AVAX Eco Space Summary: Bringing Real World Assets to AVAX
On September 26 @ 2pm CST, GoGopool held its second Twitter Space AMA, hosted by Breevie. Representatives from diverse and exciting Avalanche protocols, including Heroes of NFT, Trader Joe, Hubble Exchange, Benqi, Savvy DeFi Colony and BWS Labs were present, as was Steven Gates, the founder of GoGoPool.
The AMA was conducted to provide Dapp representatives with opportunities to discuss some of the exciting developments happening in the Avalanche and subnet ecosystems and what this could mean for DeFi, GameFi, institutional & retail investors alike.
Below is a quick summary of what was discussed but you can listen to the full space by clicking the video:
The conversation began with a brief discussion of the bright future the Layer 1 has. Since inception, Avalanche has been continuously building its ecosystem, making it more efficient and easier to build on. The representatives reiterated their strong confidence in Avalanche’s potential, despite a few developmental milestones not being recognized.
Two important developments were discussed specifically as they surprisingly failed to garner much attention. These were the releases of Securitize Capital and Boba Network.
Boba Network is a Layer 2 scaling solution and Hybrid Compute platform that is coming to Avalanche and assists with its scalability for Dapps on the C-chain. This is important as it will allow Avalanche to process and finalize transactions with greater speed, paving the way for mass adoption.
Another milestone is Securitize, a leading digital asset securities firm that launched a fund tokenizing an interest in Kohlberg Kravis Roberts’ (KKR) Health Care Strategic Growth Fund II on Avalanche. KKR is an American multi-billion dollar global investment company that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds. The new Securitize tokenized fund marks the first time exposure to one of KKR’s alternative investment strategies has been offered in a digital format in the U.S. The Fund is managed by Securitize’s digital asset management arm, Securitize Capital, and provides exposure to KKR’s health care growth equity investing strategy.
One reason why such releases have seemingly flown under the radar has to do with these milestones being merely ‘infrastructural developments’, meaning they don’t directly affect Avalanche users. Securitize Capital’s tokenized Fund is great news, but until the average user can see the token being listed and used in Dapps (e.g. Trader Joe), such an announcement is more likely to arouse speculation rather than enhance actual growth and adoption.
It was commented that the development of an ecosystem takes time, which can span many months or even years. Often what happens is that mass adoption comes only once a strong foundation has been developed upon which projects can be built. This is what is currently happening right now on Avalanche. As it continues to grow and scale, it will inevitably attract greater attention, engagement, and investment.
This discussion then shifted to a conversation about the growth and future of Avalanche. The Layer 1 is well on its way to developing a well-structured and thriving ecosystem. Subnets in particular, were proposed as vital to Avalanche because of their capacity to scale and adjust as per a project’s necessities and resources.
Subnets are relatively quick and simple to launch, with some subnets being launched within 30 seconds. However, it typically takes days to launch a Subnet (after various tests), particularly if the project builds its own Virtual Machine (VM), incorporates a price oracle, and establishes permissionless Validators, among other customizations. Nevertheless, from a Venture Capital’s (VC) perspective, this rather simple, customizable process creates endless possibilities and opportunities that can be quite attractive. Hence, VC’s may be more inclined to fund a particular project not only with strong potential, but one that can customize itself to be regulatory compliant and operate according to the unique specifications of the VC’s interests.
GoGoPool is one such project with a unique service, but another project was also mentioned with an astounding potential. Sparq is a tooling project that is a ‘subnet of subnets’ where projects can launch their own subnet on any VM and use any coding language, further facilitating the on-boarding process and making the subnet ecosystem that much more accessible.
GameFi projects in particular are in need of the advantages subnets have to offer due to the demand for a game to scale without suffering network traffic congestion and delays. This most certainly creates a synergetic opportunity for subnets, Avalanche overall, and the project itself.
Excitedly, the gaming sector is already starting to utilize subnets, with some highly anticipated games expected to come online as early as the first quarter of next year.
Regarding NFTs, Avalanche is no stranger to the hype and excitement surrounding this technology. In Avalanche’s own blog, they have discussed their goal of becoming the ‘Art chain’ by being the go-to chain for artists or businesses with art studios to create, display and sell creative works of art.
Another major point during the AMA was Subnet’s strategic focus to horizontally scale Ethereum Virtual Machines (EVMs) for various use cases. Whether for GameFi, DeFi, institutional applications, or even targeting certain optimizations, Subnets allow for unique structures and applications to be built that other blockchains simply cannot or do not provide. Even a Virtual Machine can be re-structured to fit the needs of a project; essentially customized VMs.
Another advantage that is sometimes overlooked is how welcoming an ecosystem’s community is to newcomers, whether they are investors/ DeFi degens or developers. The speakers praised the Avalanche community for making newcomers and projects feel welcomed and actively providing users with all the necessary information and resources they need to participate and build within the Avalanche ecosystem.
The conversation then shifted to certain metrics that Avalanche scores highly on. Decentralization is one area where Avalanche excels. Currently Avalanche has 1,245 active validators. This is quite high for a proof-of-stake (PoS) chain, making it rather decentralized when compared with other PoS chains. By comparison, Polygon has 100, while Fantom has 71 & BNB Chain only has 21 validators. Not even Polkadot comes close, with only 297 validators.
The second metric is the ecosystem’s consistent building and development, improving Avalanche’s infrastructure and efficiency. Even its gas fees have gone down considerably since 2021. Last year, it used to cost around $0.20-$0.40 for a single transaction, but since the Apricot upgrade, it has since gone down to around $0.02-$0.05.
A third metric discussed was the number of developers coming to Avalanche. This gives greater confidence to other teams and projects looking to build their projects on Avalanche, further contributing to the growth and development of the ecosystem.
The Total Value Locked (TVL) on Avalanche, currently sitting around $1.6 billion and ranked 4th place on Defillama, was a fourth positive metric, as it provides a good indication of where the money is flowing to.
Despite all the excitement surrounding Avalanche and subnets, the conversation shifted to competition, specifically comparing Cosmos as a strong Avalanche competitor.
Firstly, Cosmos provides a software development kit (SDK), which is not an integrated part of the protocol. Developers on Cosmos can use the SDK to build a chain and connect it to other chains by using its Inter-Blockchain Communication (IBC). However, the whole ecosystem is not connected to the Cosmos Hub, where its Validators reside. This leaves Cosmos’ Zones isolated and without network support, resorting to them having to bootstrap their own Validators. This is where Avalanche varies.
Avalanche has three chains which comprise the primary network, the Platform-Chain (P-Chain), Exchange-Chain (X-Chain), and Contract-Chain (C-Chain). Avalanche provides chain integration through its Primary Network by requiring validators, which are coordinated and stored on the P-Chain, to stake AVAX to secure the network on the X-Chain . In other words, Avalanche provides an already bootstrapped set of Validators nodes for its subnets as all validators must validate the primary network in conjunction with any subnets they validate.
Cosmos’ Validators are not integrated in this way and it is the responsibility of each project or Zone to bootstrap its own validator nodes. However, admittedly, the P-Chain is not fully complete. For example, arbitrary message passing between subnets and permissionless validation of subnets are two important components that are still under development. However, once the subnet architecture is fully complete, Avalanche will provide a fully integrated ecosystem down to the protocol level. This will enable arbitrary messaging with less overhead, as well as a well-developed ecosystem overall with a variety of tokenomics and incentives, all interoperable and in open communication with each other. Additionally, Cosmos’ consensus mechanism is rather limited when compared with Avalanche’s. Cosmos uses Tendermint, a classical consensus mechanism which cannot scale past around 150 validator nodes. Avalanche does not have such limitations. Lastly, Avalanche’s EVM compatibility is becoming more robust when compared with Cosmos’.
Moreover, it does not take much to launch a Subnet. There have been scenarios where launching one can take as little as thirty seconds. However, usually it often takes days to launch a Subnet (after various tests), especially if the project builds its own Virtual Machine (VM), incorporates a price oracle, getting permissionless Validators, etc. Nevertheless from a Venture Capital’s (VC) perspective, this rather facilitating process, along with Subnets opening the gates of customization, creates endless possibilities and opportunities that VCs find attractive. Hence, VC’s would have no shortage in deciding to fund a particular project not only with strong potential, but one that can customize itself to be regulatory compliant and/or specific to the VC’s interest.
Even from an institutional perspective, the development of Avalanche makes the network more attractive for large corporations. This is particularly clear with the announcement of KKR’s tokenization of its Health Care Strategic Growth Fund II by Securitize. What was monumental was not just that such a large Private Equity firm announced it, but that they actually tokenized their fund. Upon announcement, the fund opened for subscriptions and investment. Although the token is only for highly qualified purchasers, the idea is to ultimately minimize the restrictions so that not just accredited, but also retail investors can participate in the fund. Despite the crypto sector going through a serious bear market, the idea and desire of bringing real world assets on-chain has only increased interests among both institutions and retail investors, further emphasizing the importance of creating an ecosystem and resources conducive to these use-cases.
Despite the interest in Web3 and DeFi, there is a wide knowledge gap among institutions or any Web2 corporation that must be remedied prior to mass adoption. There were comments that education must demonstrate to institutions the huge potential blockchain technology and subnets have. Subnet’s customizability, particularly their ability to be permissioned and compliant to local regulations can provide security to institutions who are already familiar with such criteria. The issue with mass education is attempting to transfer this information to institutions and corporations who may not be as familiar with the technology. Another metric that traditional finance (TradFi) considers a crucial requirement is a blockchain’s atomic settlement and sub-section finality, something that Subnets can be customized to provide. One assumption about the crypto sector is that it is the “wild west”, which is not strictly accurate as it overlooks subnet technology. Subnets can provide strict control and customization that will fit the needs and regulations of clients, investors, and the project.
The AMA then opened the floor to all listeners to ask any questions. While many interesting questions were asked, a few notable questions should be mentioned.
One question was how Avalanche’s subnets compare with other solutions, such as Polkadot’s Parachains. The response was that subnets are more flexible than parachains. In addition, parachains are scarce. Due to Polkadot’s shared security, there are only 100 Parachains on Polkadot that can be deployed. With subnets, there are no limitations as to how many subnets can be created. Furthermore, parachains are only leased for up to two years, after which the leasser must either give up their parachain or go through another auction round to gather the necessary DOT in order to retain its parachain, a process that is costly in both time and resources and does not guarantee a parachain as they are only given to the highest bidder.
Another notable question was for Savvy DeFi, to explain how their non-liquidation lines of credit work. To achieve this, they allow users to deposit their crypto into Savvy via staking. Those staked assets earn yield while at the same time, users can borrow against their staked asset of up to 50%. The yield the user earns effectively pays down your line of credit (debt) for you. Furthermore, users can open different lines of credit for different tokens without having to sacrifice their crypto.
A third and final question was for another project speaker, BWS Labs, to provide a quick overview about what it is about. Essentially, BWS is bringing hedge fund strategies on-chain through a Gamefi front-end. At the back-end, the BWS trading engine will be providing hedge fund vaults for clients based on their risk assessment and purchased tokens. Like other protocols, BWS chose to build on Avalanche due to its speed, low gas fees and near-instant finality. Other future features will be an NFT gallery, which will have use cases within the BWS ecosystem.
After a few more questions, the AMA ended. The Host, Breevie, thanked everyone for coming to speak and listen.
If you want to listen to the whole AMA discussion, check out the recorded discussion by clicking here: https://www.youtube.com/watch?v=tAxykg7-ulE
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