Avalanche (AVAX) price is up, but do fundamentals support the rally?


Avalanche (AVAX) witnessed a meteoric begin to 2023, gaining 98% in 30 days, and merchants are actually inquisitive about whether or not the rally will prolong all through February. AVAX’s year-to-date features for 2023 have outpaced these of Bitcoin (BTC) and Ether (ETH).

Latest causes for AVAX’s rally might be attributed to an Amazon partnership announcement on Jan. 11. The partnership is supposed to simply deploy nodes on the Avalanche blockchain with Amazon Internet Providers (AWS). Ava Labs, which helps the Avalanche ecosystem, hopes the partnership will increase blockchain utilization for enterprises and governments.

Whereas AVAX value has benefited from the information, some analysts predict that the move could have been a bull trap.

Let’s dig into the fundamentals to see if on-chain network activity supports the recent AVAX rally.

AVAX fees from DeFi are up

After the AWS news, AVAX price was not the only metric seeing a quick rise. On Jan. 14, Avalanche network hit a year-to-date high of $31,218 AVAX fees received. The increase in fees compared to the previous 30 days is 59%, signaling that positive price appreciation helped boost the fees that the network received.

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Avalanche network fees and AVAX price. Source: TokenTerminal

While the Avalanche fee base is increasing, it still lags behind top EVM-compatible blockchains like Ethereum, Binance Chain (BNB), Optimism (OP) and Polygon (MATIC). Over the previous 30 days, the charges Avalanche has generated rank ninth out of all blockchains.

High blockchains sorted by charges. Supply: TokenTerminal

Notably, layer-2 competitor Polygon earned near 4 instances the quantity of charges in comparison with Avalanche. Even with the astounding progress thaAvalanche has skilled in 2023, the community might want to considerably improve charges to overhaul extra blockchains.

Energetic addresses and customers are down

An indication of blockchain well being is the variety of energetic addresses, customers and transactions. Regardless of reaching a year-to-date excessive on Jan. 18 of 1.84 million transactions, Avalanche’s transaction rely is trending down.

An identical downtrend is witnessed when energetic addresses within the Avalanche ecosystem. Energetic addresses denote transactions taking enjoying on distinctive wallets for a given day. After reaching a year-to-date peak of 54,978 energetic addresses on Jan. 31, solely 34,624 energetic addresses had been registered the next day.

Energetic addresses and transactions. Supply: Avalanche

The downtrend in Avalanche exercise is creating additional separation between different blockchains. In response to TokenTerminal, Avalanche’s all-time excessive (ATH) variety of each day energetic customers is 131,000, which is dwarfed by Polygon’s ATH of 737,000. Avalanche is now removed from its all-time excessive of each day customers, registering solely 44,000.

Blockchains sorted by each day energetic customers, Supply: TokenTerminal

For blockchains to create sustainable charges, there must be each day energetic customers collaborating on the community.

AAVE dominates Avalanche DApps

The energetic customers on Avalanche appear to have a desire for utilizing Aave (AAVE) on the AVAX blockchain. Over 36% of all Avalanche transactions stream by way of the Aave protocol. Buyers have staked over $353 million on Aave’s Avalanche model, far surpassing the second-most widespread protocol by verified complete locked worth (TVL), the Dealer Joe decentralized change (DEX).

High Avalanche DApps. Supply: DefiLlama

Whereas Aave and Dealer Joe are main the Avalanche blockchain, when DEX exercise on different blockchains, they witness far much less buying and selling quantity. DEX quantity instantly correlates to the charges {that a} protocol receives.

Ethereum DEX exercise leads the way in which with over $1.6 billion in each day quantity, whereas Avalance solely sees round $104 million.

DEX exercise by blockchain. Supply: DefiLlama

Whereas Avalanche is presently witnessing immense progress from the AWS announcement, the blockchain continues to be small in comparison with opponents. The aim of the AWS partnership was to assist improve community exercise by decreasing boundaries to entry. Reaching the aim could improve Avalanche adoption however different ecosystems appear to be out to a big and early lead.