Despite Slow DApp Use, AVAX Traders Expect A New ATH

In the last fifteen days of March, Avalanche (AVAX) surged by 43.8%, reaching the highest level of daily close since Jan. 5 i.e.$97.50. Avalanche is a layer -1 solution that uses a proof-of-stake model and has collected $9 billion in total value locked (TVL) on the smart contracts of the network. 

Subnet adoption propels the recent price rally

An incentive program by Avalanche to accelerate the subnets’ adoption, announced on March 9th, is being held as the reason behind its rally.  The Avalanche Foundation believes that functions that can be done only via “open experimentation and network-level control” are enabled only through subnets. 

Around four million AVAX, worth approximately $340 million, will be allocated by the program for funding NFTs, gaming, and financial applications. 

Avalanche’s subnet with KYC infrastructure, is going to be a huge step in its agenda of institutional adoption, says Wes Cowan, managing director of DeFi at Valkyrie Investments.

However, the price of AVAX despite its positive traction is still 33% below its all-time high, with its token holding 26.3 billion in market capitalization. Meanwhile, the market cap of Terra (LUNA) is at $38.1 billion, and Solana (SOL)’ stands at a $43.8 billion total value.

It is also important to note that Avalanche is also Ethereum Virtual Machine (EVM) compatible and is not dominated by the $15 average transaction fees and network congestion that affects the Ethereum network. 

The use of Avalanche’s smart contracts is in decline

After the network’s TVL dropped below 94 million AVAX,  the primary Dapp metric of Avalanche began to show its weakness in March. 

As the chart above shows the DApp deposits of Avalanche climbed to their highest 132.9 million AVAX on March 14, however on Jan 3rd significantly dropped down to its lowest level. The current TVL of $9 billion is a $12.2 billion all-time high in December 2021.

Analyzing DApp usage metrics can verify that the decrease in Avalanche‘s TVL is worrisome. The TVL metric is not relevant since DApps, such as games and collectibles, do not need large deposits.

There is a 16% decrease in the number of Avalanche network addresses interacting with decentralized applications on April 1st as compared to the previous month, according to the data from DappRadar.

However, the TVL of Avalanche has suffered the hardest in comparison to similar smart contract platforms, there is still a solid network use in the decentralized finance (DeFi) segment.

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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