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04/12/2024

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Will AVAX Keep Dropping? Understanding Key Metrics

In recent weeks, there's been a big drop in smart contracts being used on the Avalanche network. Not only that, but activity and trading volumes on decentralized exchanges (DEX) within the network have also decreased.

Will AVAX Keep Dropping? Understanding Key Metrics

In recent weeks, there’s been a big drop in smart contracts being used on the Avalanche network. Not only that, but activity and trading volumes on decentralized exchanges (DEX) within the network have also decreased.

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Despite this, the total value locked (TVL) in the network has stayed high. Avalanche’s token, AVAX, has been staying steady without much reaction to the ups and downs of the market. However, even though AVAX itself hasn’t been affected much by market changes, the Avalanche network has had its own set of challenges to deal with.

Avalanche’s Smart Contract Deployment Decline Raises Concerns

According to recent data from Token Terminal, there has been a significant decline in the number of smart contract deployers on the Avalanche network. This downturn could indicate a slowdown in innovation within the network.

The decreasing number of new projects might pose challenges for Avalanche to keep up with the rapid pace of the blockchain industry. Additionally, this decline could signal underlying issues within the ecosystem.

The diminishing interest from developers could erode confidence in the Avalanche ecosystem, which is vital for any blockchain platform’s success. Lack of investment or support for developers might be contributing factors to this trend.

Unless Avalanche addresses these potential issues, it risks losing momentum and falling behind its competitors in the blockchain space.

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Source: Token Terminal

Mixed Signals in Avalanche’s DeFi Landscape

In the DeFi sector, the total value of crypto assets deposited on the Avalanche network has grown, indicating user investment. However, other metrics paint a concerning picture.

There’s been a noticeable decline in network activity, evidenced by both the number of transactions and the volume traded on Avalanche’s Decentralized Exchanges (DEXes). This slowdown suggests a decrease in user adoption and overall network usage.

The inconsistency between the rising Total Value Locked (TVL) and declining activity is troubling. It raises questions about the sustainability of the current TVL growth.

If the TVL increase isn’t matched by a corresponding rise in new users and network activity, it might indicate that existing users are simply locking in more value. This could lead to a stagnant ecosystem with limited growth potential.

The decline in DEX volume specifically indicates a potential drop in trading activity, a crucial function of any blockchain platform. This could discourage new users from joining the Avalanche ecosystem, further impeding its growth and adoption.

Source: Santiment

At the moment, AVAX is trading at $46.73, with a 0.81% decrease in the last 24 hours. Additionally, the Open Interest in AVAX has declined, suggesting waning interest from traders in the token.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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  • SHBAZ

    A crypto enthusiast, Loves to write, Loves to explore and stay up-to-date about the latest developments in the crypto world. #Btc #Crypto #NFT

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