The monumental rise of the Solana (SOL) blockchain coupled with the sky-high gas fees on Ethereum (ETH) has piqued the crypto industry’s attention toward Layer-1 smart contract platforms.
While, to date, several smart contract platforms have been touted as “Ethereum killers”, none of them have really managed to make the largest smart contract platform obsolete per se.
However, this does not mean that there is no room for alternative Layer-1 blockchain solutions as Ethereum continues to wait for wider adoption of Layer-2 scalability solutions such as Optimism and Arbitrum to take the load off of the main chain.
Against that backdrop, two promising alternative Layer-1 solutions have emerged recently that could very well threaten Ethereum’s firm grip over the ballooning smart contract economy, Avalanche (AVAX) and Fantom (FTM).
So, what are Avalanche and Fantom smart contract platforms and why should you keep an eye on their ecosystems? Let’s find out.
Avalanche Rising Through the Ranks
Avalanche (AVAX) is an open-source, scalable, low-cost, and eco-friendly smart contract platform that aims to become the de-facto platform for developers building decentralized applications (dApps), NFT platforms, and other smart contract-enabled applications.
Avalanche Network is developed by Ava Labs and launched its mainnet in September 2020, shortly after raising $42 million in a token sale that lasted for less than 5 hours.
At its core, Avalanche was designed to tackle some of the most pressing points of older Layer-1 blockchains such as slow transaction speed, high cost, centralization, and lack of scalability. Avalanche’s unique technological architecture enables it to effectively tackle all the aforementioned issues while at the same time making it eco-friendly and resistant to 51% attacks.
On August 18, Avalanche announced a high-octane DeFi incentive fund under the title “Avalanche Rush” worth a whopping $180 million with leading DeFi protocols Curve and Aave.
The first phase of “Avalanche Rush” witnessed Avalanche’s native coin, AVAX being used as a liquidity mining incentive for Aave and Curve users for a period of 3 months. Unsurprisingly, the price of the AVAX token has since skyrocketed as despite it being offered for liquidity mining, the incentive to move crypto assets from Ethereum to Avalanche and farming the yields was a little too much.
From the graph below, we can infer the kind of impulsive movement AVAX has witnessed since the launch of “Avalanche Rush.”
The cascading effects of the liquidity mining program were even grander for Avalanche-based DeFi protocols such as Joe (JOE) and Pangolin (PNG) where both witnessed their prices jump in excess of 400% in a matter of weeks.
Fantom Blockchain Launches Incentive Program to Foster DeFi Growth
Following in the lines of Avalanche, layer-1 blockchain platform Fantom (FTM) announced its own DeFi incentive program worth a staggering 370 million in rewards. According to the current price of FTM at 1.6, the incentive program is worth $592 million.
The unique characteristic of Fantom’s incentive program is that it is not denominated in USD but rather in FTM. This means that as the FTM price continues to grow, the value of rewards in USD terms will also grow which essentially puts no upper ceiling to the magnitude of the program.
Further, Fantom’s incentive program differs from the vast majority of other similar incentive programs in that it leaves it up to the developers to use the FTM in whatever way they want.
Project teams that apply for FTM grants will be free to choose to use the funds in whatever way to foster the platform’s growth in the Fantom ecosystem. This could be in the form of using FTM to build the protocol or for incentivizing liquidity mining to attract more users to the protocol for enhanced network effects.
However, there are certain criteria that must be fulfilled for projects to be eligible to apply for FTM grants.
At present, a protocol team can apply for FTM rewards if its TVL can stay above a time-weighted-average of $5 million or $100 million for an extended period of time. Once the Fantom Foundation approves a project’s application for rewards, a two-month-long cliff will begin, after which the FTM rewards will commence vesting on a monthly basis.
Soon after the announcement of the rewards program, the price of FTM witnessed a steep upward surge, climbing from $0.5 on August 30 to $1.6 at the time of writing.
Similarly, the cascading effects of Fantom’s massive reward program were felt by Fantom-based DeFi projects such as SpookySwap which jumped from $10 on August 30 to $21 at the time of writing.