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10 Key Takeaways from Nansen’s Report on Avalanche

Blockchain analytics platform Nansen published a comprehensive research report yesterday on Avalanche, the new EVM-compatible Layer 1 platform.

The Avalanche ecosystem, designed to address Ethereum’s scalability challenges, leverages sub-second transaction finality, a distinctive consensus protocol upgrade, and high transaction throughput to deliver low-cost products. Major Ethereum projects such as Aave and Curve have already migrated to Avalanche, and more DeFi and crypto dApps are expected to follow.

Here are 10 key takeaways from Nansen’s report:

  1. Robust ecosystem: Avalanche’s broad ecosystem covers major blockchain use cases from DeFi and NFTs to DEXs and play-to-earn (P2E) gaming. Its compatibility with the Ethereum Virtual Machine enables prominent dApps from across the blockchain space to migrate with minimal friction.
  2. Total value locked and native dApps: Avalanche reports a Total Value Locked (TVL) of $13.9 billion, with more than 25% attributable to Aave. Native applications such as Trader Joe and Benqi account for much of the remaining TVL. Other notable native projects include Wonderland, a successful OHM fork, and the P2E combat game Crabada.
  3. Avalanche Bridge: To support a multi-chain future, Avalanche developed the Avalanche Bridge, which enables fast, secure, and cost-effective transfers of ERC-20 tokens between Ethereum and Avalanche’s C-Chain. The bridge supports transfers of tokens including WETH, USDC, and WBTC. A typical transfer between Ethereum and Avalanche takes roughly 15 minutes and costs about $3.
  4. Bridge activity: Bridge volume reached $370 million in August following the Avalanche Foundation’s announcement of “Avalanche Rush,” a $180 million DeFi incentive program. Backed by prominent VCs and liquidity mining programs, bridge activity peaked on September 23 with a daily volume of $600 million.
  5. Transaction throughput: Avalanche has demonstrated throughput exceeding 4,500 transactions per second (tps) and transaction finality under 2 seconds. For comparison, Bitcoin processes about 7 tps with finality measured in nearly 60 minutes, while Ethereum processes around 14 tps with finality of about 6 minutes.
  6. Daily transactions: Daily transaction counts rose significantly after the Avalanche Rush initiative in August, which attracted blue-chip DeFi projects. Another upward trend occurred following Avalanche’s strategic partnership with Deloitte. A recent collaboration with Fireblocks is expected to further boost Avalanche’s daily transaction metrics in the coming months.
  7. Avalanche vs Ethereum gas fees: High gas fees on Ethereum, particularly since August, have been blamed for pricing out retail users and undermining some business models. While Ethereum attributes part of the increase to NFT demand, Avalanche has maintained its commitment to low-cost, accessible applications. The discrepancy was stark on November 26, when daily gas paid on AVAX totaled $1,311,682 versus $51,389,748 on Ethereum.
  8. Avalanche’s focus on NFTs: Various NFT projects have leveraged Avalanche, including sports-based marketplace Topps, metaverse NFT ecosystem Kalao, P2P marketplace Venly Market, and the play-to-earn NFT game Crabada. The Avalanche Foundation has allocated $200 million of recently raised funds to NFTs. Despite this focus, DeFi dApps remain among Avalanche’s most impactful applications.
  9. Transaction share vs Ethereum: Avalanche’s share of transactions relative to Ethereum rose from 1% at the start of August to a peak of 54% on November 26. This shift is largely attributed to Avalanche’s low gas fees. On that date, AVAX processed more than half of Ethereum’s daily transactions at a cost more than 20 times cheaper than Ethereum’s.
  10. Smart money proportion: Avalanche has been a top performer among alternative L1 chains in attracting attention from investors such as Three Arrows Capital and Polychain Capital. The network hosts 31% of total smart money activity, 46% of smart NFT minters, and 24% of smart NFT traders. Avalanche ranks among the top five platforms for smart money engagement.

While higher performance, faster transactions, and lower fees position Avalanche as a strong contender to challenge Ethereum, the long-term impact of liquidity mining incentives will determine whether the momentum Avalanche has gained over the past 12 months endures. Its vibrant ecosystem of native apps, migration of popular Ethereum-based protocols, and shared security model make Avalanche a compelling platform to watch in the crypto space.