{"id":17431,"date":"2023-06-02T19:37:54","date_gmt":"2023-06-02T23:37:54","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/avalanche-a-fundamental-divergence-from-price-avax-usd\/"},"modified":"2023-06-02T19:37:55","modified_gmt":"2023-06-02T23:37:55","slug":"avalanche-a-fundamental-divergence-from-price-avax-usd","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=17431","title":{"rendered":"Avalanche: A Fundamental Divergence From Price (AVAX-USD)"},"content":{"rendered":"
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When I last covered Avalanche (AVAX-USD) in early January, I noted there were positive signs despite a lack of growth in network activity. Those positive signs included attractive valuation metrics compared to peers. In this Avalanche update, I’ll provide an updated look at some of the activity and valuation metrics I’ve been sharing with BlockChain Reaction subscribers over the last few weeks.<\/span><\/p>\n

Network Activity<\/h2>\n

Total transactions on Avalanche more than doubled from 4.2 million in March to over 9.3 million in April. The transaction growth trend continued in May with a 32% month-over-month increase to 12.3 million transactions. Looking at the daily transaction data from IntoTheBlock on the same chart as AVAX price really shows the divergence between AVAX and the activity on the network. This is unusual considering there has been a clear correlation between the two in the past and AVAX is the gas utility token of the network.<\/span><\/p>\n

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\"Avalanche<\/span><\/picture>
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Avalanche (Into The Block)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Going back through more than two and half years of network history, we’ve rarely had such a large divergence in daily transactions and price as we do right now. The last time the divergence was this large was in May 2022 before the Terra (LUNC-USD) collapse. At that time, the divergence started when activity and price were both near highs, this time we have the opposite. Daily average transactions have doubled over the last several weeks, and AVAX’s token price simply isn’t reflecting that move. This is fairly unique to non-Ethereum (ETH-USD) ecosystem chains.<\/p>\n

From a daily user standpoint, the activity spike is very evident compared to other alternative networks:<\/p>\n

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Daily Active Users (Token Terminal)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

When we look at daily active users over the last 6 months through Token Terminal, Avalanche is a standout versus chains like Cosmos Hub (ATOM-USD) or MultiversX (EGLD-USD) as those networks don’t have sustained increases in DAUs that started in early April. I picked these two chains as comps because they share a similar DAU baseline and help illustrate that it is indeed something unique to Avalanche that is taking place.<\/p>\n

Finding where that activity is coming from is always part of the challenge. Much of it is probably explained by the NFT sales on Avalanche. That figure has spiked roughly 600% from just under 400k in March to over 2.7 million in April. May saw over 2 million NFT sales as well but came in slightly under the April total:<\/p>\n

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\"Avalanche<\/span><\/picture>
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Avalanche NFTs (Dune Analytics\/subinium)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Elsewhere, Avalanche’s deployed contracts made an absolutely enormous jump higher over the last two months as well:<\/p>\n

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\"Avalanche<\/span><\/picture>
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Avalanche Contracts (Dune Analytics\/subinium)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Month-over-month deployed contracts moved up from 887k in March to nearly 7.6 million in April – which is more contracts deployed on Avalanche than on Ethereum, Arbitrum (ARB-USD), and Optimism (OP-USD) combined. That figure came down to a little under 3 million in May. But the activity on the chain remains highly elevated compared to previous levels.<\/p>\n

Valuation<\/h2>\n

From a valuation standpoint, things are a bit more mixed. In my last Avalanche article, we looked at price to sales ratios and market cap to TVL ratios for chain comparisons. From a DeFi standpoint, you could argue Avalanche is actually a bit more expensive compared to January when it had an MC\/TVL ratio now near 4:<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n\n\n
TVL Rank<\/th>\nNetwork<\/th>\nProtocols<\/th>\nTVL<\/th>\nStables<\/th>\nMC\/TVL<\/th>\n<\/tr>\n
1<\/td>\nEthereum<\/td>\n807<\/td>\n$27.22b<\/td>\n$68.94b<\/td>\n8.28<\/td>\n<\/tr>\n
2<\/td>\nTron<\/td>\n22<\/td>\n$5.58b<\/td>\n$45.21b<\/td>\n1.22<\/td>\n<\/tr>\n
3<\/td>\nBinance<\/td>\n606<\/td>\n$4.44b<\/td>\n$5.68b<\/td>\n10.87<\/td>\n<\/tr>\n
4<\/td>\nArbitrum<\/td>\n343<\/td>\n$2.36b<\/td>\n$1.83b<\/td>\n0.63<\/td>\n<\/tr>\n
5<\/td>\nPolygon<\/td>\n425<\/td>\n$1.02b<\/td>\n$1.53b<\/td>\n8.17<\/td>\n<\/tr>\n
6<\/td>\nOptimism<\/td>\n142<\/td>\n$884.24m<\/td>\n$607.69m<\/td>\n1.02<\/td>\n<\/tr>\n
7<\/strong><\/em><\/td>\nAvalanche<\/strong><\/em><\/td>\n307<\/strong><\/em><\/td>\n$705.93m<\/strong><\/em><\/td>\n$1.33b<\/strong><\/em><\/td>\n6.94<\/strong><\/em><\/td>\n<\/tr>\n
8<\/td>\nMixin<\/td>\n9<\/td>\n$403.67m<\/td>\n$29.34m<\/td>\n <\/td>\n<\/tr>\n
9<\/td>\nCronos<\/td>\n98<\/td>\n$341.93m<\/td>\n$5,860<\/td>\n4.37<\/td>\n<\/tr>\n
10<\/td>\nPulse<\/td>\n6<\/td>\n$336.21m<\/td>\n <\/td>\n <\/td>\n<\/tr>\n<\/table>\n

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