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Proof-of-Stake (PoS) blockchains, with Avalanche (AVAX) often leading the pack, recently shared a post on social platform X (formerly known as Twitter) highlighting a sharp decline in network usage over the past week.
AVAX Comments
Designed to ensure the sustainability of Smart Chains, the C-Chain saw a total of 7.66 million transactions last week, which is a 16.88% decrease compared to the number of transactions from the week before.
With fewer transactions, there was also a 2.74% decrease in the amount of gas used on the network last week. It’s important to remember that transactions tied to smart contracts tend to require more gas due to their complexity.
This suggests that decentralized applications (dApps) based on Avalanche have been experiencing fewer transactions.
In fact, this decline dates back to December. Daily transactions on the C-chain have plummeted since the inscription craze that took place in December. As shown in the graph below, Avalanche hosted over 5 million transactions between December 15 and December 25.
However, within two months, the situation reversed, and the daily transaction count dropped to as low as 200,000 on February 6. This indicates that the positive trend AVAX experienced in 2023 took a hit in 2024.
Considering the current outlook, Avalanche may have lost all the revenue generated from transaction fees.
Moreover, according to data provided by Avascan, there was a notable decrease in the number of AVAX due to the reduction in transaction volume last week. This drop in deflationary pressure could potentially be the main reason behind the 1.1% weekly decrease in the cryptocurrency’s price.
While all this was happening, today the price of AVAX began to rise, increasing by nearly 4% to $35.5. Along with the price increase, there was also a rise in trading volume, which surged by 44% to $516 million.
Current Status of AVAX
According to Coinglass data, as the spot price fell, the value locked in AVAX Futures Open Interest also decreased.
As of the time of writing, the Open Interest (OI) in AVAX Futures contracts was valued at $193 million, which also saw a decrease of about 5% compared to the previous week. The drop in OI coincided with the price decrease, reflecting the downward trend in AVAX.
On the other hand, the number of investors acting on a bearish expectation is increasing. The number of short positions taken for AVAX continues to rise compared to long positions, supporting the downward trend.
