79% user surge in last 7 days
Avalanche DeFi newcomer Teddy Cash is making some serious noise as we enter the final quarter of the year. The decentralized borrowing protocol with interest-free loans on Avalanche has seen its total value locked rise from just over $5 million to over $100 million in under 2 weeks.
Week over week, Teddy Cash attracted almost 80% more unique active wallets, driving users up to 2,040 in the last 7 days. Those wallets completed over 18,000 transactions which drove $52.9 million in volume. Indicating that while Ethereum has the biggest TVL, value flows to other blockchain protocols as well. Avalanche is one of the biggest upcoming contenders in that space.
Looking at the all-time data, we see an uptick in activity starting around the 22nd of September. The number of unique active wallets interacting with the platform jumped sharply from around 80 to over 850 a few days later. This coincides with several staking pools becoming available on alternative Avalanche DeFi platforms. A normal tactic employed by finance platforms to lure users into first purchasing the platform’s native token and then staking that for rewards. More importantly, to provide much-needed liquidity.
Recently, Trader Joe, another DeFi platform on Avalanche started stealing the headlines but as the ecosystem quickly evolves on the network it’s clear there will be an abundance of choices for users in the near future.
What is Teddy Cash?
At its core, Teddy Cash is a decentralized borrowing protocol that allows you to obtain 0% interest loans against AVAX used as collateral. In addition to the collateral, the loans are secured by a stability pool containing TSD and by fellow borrowers collectively acting as guarantors to be enacted as a last resort. In the short term, the platform intends to work towards establishing the TEDDY token throughout the ecosystem, making it ultimately deflationary. Regarding governance of the platform, the platform imagines a DAO where TEDDY stakers could decide to use funds from the treasury to invest in projects on Avalanche, for example, almost acting like a hedge-fund.
How Teddy Cash loans work
There are a few loan options available in the growing Avalanche ecosystem. Benqi is the largest lending protocol by TVL. Vee is an up-and-coming competitor. However, Teddy Cash focuses on bringing a highly decentralized and capital-efficient borrowing protocol to the Avalanche ecosystem. The table below shows how using capital-inefficient protocols can cause losses in the region of 60% to 70% upon liquidation. Liquidations are automated processes that close a loan. Assuming you would deposit 100 AVAX into each of the protocols, taking out the biggest loan possible. A collateral ratio being on the verge of liquidation means a small price drop could cause it to tip.
Finance projects based on the Compound protocol can only repay half the debt in a single transaction. With funds taken from deposited collateral, plus a 10% fee for the liquidator. Leaving you with the rest of your collateral and the other half of your debt still needing to be paid.
Teddy Cash offers the highest capital efficiency on Avalanche currently, as seen in the table above. Liquidations rely on speed. If the price of the underlying collateral falls, it’s important to liquidate the position as fast as possible. Fast liquidations reduce the risk of collateral asset prices dropping further before the debt is settled. Some protocols rely on auctions or partial liquidations, where a part of the collateral is swapped to repay a part of the debt. Should the price drop continue another liquidation is made.
Teddy Cash does it all in one step. Debt is repaid from the stability pool and any liquidated collateral is shared among stability providers. Only charging a one-time fee and a liquidation reserve, that you will get back upon settling your debt.
Even the largest avalanche is triggered by small things…
According to the Q3 Dapp Industry Report by DappRadar, the Avalanche ecosystem has been making some serious moves lately. Specifically in the DeFi arena. Whilst Ethereum is still the leading blockchain in terms of TVL, the progress made by Avalanche was exemplary. The total value locked in the 40 active dapps on the platform has increased from $191 million back at the start of July to a whopping $4 billion at the time of writing.
As mentioned, other blockchains are throwing their hat into the growing DeFi dapp sphere. Harmony is being championed by ViperSwap and the gamified investment platform DeFi Kingdoms. Additionally, to some extent SushiSwap, as it operates cross-chain. NEAR has Ref Finance and Skyward Finance, while Tezos has Smartlink and Plenty propping up its finance offers. Moreover, none are progressing as quickly as the finance dapps on Avalanche in regards to building steady user bases and collecting value.
The Avalanche blockchain is one of the first smart contract platforms able to offer a combination of confirming transactions in under one second while supporting the Ethereum development toolkit. Moreover, the Avalanche protocol is attempting to cherry-pick the best aspects of current distributed ledger technology and place it within a tidy frame. By implementing the innovations of Ethereum and the EVM, and respecting age-old systems while changing the core mechanics to achieve faster, lighter, and cheaper running costs. Enabling dapps like Teddy Cash to flourish. Observing the growth of Avalanche and its dapps will be fascinating during quarter four and beyond.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, ADA, MATIC, SAFEMOON, HEX, LINK, GRT, CRO, OMI, USDT, SOL, SHIBA INU, AVASTR, RAY, BOSON, AND OCEAN