Avalanche (AVAX) Faces Significant Decline in User Activity and Development: VanEck
A recent report from VanEck analysts has raised concerns within the cryptocurrency community as it reveals a troubling trend for Avalanche (AVAX). The report points to a significant decline in user activity and development across all of Avalanche’s blockchains, shedding light on challenges that the platform is currently facing.
User Exodus and Decreased Fees
One of the most alarming findings of the report is that Avalanche experienced a drastic 34% decrease in its daily active user base in September when compared to August. Additionally, the fees generated on the network saw a substantial drop of 45%, marking one of the most significant declines among Smart Contract Platforms (SCPs) tracked by VanEck.
Developers Migrating to Competing Platforms
Another concerning aspect highlighted in the report is the sharp drop in the number of weekly active developers on Avalanche, which plummeted to just 28. This figure stands in stark contrast to Solana’s 165 and Polygon’s 125 active developers. This represents a 34% decrease on a monthly basis and a staggering 70% decline when compared to September 2022.
Avalanche’s Technological Innovations
Despite these challenges, Avalanche has been making strides on the technological front. The platform recently released updates to its software development kit (SDK) known as “Hyper SDK,” enabling users to create blockchains capable of processing a remarkable 143 thousand transactions per second (TPS). This achievement significantly surpasses Solana’s 50 thousand TPS claim and dwarfs Ethereum’s estimated 200-300 TPS.
Avalanche’s long-term strategy is built around creating a multi-blockchain network powered by its native AVAX coin. This strategy relies on the development of an SDK designed to incentivize others to build blockchains on the Avalanche network, with the aim of attracting new ideas, users, and fees.
C-Chain’s Rise and Fall
It’s worth noting that Avalanche’s fortunes have seen significant fluctuations in the recent past. The platform achieved notable success with its self-developed Ethereum Virtual Machine (EVM) blockchain, known as C-Chain, in the fall of 2021. At its peak, C-Chain boasted more than $10 billion in total value locked (TVL) in its smart contracts, generated $1 million in daily fees, and boasted over 100,000 daily active users.
However, by September 2023, these impressive figures had dwindled significantly. TVL dropped to $500 million, daily fees plummeted to $11 thousand, and daily active users dwindled to 34 thousand. This decline can be attributed to a combination of factors, including the bankruptcy of Avalanche’s chief backers, Three Arrows Capital, and a lack of product diversification that became evident during the bear market.
The Road Ahead for Avalanche
Avalanche’s recent challenges are indicative of the highly competitive and rapidly evolving cryptocurrency landscape. The platform’s innovative technology and ambitious multi-blockchain strategy suggest a potential path to recovery. However, it will be crucial for Avalanche to address the decline in user activity and developer engagement, while also diversifying its product offerings to remain a strong contender in the SCP market.
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