Polygon Set To Bring an Overhaul to DeFi With New Blockchain ‘Avail’

Key Insights:

• Polygon’s new blockchain Avail went live last week.
• Avail being a modular blockchain has been built to scale other blockchains.
• MATIC has remained unmoved since the launch of the new blockchain.

The Decentralised Finance (DeFi) space was one of the fastest-growing aspects of the crypto industry up until before the May crash wiped out billions of dollars from DeFi protocols and blockchains.

However, with the hype of web3 picking up pace again, Polygon has brought forward a way to make DeFi’s growth faster than before.

Polygon launches Avail

On June 28, the Avail Testnet went live, and users and developers were introduced to a new form of blockchain which focuses on scaling the chains by not extending them but breaking them apart from within.

In a typical blockchain, the opportunity for scaling is dominated by the already existing critical function that the chain carries. These functions include execution, settlement, and data availability, and as these are all being performed at once, the chain takes on load, which results in the slowdown.

Avail intends to solve this particular issue by separating the chain for all three functions.

Being a modular blockchain, Avail plans on enabling separate chains which would dedicatedly focus on just one function, i.e., one chain for execution, one chain for settlement, and another one for data availability.

Although, at the moment, Rollups and Layer-2 options are available for blockchains looking to scale them, Polygon itself being one of them.

But these layers are primarily limited to the blockchain they are built upon, creating special conditions that must be fulfilled in order to connect with other chains.

Avail also plans on solving this issue as, in the long term, it will become the base layer for thousands of chains built atop it, enabling trustless bridges between blockchain worlds.

Furthermore, Avail also provides a step function increase in throughput and reduction in costs for the existing Layer-2 options, making it compatible with every chain.

Also discussing the doubts about overloading, Avail explained that as the blockchain has been designed to perform just one function, it is capable of supporting the storage needs of hundreds of blockchains at once. Adding to the same, the announcement read,

“While the benefits of outsourcing data availability may not seem obvious at first, the impact Avail will have on the space is difficult to understate. Because other layers aren’t required to store transactions that have taken place on their chains, execution environments can make necessary optimizations, and more easily experiment with improvements. Avail will only increase the rapid pace of progress we’ve already seen in the Web3 community as it makes experimentation easier.”

The DeFi space certainly needs it now more than ever as the blockchains are preparing to rise once again.

DeFi To Make a Return?

As stated above, the crash of May 2022 was disastrous for the crypto community as it impacted not just investors but also blockchains as people pulled their investments.

The DeFi chains were no exception either, as, within the span of a month, the total value locked (TVL) on it declined from $231 billion to $112 billion.

Losing another $40 billion over the last two months, the combined value of all DeFi protocols currently stands at $77.16 billion.

Ethereum, the biggest DeFi chain, which alone was worth over $100 billion at one point, currently holds only $48 billion in TVL.

Naturally, Polygon took a hit as well. The TVL on the third biggest chain by protocol sank from $4.13 billion to billion today. However, protocols on the chain continue to live on despite the losses.

But Avail plays an important role here as well since any chain can plug into it and scale itself, and since the hype surrounding web3 is rising again, chains can make use of Avail and grow much more quickly than they did initially.

What About MATIC, Though?

Since the launch of Polygon’s Avail over a week ago, the native token of Polygon – MATIC has remained unmoved. Trading at $0.52 at the time of writing, MATIC is only 3% above where it was on June 28.

This shows that the launch had no effect on the trajectory of the altcoin’s price action. This is because MATIC is following the broader market’s trend in its attempt to recover from the April crash, since which it lost almost 80%.

Up by 52% over the last 20 days, the cryptocurrency is only now exhibiting some signs of sustainable recovery, with the Relative Strength Index (RSI) lingering in the bullish zone.

Suppose MATIC can manage to maintain its rise and prevent a drop back below the neutral mark. In that case, the altcoin will have an opportunity to climb back to $1 by the end of this month.