Table of Contents

1. Project Overview

2. 1Q24 Highlights
2-1. Key highlights
2-2. Key metrics

3. Key Partnerships and Updates
3-1. Expanding the blockchain ecosystem of Nexon’s MapleStory Universe
3-2. Alipay Plus D-Store delivers a real-life web 3 experience
3-3. Tokenizing financial assets (RWA) with Citibank and ANZ
3-4. Technology updates to maximize scalability (Durango, HyperSDK)
3-5. Avalanche Foundation launches grants programs to strengthen the Avalanche ecosystem’s growth

4. On-chain Performance
4-1. Quarterly performance
4-2. Network activity
4-3. Network security
4-4. Development activity

4. Recap

1. Project Overview

Avalanche is a layer 1 blockchain that introduces "Subnets," customizable blockchains within its ecosystem. Subnets operate as independent networks with their own token economy, rules, and validators. The Primary Network, comprising P-Chain, X-Chain, and C-Chain, relies on the Snowman consensus algorithm and is interconnected with the Subnets.

2. 1Q24 Highlights

2.1 Key highlights

Avalanche Network expands beyond the blockchain ecosystem into real and virtual worlds

• Nexon's MapleStory Universe adopts an Avalanche subnet to expand its Web3 ecosystem
• Alipay+'s D-Store partners with Avalanche to introduce a web3-enabled voucher program
• Citibank tests tokenization of a private equity funds with Avalanche
• Avalanche collaborates with Australia New Zealand Banking Group (ANZ) and Chainlink to settle tokenized assets

Technology updates to maximize scalability

• Launched HyperSDK, a pioneering framework for building high-performance, custom virtual machines (VMs)
• Durango Upgrade to enable interoperability between Avalanche subnets
• Unveiled AvalancheGo roadmap, combining the strengths of monolithic and modular blockchain networks

Avalanche Foundation launches grants programs to strengthen the Avalanche ecosystem’s growth

• Memecoin Rush: Initiated a $1M liquidity mining incentive program
• Codebase accelerator program: Funded 15 web3 projects
• Community grants program with Gitcoin: Launched to support developers in the Avalanche ecosystem
• Icebreaker Program: Launched by the Avalanche Foundation to support LSTfi projects during the inaugural phase

2-2. Key metrics

3. Key Partnerships and Updates

3-1. Expanding the blockchain ecosystem of Nexon’s MapleStory Universe

Source: Avalanche official blog

MapleStory Universe chose the Avalanche Subnet over the existing Polygon Chain to build and expand its Web3 ecosystem. The Avalanche Subnet offers a tailored solution for handling complex game logic and large transactions, demonstrating superior speed and processing power while maintaining compatibility with Ethereum. Nexon also favored Avalanche because of its established services, such as DFK and UPTN, which are already operating on the Subnet. This choice allows users to claim clear ownership of their game assets on the Subnet and utilize the MapleStory IP to create secondary and tertiary works, securing economic incentives.

With the MapleStory Universe, Nexon aims to build a new gaming platform that appeals to both traditional gamers and new Web3 audiences. Angela Sohn, the lead of the partnership, expressed her intention to maximize the utilization of the existing MapleStory IP through various dApps with MapleStory N. She shared her vision of creating a new type of Web3 gaming culture by integrating blockchain technology with gaming. MapleStory Universe plans to launch MapleStory N on the Avalanche Subnet by the end of 2024.

3-2. Alipay Plus D-Store delivers a real-life web 3 experience

Source: Avalanche official blog

Alipay Plus' D-Store is exploring new digital solutions by adopting the Avalanche Subnet to introduce a Web3-based voucher program. This program offers tangible benefits by providing discount vouchers for milk tea, a highly popular product in Southeast Asia. The customization of the Avalanche Subnet allows for the creation of a rewards-specific blockchain environment, enabling trusted reward distribution based on consumer behavior and reward logic. This innovative approach surpasses traditional digital voucher systems, such as discount coupons and points accumulation, and paves the way for more active user engagement and interaction.

Alipay Plus D-Store's Web3 strategy extends beyond offering discounts to maximize user engagement and open up new monetization opportunities. Users can earn vouchers through mini-games and redeem them to purchase discounted milk tea, creating a more interactive experience. Web3 technology makes the interactions between consumers and businesses transparent and trustworthy, enhancing brand loyalty and building sustainable customer relationships. Through this strategy, Alipay Plus D-Store aims to provide an experience for existing customers to familiarize themselves with Web3 and explore the possibilities of the Web3 ecosystem.

3-3. Tokenizing financial assets (RWA) with Citibank and ANZ

Source: Avalanche official blog

Citibank and Australia and New Zealand Banking Group (ANZ) are leveraging the Avalanche Subnet to innovate capital markets and enhance financial services. Citibank is utilizing the 'Spruce' Subnet to explore how blockchain infrastructure, tokenization, and smart contracts can reshape capital markets. Meanwhile, ANZ is using Chainlink's Cross-Chain Interoperability Protocol (CCIP) to facilitate the movement of tokenized assets and payments in multiple currencies on the Avalanche Subnet. These initiatives aim to increase the efficiency of the global financial system, provide transparency, and modernize asset management and trading processes.

Specifically, Citibank experimented with the tokenization of private assets in Q1, building on last quarter's FX trading test on Avalanche. These efforts aim to identify new use cases for traditional financial markets, explore the potential for digital distribution markets, and automate data management and operating models through blockchain technology. On the other hand, ANZ is focusing on enhancing the trust of the global financial system by ensuring seamless movement and settlement of currencies on the blockchain. These initiatives are crucial for promoting the growth of the digital financial ecosystem through the tokenization of traditional financial assets (RWA).

The projects undertaken by Citibank and ANZ demonstrate that financial institutions are increasingly turning to customized networks like Avalanche's Evergreen Subnet to explore blockchain technology and develop new business models. These efforts provide valuable insights into how tokenized assets can evolve and be utilized in the financial industry, potentially disrupting the traditional financial system.

3-4. Technology updates to maximize scalability (Durango, HyperSDK)

Avalanche's latest technological advancements, the Durango upgrade and HyperSDK framework, are significantly enhancing the reach and efficiency of blockchain technology. Durango improves complex smart contract and tokenization capabilities on the Avalanche Mainnet, while HyperSDK enables developers to quickly build custom virtual machines (VMs), allowing blockchains to run faster and operate optimally.

Source: Avalanche official blog

The Durango upgrade integrates Avalanche Warp Messaging (AWM) into the Ethereum Virtual Machine (EVM), facilitating seamless messaging and transactions across Subnets. This integration significantly improves interoperability and efficiency across the platform, enabling financial service providers to process complex transactions and international payments faster and more securely. It also simplifies the transfer and management of tokenized assets, paving the way for deeper integration of blockchain technology into the financial industry.

Source: Avalanche official blog

HyperSDK, on the other hand, is the first framework designed for building high-performance VMs from scratch, making it easier to develop ultra-fast blockchain networks. By removing the complexity of blockchain development and enabling customization for a wide range of applications—including games, financial protocols, and NFT marketplaces—this framework accelerates the market entry of innovative projects.

These technological advancements maximize the scalability of Avalanche's custom Subnets, providing a robust foundation for companies in traditional industries to transform their services with blockchain technology. Durango and HyperSDK are expected to play a pivotal role in realizing Avalanche's vision and accelerating the adoption and evolution of blockchain technology by offering powerful tools to the developer community.

3-5. Avalanche Foundation launches grants programs to strengthen the Avalanche ecosystem’s growth

Avalanche is fostering the multifaceted growth of its ecosystem through a variety of support programs. The 'Memecoin Rush' program offers economic incentives to attract liquidity providers to meme token pools, which is expected to further expand the DeFi market. The Codebase program and Avalanche Community Grants aim to promote the development of innovative dApps, aligning the growth trajectory of the Avalanche ecosystem. Additionally, the Icebreaker Program supports LSTfi projects, enhancing the DeFi ecosystem around liquidity staking. These initiatives collectively strengthen the Avalanche network, driving innovation and adoption in the blockchain space.

4. On-Chain Performance

4-1. Quarterly performance

In Q1, Avalanche generated $7.4M in on-chain fee revenue and $5.9M in net income. While these figures show a decline from the previous quarter, they indicate a positive trend as this marks the second consecutive quarter of profitability. The reduction in revenue and net income is likely due to a decrease in network activity, with fewer transactions compared to the previous quarter.

4-2. Network activity

The average number of transactions on the Avalanche C-Chain in Q1 was 470k, representing a 69.6% decrease from the previous quarter. The spike in daily transactions observed in Q4, driven by the inscription epidemic and increased meme coin transaction volume, was followed by another short-term spike in Q1 due to the meme coin epidemic (COQ, KIMBO, NOCHILL, etc.) that originated with Solana. The number of daily active addresses, which had been declining as the inscription fad waned, also saw an uptick with the Memecoin fad. In response, the Foundation launched a liquidity mining incentive program called "Memecoin Rush" as a strategic effort to boost the Avalanche ecosystem.

The number of Subnets increased by 13 from the previous quarter, reaching a total of 112 at the end of Q1. This growth is likely driven by the increasing trend of Web2 companies adopting Avalanche Subnets to develop Web3 ecosystems. Notably, traditional financial institutions like Citigroup and ANZ are experimenting with tokenized assets on finance-optimized Subnets. Additionally, Nexon's MapleStory Universe is set to launch on a game-optimized Subnet. The rising rate of Subnet creation highlights the accelerating adoption of web3 at scale with the expansion of the Avalanche Subnet.

Avalanche's Total Value Locked (TVL) also returned to an upward trend in Q1. This increase is likely due to the rising price of $AVAX over the previous quarter and increased Avalanche staking driven by Subnet adoption.

4-3. Network security

The number of validators on the Avalanche network has steadily increased, reaching 1,675 validator nodes by the end of Q1. Since Subnets require validation on the C-Chain for verification and need to acquire validator nodes for this purpose, the total number of validators across the network is expected to grow as the number of Subnets increases. Consequently, network security is anticipated to improve further with the increased adoption of Avalanche Subnets.

4-4. Development activity

Avalanche maintains an average of 40 core developers who continue to focus on performance improvements. In Q1, the release of HyperSDK enabled more efficient, enabling more efficient, high-performance VM customization for those building their own networks on top of Subnets.  Additionally, Avalanche is working on enhancing interoperability between Subnets with Durango upgrades on its testnet. Although the number of new contract deployments saw a 244% spike in Q4 followed by a 6.5% decline in Q1, development activity remains robust.

5. Recap

Avalanche demonstrated strong performance in the gaming and financial industries in Q1. With the Durango upgrade and the introduction of new technologies such as HyperSDK, the customization capabilities of Subnets are expected to become even more dominant. Avalanche continues to extend its influence beyond the blockchain ecosystem into the Web2 industry, showing significant growth potential in the tokenization of financial assets (RWA tokenization) and gaming. Through continuous technological innovation and strategic partnerships, Avalanche is poised to contribute to the democratization of blockchain technology.