AVAX prices have risen significantly since the start of 2023, but a sustained rally in the DeFi component is needed to maintain the current bullish momentum.
has had a meteoric start to 2023, with a 98% rise in 30 days. Traders are now interested in whether the rally will continue into February. AVAX Revenue Year-to-Date in 2023 Exceeds Bitcoin Revenue
A new reason for the rise of AVAX can be attributed to the announcement of Amazon’s partnership on January 11. This partnership aims to make it easy to deploy nodes on the Avalanche blockchain using Amazon Web Services (AWS). Ava Labs, which supports the Avalanche ecosystem, hopes the partnership will increase the use of blockchain by businesses and governments.
AVAX prices have benefited from the news, although some analysts predict the move could be a bullish trap.
Let’s get down to the basics and see if chain network activity supports the new AVAX rally.
AVAX Fees From DeFi Rise
AVAX price is not the only indicator that rose after the AWS news. On January 14, the Avalanche network received an annual AVAX fee of $31,218. The cost increase compared to the last 30 days is 59%, indicating that the positive price increase helps to boost the cost received by the network.
Avalanche’s fee base has increased significantly, but it still lags behind major EVM-compatible blockchains such as Ethereum and Binance Chain.
, Optimism (OP), Polygon
In the last 30 days, Avalanche generated the ninth highest fee among all blockchains.
In particular, Polygon’s competitor layer 2 costs almost four times more compared to Avalanche. Despite the incredible growth experienced by thaAvalanche in 2023, the network will have to raise its fees significantly to catch up with more blocks.
Addresses and active users are down
A sign of blockchain health is the number of addresses, users, and active transactions. Despite reaching 1.84 million transactions on January 18, Avalanche’s transaction numbers are down.
A similar downward trend can be seen when looking at active addresses in the Avalanche ecosystem. Active addresses represent transactions made in a unique wallet on a given day. After reaching a year-to-date peak of 54,978 active addresses on January 31, only 34,624 active addresses were registered the following day.
The downward trend in Avalanche activity has led to further isolation among other blocks. According to TokenTerminal, Avalanche has an all-time high (ATH) of 131,000 daily active users, which is smaller than Polygon’s ATH of 737,000. Avalanche’s daily user count is far from its all-time high, with only 44,000 registered users.
For the blockchain to generate sustainable fees, daily active users must join the network.
AAVE dominates Avalanche DApps
Active users of Avalanche prefer to use Aave.
in the AVAX block. Over 36% of all Avalanche transactions flow through the Aave protocol. Investors have bet more than $353 million in the Avalanche version of Aave, the second most popular protocol by verified Total Key Value (TVL), Trader Joe’s decentralized trading It is far beyond Place (DEX).
Aave and Trader Joe’s lead the Avalanche blockchain, but a look at DEX activity on other blockchains shows lower trading volumes. DEX volume is directly related to the commission received by the protocol.
DEX activity on Ethereum leads with a daily trading volume exceeding $1.6 billion, while Avalance only sees around $104 million.
Avalanche has grown significantly since the AWS announcement, but its blockchain is still small compared to its competitors. The goal of the AWS partnership is to lower barriers to entry and increase network activity. Avalanche adoption may increase once it hits its target, but other ecosystems seem to have a big, early lead.