AVAX is trading below $65, but the large DeFi network ecosystem and DApp usage reflect its strong fundamentals.
Avalanche (AVAX) price dropped over 30% in April, but despite the bearish price action, the smart contract platform remains a top contender in the decentralized application (DeFi) landscape due to its scalability, low-cost transactions, and large reach. decentralized finance.
AVAX token/US dollar on FTX. Source: Trading View
The Ethereum Virtual Machine (EVM) compatible network is unique in that it does not experience performance bottlenecks such as high transaction fees and network congestion.
Avalanche has accumulated over $9 billion in total value locked (TVL) by offering a Level 1 Proof-of-Stake (PoS) scaling solution. This indicator is extremely relevant as it measures the deposits in the smart contracts of the network. For example, the BNB network, which has been operating since September 2020, owns $10.4 billion worth of TVL.
Positive news can create price support
Even though the price of the AVAX token has suffered and TVL has lagged behind some of its peers, investors remain optimistic based on the fundamentally positive developments in April.
According to an April 14 Bloomberg report, Ava Labs, the lead developer of the Avalanche blockchain, has raised $350 million from investors. The deal valued the company at $5.25 billion and according to DappRadar, Avalanche has about 100 active applications ranging from decentralized finance to non-fungible token (NFT) markets and games.
In early April, the entities behind the algorithmic stablecoin Terra USD collectively bought AVAX for $200 million for their Terra USD strategic reserves. Do Kwon, co-founder of Terra, noted the steady growth of the Avalanche ecosystem and large user base.
Despite the positive news, AVAX’s price remains 53% below its all-time high of $147, resulting in a market cap of $18.4 billion. In comparison, Terra (LUNA) has a market capitalization of $31.0 billion and Solana (SOL) has a total market cap of $33.3 billion.
The total locked value is down 10.5% but follows the general market downtrend.
The core DApp Avalanche metric has strengthened over the past 30 days as the network’s TVL increased to 121 million AVAX.
Avalanche is completely blocked, AVAX. Source: Defillama
The chart above shows how Avalanche DApp deposits peaked at 132.9M AVAX on March 14 but plummeted in early April to their lowest level since January 3. As a result, the current TVL of $8.5 billion is down 10.5% over the past 30 days. .
By comparison, Solana’s TVL (SOL) fell 9.5% over the same period to reach $4.8 billion. Similarly, Ethereum smart contract deposits fell from $88.3 billion to $80.1 billion over the same period, down 9%.
To confirm whether the drop in TVL in Avalanche is problematic, DApp usage metrics should be analyzed. Some DApps, like games and collectibles, don’t require large deposits, so TVL doesn’t matter in these cases.
Avalanche DApps data for 30 days. Source: DappRadar
As revealed by DappRadar, the number of Avalanche network addresses interacting with decentralized applications decreased by 14% on April 28 compared to the previous month. By comparison, the Solana network saw a 60% increase in user numbers while Ethereum stayed the same.
Strong DeFi Avalanche Use Case Still Positive
Even though TVL Avalanche has suffered the most compared to similar smart contract platforms, the DeFi segment has seen stable network usage. For example, Trader Joe’s 180,830 active addresses are the addresses of the leading DeFi application for Ethereum, MetaMask Swap, which has 116,210 active users.
The data above shows that Avalanche is holding its own against competing chains. With the price of AVAX down 29.5% in 28 days, investors should not panic as the decentralized application network has released reliable data on TVL and DApp usage.
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