- Avalanche user activity and revenue grew in Q2.
- The DeFi and NFT branches declined.
Home to over 350 decentralized applications (dApps), a new one report from Messari revealed that Proof-of-Stake (PoS) smart contract platform Avalanche [AVAX] saw growth in its key ecosystem metrics and some corresponding small declines in Q2 2023.
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Titled “State of Avalanche Q2 2023,” the on-chain analytics firm found that the 90-day period under review was marked by an increase in Avalanche’s user activity and revenue, new product launches, and a number of key partnerships.
Avalanche and its many growth stories
The Avalanche network consists of several chains, including the Primary network, including the P-Chain, X-Chain and C-Chain. The P-Chain is responsible for all validator and subnet level operations. This chain functions as the primary chain in the network and is responsible for coordinating and controlling the other chains. The C-Chain is an implementation of the Ethereum Virtual Machine (EVM), while the X-Chain is responsible for operations on digital smart assets known as Avalanche Native Tokens.
Messari considered user activity in the C-Chain and 15 Avalanche subnets and found that the number of daily average active addresses increased by 107.8% quarter-over-quarter (QoQ). By the end of the first quarter, Avalanche recorded 30,097 daily average active addresses. By the end of Q2, this rose to an all-time high of 79,167.
Source: Messari
In terms of the number of trades executed daily on Avalanche in the second quarter, Messari noted that the C-Chain saw a substantial 162.2% QoQ increase. The C-Chain ended the 3-month period with a daily average of 1.58 million transactions. This was “largely due to an increase in stablecoin liquidity and LayerZero,” Messari stated.
Source: Messari
On the other hand, transactions between subnets fell by 33.4%. This decline was primarily driven by a significant 31.7% drop in transactions on the DFK (DeFi Kingdoms) subnet.
In network finance, Avalanche posted a quarter-over-quarter revenue growth of 173.1%. This was due to an increase in the chain’s user activity during that period. Similarly, average transaction costs across the chain increased by 5.9%, contributing to the astronomical revenue growth.
“The revenue increase was partly due to a 5.9% increase in transaction costs, but was mainly due to the activity generated by LayerZero. In addition, the revenue spike in late April was driven by XEN Crypto, a free-to-mint token known for clogging networks. Since Avalanche burns 100% of sales (gas costs), the increased activity contributed to AVAX’s burn and increase in token value,” Messari found.
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Source: Messari
Turning to its DeFi vertical, Avalanche recorded a 19.4% decline in its total value locked (TVL) denominated in US dollars. In contrast, AVAX-denominated TVL increased by 9.7%. According to Messari, this suggested that “new capital inflows drove TVL versus asset price increases in USD.”
Finally, in terms of the NFT ecosystem, there was a 38.3% shortfall in secondary sales volume and a 50% drop in unique on-chain NFT buyers in the second quarter.
