Thread by @el33th4xor

The Avalanche C-Chain is continuing to burn $AVAX at a fairly rapid clip, having crossed the $1m line recently. It's a good time to reflect on the underlying dynamic. (Thread)

https://twitter.com/lenguic/status/1371984615276216323

A lot of the burn is attributable to DEXes, including @pangolindex, @SushiSwap and @Zer0Dex. These DEXes share a common feature: they constantly offer to buy and sell assets using the Uniswap equation. They are censorship free, and make a market for any asset.

By construction, these DEXes operate constantly provide arbitrage opportunities as prices move. Their bid/ask prices are modified continuously, by anyone, to reflect the market consensus on the price of the assets.

These updates all consume $AVAX as gas.

It's this mechanism that's burning fees continuously and creating natural, organic demand for $AVAX. It's beautiful to watch.

These DEXes have amazing properties -- open to all, censorship proof, continuously provide liquidity, etc -- but one thing they are not is gas efficient. Volatility in the markets leads to updates to DEX prices, which then creates demand for the platform token, in this case $AVAX

This is good for $AVAX holders.

Interestingly, the fact that fees are burned in Avalanche is incredibly nice. Environment-destroying Nakamoto consensus rewards fees to miners, who then have to sell their coins to cover their OPEX, creating downwards pressure on price.

Burning fees in Avalanche creates a virtuous cycle that benefits all coin holders.

And it sure feels nice to use a modern protocol, based on sound science. Hope you all enjoy the system.