The State of Avalanche Report

As web3 stands at the threshold of the next bull market, the latest onchain data suggests that Avalanche may have already crossed through.

Strong liquidity, fresh competition in gaming, outsized token burns, and a surprising foothold for RWAs have all contributed to Avalanche’s healthy, even booming, ecosystem in recent months.

These trends are captured in the State of Avalanche report, which explores the onchain activity, user trends, and protocol competition driving Avalanche’s ongoing growth. Taken in whole, the report provides an overview of the current state of Avalanche’s ecosystem and its place at the forefront of several emerging sectors in web3.

We’ve summarized several key findings below, but encourage you to download the full report for free:

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The State of Avalanche

  • In Q4 2023, Avalanche experienced two massive spikes in onchain activity, peaking at 6.4M transactions on Nov 22 and 6.3M transactions on Dec 19. ASC-20s initiated the first recent spike in onchain Avalanche activity, while a memecoin-driven burst of activity accounts for the second spike.
  • These spikes catalyzed sustained growth, with new user growth surpassing existing active users by 17.7%. This growth in new users has continued unbroken since early Q4 2023, suggesting that new Avalanche users are staying active as the chain gains traction organically.
  • AVAX token burns increased eightfold in Dec 2023 as network activity surged, with cumulative burned AVAX shooting up from 173k at the start of December to 1.46M by the end of 2023. This surge in burned transaction fees was mostly attributed to the rise of inscription-related transactions.

DeFi Activity

  • Avalanche’s TVL began rising in early Q4 2023, peaking at $1.53B on Dec 21, and remaining above $1B since. This rise in Avalanche’s TVL was driven by a number of high-profile protocols, including Benqi, Aave, Struct, and Delta Prime. Benqi Finance played an especially large role, accounting for over 40% of the network’s TVL on December 21, 2023.

  • Trader Joe continues to dominate Avalanche’s DeFi scene, hosting more than 80% of daily swappers at the height of 2023 activity. In the final months of 2023, Trader Joe’s trading volume increased by 578%, attracting more trading volume than all its competitors combined.

  • That said, Avalanche’s DeFi ecosystem is increasingly diverse. Trader Joe’s ownership of overall Avalanche DeFi volume only increased by 4% between the start and end of Q4 2023 – during the same time the DEX’s trading volume increased nearly 6x. This indicates that Avalanche’s DeFi’s ecosystem is rapidly expanding, including, but also beyond, the chain’s leading DEX.

Emerging Trends

Real-World Assets

  • While Avalanche’s overall DeFi activity has gradually declined since the end of 2023, the network’s daily RWA market cap has bucked this trend, increasing 44.7% between Oct 2023 and Feb 2024.
  • The vast majority (98.3%) of RWA volume came from EUROC, with ~$856M transacted in Q4 2023. Overall Q4 volume for VCHF and VEUR lagged far behind, at $7.7M and $6.8M, respectively.
  • Balancer accounted for 31.6% of Avalanche’s RWA activity between Oct 01, 2023. Balancer’s Smart Pool configurations may be especially advantageous for RWAs, given their ability to support multiple tokens with customizable, dynamically adjusted weighting.

Gaming & NFTs

  • Avalanche’s gaming sector is growing as new competitors emerge. As a result, DeFi Kingdoms no longer reigns supreme, although its subnet has managed to sustain high transaction volumes.

  • DeFi Kingdoms accounted for 81% of daily transactions across all observed subnets over the past 4 months, but Shrapnel now leads the pack in daily transactions, and Beam and UPTN are currently vying for the top spot in daily user volume.

  • Overall daily user volume across observed subnets has quadrupled since Q4 2023, growing from 9,994 users in Oct 01, 2023 to 40,497 in Feb 07 2023. And in terms of on-chain activity, January’s total daily transaction volume grew by 36.4% relative to October (19.2M transactions vs. 14.1M).

  • This user and transaction growth is increasingly distributed across new subnets and projects. Between Q4 2023 and now, over 249.4k new contracts were deployed, playing host to roughly 75.3M total subnet transactions as of Feb 02, 2024.

More on-chain analyses and Avalanche ecosystem insights are included in the full report:

Download the State of Avalanche Report

This report was created in collaboration with Flipside community analysts, Ali Taslimi and cloudr3m.
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