[Recap] Avalanche Q3 2024 State of the Ecosystem

This call summary is from the above talk with The Tie’s Chief of Staff & Senior Vice President of Strategic Initiatives Heidi Pickett, Ava Lab’s Chief Business Officer John Nahas, and Ava Lab’s Senior Director of Business Development for Institutions & Capital Markets Morgan Krupetsky.

Interchain Communication Token Transfer (ICTT): As John Nahas explained, ICTT, known previously as Teleporter, is built on Avalanche Warp Messaging (AWM) and offers developers an interface to send tokens across EVM compatible subnets. Morgan added that, unlike traditional bridges, ICTT does not use a multi-sig mechanism, allowing seamless asset swaps and message exchanges (e.g., trade RFQs, price oracle feeds) between Avalanche L1 blockchains. ICTT also facilitates native integrations and data feeds from the C-Chain. John continued that the ICTT developer grant program supports projects like Lamina1 (a metaverse for digital creators), zeroone (an NFT marketplace), and GoGoPool (a liquid staking solution) that are building on ICTT.

Avalanche Community Proposal 77 (ACP 77): Morgan stated that this new proposal aims to enable sovereign chains by eliminating the 2000 AVAX staking requirement for validators, replacing it with a pay-as-you-go model. Previously, L1 validators had to validate both the primary network and the L1, which was prohibitively expensive and regulatorily restrictive, especially for institutions that cannot validate public, permissionless networks. The new model reduces the cost of launching an L1 while maintaining network interoperability. John highlighted that although the proposal may deviate from the original whitepaper, this change reflects community feedback and ensures compliance flexibility for institutions. The new tokenomics of ACP 77 will also result in a consistent removal of AVAX from circulation across all types of blockchain networks.

Tokenization and Asset-Backed Finance: Morgan discussed the rise of both generalist and industry-specific marketplaces within and outside of crypto. Asset-backed finance, mainly lending supported by contractual cash flows from various asset pools (e.g., music, media, real estate, auto loans), is expanding on-chain. The 2008 financial crisis reduced banks' lending capabilities, leading to the growth of web2 fintech solutions. Now, web3 solutions are emerging, offering venture/debt financing with potential token upside, creating attractive risk/return profiles in lieu of more traditional web2 fintech solutions. These web3 solutions connect off-chain capital to on-chain, evidenced by tokenization initiatives like diamonds and fine wine funds launched by Oasis Pro Markets. Morgan also sees high interest in tokenizing cash equivalents (e.g., stablecoins, yield-bearing stablecoins, CBDCs) and alternative assets.

Stripe Integration: Both Morgan and John highlighted Stripe's new integration with Avalanche. This integration enables US dollar on and off-ramps into AVAX, making it more accessible to non-crypto native users. This integration benefits platforms like zeroone and the Arena, enhancing the connection between the real and on-chain worlds.

Web3 Gaming Evolution: John highlighted that the new wave of web3 games focuses on genuine gameplay rather than just token mechanics. Notable developments include Solo Leveling on Avalanche, part of the Other World protocol with exclusive web3 rights to 25 anime properties, and major projects by Nexon and Konami. Significant adoption is occurring in Asia, particularly Japan and Korea. Gaming could be the first sector to validate Avalanche's scaling thesis through customizable, interoperable blockchains.

Avalanche Boost: the New DeFi Incentive Program: John explained that Avalanche Rush in 2021 kickstarted interest in the Avalanche ecosystem on the C-Chain. Since then, L1s have developed, yet the  C-Chain has remained the primary liquidity hub. The upcoming ACP 77, ICTT, and other platform upgrades will be complemented by the Avalanche Foundation's Boost incentive program to enhance DeFi liquidity on the C-Chain. Platforms like Trader Joe, BenQi, DeltaPrime, Pharaoh Exchange, and GMX are part of this initiative. Additionally, the Icebreaker program allocates up to 500k AVAX to DeFi protocols, predominantly liquid staking solutions. New protocols coming to market from Codebase, Ava Lab's accelerator program, like Axon, Inertia, Musing, and beyond, will also benefit from this liquidity injection.

Growth Strategy: John outlined a dual approach: top-down, involving large, trusted partners to validate use cases (e.g., SK Planet), and bottom-up, where innovation drives incumbents towards decentralization. He emphasized that metrics often underreport Avalanche's success due to its multi-blockchain deployment. Tools like Core's Airdrop and Frosty Metrics’ Chill Factor can enhance user engagement and incentivize participation.

Avalanche Summit: The upcoming Avalanche Summit, which will be held in Buenos Aires this October, will bring the community together to share ideas, network, and collaborate.

Reflection on Progress: Morgan highlighted the technology's alignment with Avalanche's scaling vision but noted the need for better community engagement and consistent messaging. John reiterated the platform team's strength and Ava Labs' long-term performance track record. The focus is now on improving short-term narratives and continuing successful institutional onboarding through Avacloud.

Avalanche is demonstrating robust growth and innovation across various verticals. The Interchain Communication Token Transfer (ICTT) enhances cross-subnet token transfers without traditional multi-sig mechanisms. At the same time, Avalanche Community Proposal 77 (ACP 77) lowers the barrier to institutional participation by introducing a pay-as-you-go model for validators. The platform's integration with Stripe facilitates seamless US dollar transactions into AVAX, bridging off-chain and on-chain capital. Avalanche's gaming sector is gaining traction, particularly in Asia, focusing on genuine gameplay. DeFi initiatives are set to thrive with the Avalanche Boost incentive program to increase liquidity on the C-Chain. The upcoming Avalanche Summit in Buenos Aires highlights the community's active engagement. Overall, Avalanche's balanced growth strategy, combining top-tier partnerships and grassroots innovation, positions it as a leader in the blockchain space.

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