Overview
Pangolin launched in February 2021 as one of the first automated market makers (AMMs) on Avalanche's C-Chain. As a straightforward Uniswap V2 fork, Pangolin offered the same constant-product AMM model familiar to Ethereum DeFi users, but with Avalanche's faster finality and lower transaction costs. The protocol was initially community-governed from launch, distributing its PNG token through liquidity mining incentives.
During the 2021 Avalanche DeFi boom, Pangolin was the dominant DEX on the network, peaking at over $1 billion in TVL and capturing the majority of swap volume. The Avalanche Foundation's "Avalanche Rush" incentive program funneled significant liquidity to Pangolin and other Avalanche protocols. However, the emergence of Trader Joe in mid-2021 — with superior UX, aggressive tokenomics, and a broader product suite — rapidly eroded Pangolin's market position.
By 2023-2024, Pangolin had lost the vast majority of its TVL and volume to competitors. The protocol attempted to expand to other chains (Flare, Hedera) and introduced Pangolin V2 with concentrated liquidity features, but these efforts failed to reverse the decline. Pangolin remains operational but is a cautionary example of how first-mover advantage in DeFi can evaporate quickly without sustained innovation.
Smart Contracts
Uniswap V2 Fork
Pangolin's core contracts are a direct fork of Uniswap V2, one of the most battle-tested AMM codebases in DeFi. The constant-product formula (x * y = k) is simple, well-understood, and has been deployed across hundreds of chains. The code itself carries minimal novel smart contract risk.
Pangolin V2 Upgrades
Pangolin introduced upgrades including concentrated liquidity features and Elixir (a managed liquidity layer). These additions layer new code on top of the proven Uniswap base, introducing some additional smart contract surface area. The upgrades were audited but have seen limited real-world usage, meaning they lack the extensive battle-testing of the V1 contracts.
Multi-Chain Deployments
Pangolin deployed on Flare Network and Hedera Hashgraph in addition to Avalanche. Multi-chain deployments increase code surface area and create maintenance burden for a shrinking development team.
Security
Audit History
Pangolin's core contracts inherited the security properties of Uniswap V2, which has been extensively audited and battle-tested. Pangolin-specific additions have undergone security reviews, though the audit coverage for newer features (concentrated liquidity, multi-chain deployments) is less comprehensive.
No Major Exploits
Pangolin has not suffered a major smart contract exploit, which is largely attributable to the simplicity and proven nature of the Uniswap V2 codebase. The protocol's declining TVL also reduces the economic incentive for attackers.
Operational Concerns
The shrinking development team and reduced resources raise concerns about ongoing security maintenance. Unpatched vulnerabilities in less-used features or multi-chain deployments could emerge as the team's capacity diminishes.
Liquidity
Severe Decline
Pangolin's TVL has collapsed from over $1 billion at peak to under $10 million. Most major trading pairs have migrated to Trader Joe, LFJ (Liquidity Book), or are routed through aggregators that bypass Pangolin for better execution. The liquidity that remains is thin and concentrated in a few legacy pairs.
Incentive Exhaustion
Early liquidity was driven by aggressive PNG emissions. As emission rates declined and PNG's price collapsed, the incentive to provide liquidity disappeared. Without competitive yield, LPs moved to higher-returning protocols.
Multi-Chain Fragmentation
Spreading liquidity across Avalanche, Flare, and Hedera further fragments an already thin liquidity base. None of the non-Avalanche deployments have achieved meaningful traction.
Adoption
From Dominant to Marginal
Pangolin's adoption story is one of dramatic decline. From being Avalanche's top DEX with majority market share, the protocol now captures a negligible fraction of on-chain volume. Daily active users have declined proportionally, with most Avalanche traders using Trader Joe or aggregators like Paraswap and LiFi.
Community Erosion
The Pangolin community, once vibrant with governance participation and development contributions, has significantly contracted. Discord and social media activity is minimal compared to the 2021 peak. The departure of key team members has further dampened community confidence.
Multi-Chain Expansion Failure
Expansion to Flare and Hedera was intended to find new markets, but neither chain has developed a meaningful DeFi ecosystem. These deployments have not materially improved Pangolin's adoption metrics.
Tokenomics
PNG Token
PNG has a fixed maximum supply of 230 million tokens, distributed primarily through liquidity mining. The token provides governance rights over the protocol. PNG's price has declined over 95% from all-time highs, reflecting the protocol's diminished relevance.
Emission Schedule
The liquidity mining emission schedule has progressively reduced PNG distribution. While lower emissions reduce sell pressure, they also reduce the incentive for new liquidity providers — creating a vicious cycle of declining TVL and declining token value.
No Fee Accrual
PNG lacks a meaningful fee-sharing or buyback mechanism. With minimal trading volume generating minimal fees, there is little revenue to distribute or burn. The token's value proposition is limited to governance over a declining protocol.
Risk Factors
- Severe adoption decline: TVL and volume have collapsed over 95% from peak levels.
- Team attrition: Key developers and contributors have departed, raising sustainability concerns.
- Competitive obsolescence: Trader Joe and other Avalanche DEXs offer superior products and liquidity.
- PNG token collapse: Over 95% decline from ATH with no clear catalyst for recovery.
- Multi-chain fragmentation: Expansion to low-activity chains dilutes focus without adding meaningful value.
- Avalanche ecosystem dependency: Avalanche DeFi overall has contracted, reducing Pangolin's addressable market.
- No differentiation: As a basic Uniswap V2 fork, Pangolin offers nothing that competitors don't do better.
Conclusion
Pangolin is a textbook example of DeFi's first-mover disadvantage. Being first to market on Avalanche attracted initial liquidity but couldn't sustain it against better-executed competition. The protocol's reliance on a basic Uniswap V2 fork without meaningful differentiation left it vulnerable to Trader Joe's superior product execution, and the aggressive PNG emissions that initially attracted liquidity became the protocol's undoing as token value collapsed.
The 3.6 overall score reflects acceptable smart contract security (inherited from Uniswap V2) dragged down by severe declines in liquidity (3), adoption (2), and tokenomics (3). Pangolin is not dead, but it is in hospice. New users should direct liquidity and trading to more active Avalanche venues. Existing PNG holders face poor prospects absent a dramatic protocol reinvention that shows no signs of materializing.