CoinSpot
If you missed the golden days of high yield and low fees on Ethereum, then Avalanche has you covered. It is cementing itself as one of the DeFi hubs for low-cost, high-yield farming.
The Ethereum competitor hosts around US$1.4 billion of assets (TVL), making it the ninth largest economy in cryptocurrency.1
Despite the success, you can still find APRs in excess of 100% on leading asset pairs, with fees less than a dollar.
Right now you will find this extra yield in blue-chip services including Aave, Curve and SushiSwap or with Avalanche-only protocols such as Trader Joe, Snowball and Pangolin.
Using Avalanche is easy enough, but even seasoned Ethereum users need a few more details before jumping in.
Here's what we will cover today
The reason that Avalanche has protocols like Aave and Curve is that it is compatible with the Ethereum Virtual Machine (EVM).
This basically means that any application that runs on Ethereum can also run on Avalanche. But for a fraction of the fees.
Ethereum fees are still around $10 for a standard Uniswap transfer, making it prohibitively expensive for most users.2
On Avalanche the same type of transaction costs around 50c.
Avalanche is able to do this because it uses a different consensus algorithm from Ethereum, while still maintaining the same application layer.
So in some ways, Avalanche is a cheaper and faster version of Ethereum.
Avalanche Rush is one of the biggest incentive programs in history, and has allocated $180 million of additional capital to yield farms and other DeFi services on Avax since 2021.
Here's a look at some of the major players in the Avalanche ecosystem and the yields they are currently offering. All yields were last updated on 25 November 2024, but are likely to change.
LFJ (previously Trader Joe) is the largest full-service DeFi protocol on Avalanche, offering an exchange, liquidity pools, farms, JOE staking and even single asset lending. It is Avalanche's biggest DeFi platform.
You can earn up to 16.6% yield on pools on LFJ, or up to 6.19% stablecoin yield (USDC).
Pangolin is an Avalanche AMM like Uniswap that lets you deposit liquidity and earn yield in return.
You can earn up to 1988% on a WBTC.E/USDC pair on Pangolin, with yield paid in PNG tokens.
You can currently get up 1460% on Uniswap on a USDC/SHRAP pool.
You're going to need to pay attention here.
Once you're set up, Avalanche is just as easy to use as Ethereum. Metamask and dapps work the same way.
But getting set up takes a bit more effort than usual.
You're best off using the official Avalanche guide to get started.
That being said, I will highlight some of the key points you need to know.
Avalanche uses a multichain architecture, so sending funds to the wrong chain could see them lost forever.
There are 2 main chains you need to know about for now.
This is where you will spend most of your time.
It is the contract chain and is used to interact with Ethereum-compatible smart contracts.
It essentially hosts dapps and tokens, allowing you to work your DeFi magic.
Addresses on the C-chain start with a "0x" which is an easy way of making sure you're in the right place.
The official Avalanche Bridge (AB) supports token transfers from Ethereum to Avalanche's C-chain. This is an easy and safe way to transfer tokens across, as it only lets you transfer compatible tokens (basically, ones that exist on both Ethereum and Avalanche).
The catch though is that you will need to pay gas fees on Ethereum, which are currently quite expensive.
On the other hand, if you transfer over $75 of assets, you will receive some free AVAX to help pay for gas fees once on Avalanche.
Another way to transfer assets to the C-chain is to use an exchange that supports C-chain withdrawals.
C-chain compatible exchanges include:
Using an exchange instead of the bridge to get assets onto AVAX is much cheaper as you avoid the Ethereum network altogether. Think of $50 versus 50c.
Remember you will need to specify the C-chain, as AVAX can also be withdrawn to the X-chain (more on that below).
Remember: C-chain addresses start with a "0x"!
The X-chain is where AVAX coins live. AVAX is the native coin of the network and equivalent to ETH on Ethereum or ADA on Cardano.
It is used to pay for gas fees and can be staked for rewards.
To use Avalanche, you will need to maintain your AVAX balance on the X-chain. If you run out, you will be unable to pay for gas and need to send more AVAX to your X-chain account.
Once again, you can use an exchange to do this and avoid fees.
Several support X-chain withdrawals, more so than C-chain withdrawals. Although I expect the gap will rapidly decrease between now and the end of the year if Avalanche's success continues.
Remember, if you use the Avalanche Bridge and transfer over $75 of assets or more, then Avalanche will donate some AVAX into your X-chain address to help pay for your first round of fees.
Not bad at all, but given the fees on Ethereum, I chose to deposit AVAX via an exchange.
Understandably, 2 chains might sound like a headache and be putting you off.
So let's recap the key points:
X-chain
C-chain
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