Introduction

Avalanche is a blockchain platform that aims to address the blockchain trilemma of scalability, security and decentralisation via its proof of stake mechanism. Like Ethereum, Avalanche supports smart contracts to run various decentralised applications (dApps) on its network.

The Avalanche ecosystem hosts a suite of dApps, primarily focusing on decentralised finance (DeFi) and non-fungible tokens (NFTs). As of today, Avalanche has four notable initiatives to help drive the ecosystem forward. Arranged by the launch dates, the initiatives are as follows:

1. Avalanche Rush—a $180M DeFi incentive programme 
2. Blizzard Fund—$200M+ fund to accelerate development, growth and innovation
3. Multiverse—a $290M incentive programme to accelerate subnet growth 
4. Culture Catalyst—a $100M creator fund to support NFT projects

For this analysis, we’ll be looking at different metrics to determine the health and make-up of the Avalanche ecosystem.

Key findings

• A stable number of smart contracts are being deployed on a daily basis, with the most popular application being DeFi.
• The staking activity and average staked size have been decreasing, which could be a result of the current macroeconomic climate (i.e., crypto winter).
• The daily transaction volume and number of unique active users on Avalanche have remained stable, indicating that users still have confidence in the blockchain but are taking up cautionary measures to protect their assets.

Analysis

I. Contract deployment

One important metric when assessing the overall health of an ecosystem is the number of contracts being deployed. This metric enables us to ascertain the number of active projects taking place on the blockchain.

Based on the graphs below, they show that:

• The Avalanche ecosystem is active and stable, given that there is little fluctuation between the daily number of unique contracts being deployed.
• The top use case of smart contracts is DeFi. Since the Avalanche Rush initiative was launched in the middle of 2021, we can expect DeFi to have the most significant presence on the blockchain.

II. Staking

Staking is the process of locking up tokens to support a network while receiving a reward in return. Once the tokens are locked up, they become illiquid and users are unable to use their tokens freely. With more tokens being staked, it signals users’ confidence as they’re willing to lock up their tokens on the blockchain.

\n Based on the graphs below, they show that the staking activity and average staked size on Avalanche have been decreasing. This outcome could be due to the current macroeconomic climate, which has caused users to be more protective of their assets.

III. Transaction volume / Active users

Two other vital metrics when assessing the overall health of an ecosystem are the volume of transactions and the number of unique active users. The transaction volume and number of active users signal whether people are actively participating on the blockchain.

\n Based on the graph below, it shows that the daily transaction volume and number of unique active users are stable, indicating that users still have confidence in the Avalanche blockchain. When compared with the “Average staked size” graph from II. Staking, we can conjecture that users are actively participating within the Avalanche ecosystem but have taken up cautionary measures given the current macroeconomic climate.

IV. Top projects (by unique active users)

DeFi

From the graph below, it shows that the top three DeFi protocols based on the number of unique active users are:

1. Thor financial—a hybrid DeFi-as-a-Service and Nodes-as-a-Service protocol
2. VaporNodes—a DeFi passive income protocol
3. Wonderland—a treasury that deploys capital at the earliest stages of projects 

DEXs

From the graph below, it shows that the top three decentralised exchanges (DEXs) based on the number of unique active users are:

1. Platypus—a stablewap-based DEX
2. Trader Joe—a general-purpose DEX
3. Dexalot—a decentralised, on-chain application that allows users to trade cryptocurrencies

NFTs

There has been plenty of discussion stating that Avalanche is an incredibly compatible blockchain for NFT games. Thanks to Avalanche’s subnets, it empowers game creators with greater flexibility and it can help insulate them from network issues during periods with high volume of transactions.

From the graph below, it shows that the top three NFT projects based on the number of unique active users are:

1. Lost Worlds—a platform that lets users mint NFTs by physically travelling to a location
2. Bold Point—an NFT-based role-playing game
3. Heroes of NFT—a play-to-earn NFT-based card game

Summary

• Despite the ongoing crypto winter, the Avalanche ecosystem remains healthy and robust.
• While the staking activity and average staked size have been decreasing, there’s still a stable number of daily active users on the blockchain. As such, we can conjecture that there is a strong user confidence in Avalanche, but users have taken up cautionary measures given the current macroeconomic climate.
• Moving forward, with the subnet growth, Avalanches looks to be a promising blockchain not only for DeFi, but also for NFTs and gaming. 

Methodology

In this analysis, data was used from the Avalanche Tables, with the earliest date being 30 May 2022.

The metrics used for the analysis are as follows:

I. Contract deployment

• Daily number of unique contracts being deployed
• Daily unique contracts breakdown

II. Staking

• Total staked
• Daily staked volume
• Daily number of unique stakers
• Average staked size

III. Transaction volume / Active users

• Daily volume of transactions
• Daily number of unique active users

IV. Top projects (DeFi, DEXs, NFTs)

• Number of unique active users

Date of analysis:21 July 2022

Chart refresh: Daily