Avalanche DeFi head warns of mounting risk on Ethereum blockchain, reveals AVAX endgame

• Avalanche protocol’s DeFi head said in a recent interview that risk is mounting with a concentration of DeFi activity in Ethereum Layer-2 solutions. 
• An attack on Ethereum Layer-1 could impact all on-chain systems and assets on Layer-2 solutions. 
• Luigi DeMeo believes the war for dominance among Layer-1 solutions is on and Avalanche is competing with Ethereum. 

Ethereum blockchain Layer-1’s dominance and adoption increased in 2023 with a rising number of DeFi protocols and apps joining as Layer-2 and Layer-3 solutions.

While this is perceived as a bullish sign for ETH adoption, Avalanche network’s DeFi head Luigi DeMeo argues that it concentrates risk on the Ethereum chain. 

DeMeo explains that the war for dominance among Layer-1 solutions is on and Avalanche C-Chain tackles the concentration risk more effectively than Ethereum. 

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Avalanche competes with Ethereum blockchain for Layer-1 dominance

Avalanche C-Chain, the blockchain that enables the creation of Ethereum-compatible smart contracts, tackles concentration risk more effectively than the Ethereum blockchain, according to DeMeo. The DeFi head explains that the rapid expansion of projects on Layer-2 and 3 has increased the concentration risk on the Ethereum blockchain. 

DeMeo told DeFi researcher (Ignas @DefiIgnas) that a bug or an attack on the Ethereum Layer-1 chain puts the assets on Layer-2 solutions at risk. This challenge associated with the ETH blockchain is tackled by the use of three separate chains, 

• C-Chain is EVM compatible for smart contracts with fast finality.
• P-Chain is where validation occurs.
• X-Chain is a UTXO-based chain used for fund transactions. 

The three chains mitigate risk concentration and according to DeMeo, this makes Avalanche an Ethereum competitor. 

Avalanche vs. Ethereum, Layer-1 wars continue

The war for dominance and higher market share intensifies as Avalanche continues to tackle the challenges presently faced by the Ethereum blockchain. 

Luigi DeMeo believes welcoming multiple Layer-1 solutions provides choice, more fault tolerance and competition. This spreads the risk among several protocols and safeguards user assets from being compromised by an attack on a Layer-1 blockchain. 

Despite DeMeo's optimism, at current price of $14.21, AVAX total market capitalization totals $4.8 billion, just a a small fraction of Ethereum's $223 billion market cap.

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