August 31, 2021: OnlyFantom Reveal ๐๐น
Chain Wars Heat Up with Fantom's $350MM $FTM Incentive Program
The last time the Chain Wars turned this hot was when BSC gained ground on Ethereum during the peak of gas pain. At peak, BSC captured over 20% of all TVL within DeFi in early May.
Ethereum gas prices have crept back upwards, but this time BSC has been sputtering as Binance finds itself surrounded by regulators and hackers. Now BSC has dropped to just 11% of TVL.
The action is coming from other chains looking to attract big money. Last week Avalanche announced a $180MM incentives program to bring DeFi sites like Curve to their chain. This week, Fantom announced a $370MM incentive program.
Compared with Avalanche, this is a more substantial offering and structured quite differently. @0xkydo has a great thread comparing these programs, as well as Celoโs mobile-first chain offering $100MM.
The total value of the offering has fluctuated a bit due to underlying token prices, as the Avalanche offering has been worth anywhere between $180MM to $450MM due to the sharp rise in $AVAX price. This puts Fantom and Avalancheโs competing offerings at least on a similar scale, although these things can fluctuate wildly as some traders are surely hoping.
In terms of raw tokenomics, Fantom is committing a lot more of its resources to their incentive program than Avalanche. Where Avalanche committed just 1.4% of its token supply, Fantom is committing committing 11%.
The program is also structured very differently, adding a lot more strings to qualify. Avalanche overall seeks to incentivize builders and reward TVL, requiring at least $5MM to qualify, which may have the effect of squeezing out smaller projects like NFTs and games. There are also cliffs and vesting periods for rewards, making it structured more like an investment than an incentive.
DeFi Boomers may recall Curve already launched on Fantom earlier this year. At the moment Curve has just shy of $200MM in total volume locked across the three pools, representing about a quarter of the entire volume on the chain. Over the past month, volume locked on chain has roughly doubled according to DeFi Llama. Perhaps this effect is partly them adding new projects, as their stats will be used to track incentives.
Some were cautiously optimistic about the launch. Note the use of the word โactuallyโ as a qualifier.
Some traders had product improvement recommendations.
Others expressed general criticism of these programsโฆ
โฆalbeit without diving into specifics.
Most users noted the effect of the Chain Wars, and speculating on which other chains may get into the action.
Avalanche already upped the ante by announcing ParaSwap would be joining its ecosystem.
Ethereum still has the lionโs share of DeFi value, as the entire ecosystem scrapes highs not seen since before the May nuke.
At the moment, the difference in value locked among these platforms is worth roughly the price of a JPEG. Should competing incentive programs find a way to attract some of this liquidity, we could see monster competition intensify. Chain wars!
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Newsletter is an independent roundup of interesting trends in cryptocurrency, never financial advice. Author stakes $CRV, but not in $FTM, $AVAX, $SOL, or $CELO.