A recent report from VanEck analysts sparked concerns in the cryptocurrency community as it revealed a troubling trend for altcoin Avalanche (AVAX). The report points to a significant decline in user activity and development across all of Avalanche’s blockchains and sheds light on the challenges the platform is currently facing. Here are the details…
There is user migration in the altcoin project
One of the most alarming findings of the report is that Avalanche experienced a significant 34% decline in its daily active user base in September compared to August. In addition, there was a significant 45% drop in fees generated on the network. This marks one of the most significant declines among Smart Contract Platforms (SCPs) tracked by VanEck. Another concerning aspect highlighted in the report was the sharp decline in the number of weekly active developers on Avalanche. Because this number decreased to only 28. This figure is in stark contrast to Solana’s 165 and Polygon’s 125 active developers. This represents a 34% month-on-month decline and a staggering 70% drop compared to September 2022.
Despite these challenges, Avalanche continues to make strides in the technological field. The platform recently released updates to its software development kit (SDK), known as “Hyper SDK,” allowing users to create blockchains capable of processing 143 thousand transactions per second (TPS). This achievement significantly exceeds Solana’s 50k TPS claim and dwarfs Ethereum’s estimated 200-300 TPS. Avalanche’s long-term strategy is built on building a multi-blockchain network powered by its native AVAX coin. This strategy is based on the development of an SDK designed to encourage others to build Blockchain on the Avalanche network in order to attract new ideas, users and fees.
The rise of C-Chain
It’s worth noting that the Avalanche’s fortunes have experienced 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 had more than $10 billion in total value locked (TVL) across its smart contracts, generated $1 million in daily fees, and had over 100,000 daily active users.
However, by September 2023, these impressive numbers have decreased significantly. TVL dropped to $500 million, daily fees dropped to $11,000, and daily active users dropped to 34,000. This decline can be attributed to a combination of factors such as the bankruptcy of Three Arrows Capital, the lead backers of altcoin Avalanche, and the lack of product diversification that became evident during the bear market.
What’s next for the Avalanche?
Avalanche’s recent difficulties 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 competitor in the SCP market.
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