • TYB and Shopify collaborated to launch a Web3 loyalty platform on Avalanche. The TYB Shopify App enables brands to engage and reward fans through community-integrated-commerce tools. By leveraging Avalanche's blockchain technology, fans can own digital collectibles that can be redeemed for promotions on Shopify sites.

Nansen On-chain Data

Daily Transactions on C-Chain

The daily transaction count on Avalanche C-Chain during Q2 2023 fluctuated between 200k and 550k transactions, almost double the volume compared to the previous quarter. Gas followed a similar pattern but surged during Apr 19 and Apr 26 against a slight decrease in the total number of transactions.

Daily Active Addresses on C-Chain

The daily active addresses have also been steadily increasing throughout the quarter, reaching a peak of 117k on Jun 14. The steady increase of active addresses, coupled with the rise in daily transactions, is indicative of healthy growth within the ecosystem and showcases the flourishing community supporting Avalanche. Another contributing factor towards interest in the chain could have been Avalanche Summit, which happened from May 3 to 5.

Average Daily Gas Paid (vs Ethereum)

In Q2 2023, the average daily gas paid on Avalanche C-Chain was significantly lower when compared with Ethereum. On Ethereum, the average gas fee peaked at $29 on May 6, while the average gas fee on Avalanche did not come close to $1.

Top Entities by Users and Transactions on C-Chain

Nansen's list of labels provides a comprehensive way to analyze the top entity interactions on Avalanche based on the number of users and transactions. Stargate and LayerZero are prominent entities that appear in both lists in this quarter, which could indicate a potential airdrop opportunity with ongoing rumors and the successful launch of the ARB Airdrop in Q1.

Closing Thoughts

In Q2 2023, Avalanche's C-Chain saw a doubling in transaction volume amidst current uncertain market conditions, demonstrating the network's resilience. Despite the surge in transactions, gas fees on Avalanche remained significantly lower than Ethereum, underlining its cost-effectiveness.

Key initiatives such as the Cortina upgrade, AvaCloud, and Avalanche Arcad3 were launched, improving the network's functionality and accessibility, and driving Web3 technology adoption. Furthermore, significant developments occurred in Avalanche's diverse ecosystem, particularly in the DeFi, NFT & Gaming, and Enterprise sectors.

A steady increase in daily active addresses and transactions highlights a robust and active community supporting Avalanche. Despite market volatility, the network's commitment to delivering effective blockchain solutions and fostering a broad ecosystem has strengthened its position within the competitive blockchain landscape.

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.