Detailed explanation of Avalanche’s second-quarter operating data and ecological progress

Summary of key points:

  • The macroeconomic environment did not limit Avalanche’s growth or health throughout the second quarter, and the strategy of continuing to expand the network was effective.
  • The network has seen a dramatic drop in network usage due to macro forces and activity redirected from Avalanche C Chain to subnets.
  • Avalanche’s Q2 TVL fell about 75% quarter-on-quarter in dollar terms, but the amount of AVAX locked in DeFi increased.
  • The continued development of subnets and the introduction of Core will play a crucial role in interoperability between subnets and further expansion of the network.

Avalanche Season 2 Narrative

Improving the user experience is a top priority heading into the second quarter. To that end, Ava Labs has launched  Core ; a free, non-custodial wallet explicitly created for applications on Avalanche with native support for subnetting. Additionally, Ava Labs has successfully enabled native Bitcoin support on the Avalanche Bridge , allowing BTC holders to securely transfer their BTC to Avalanche. Ultimately, while macro forces impacted Avalanche’s valuation and network activity, the strategy of continuing to expand the network worked well throughout the second quarter.

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

Avalanche’s network usage and financial performance fell across the board compared to the previous quarter, the first time in more than a year. While the market cap has fallen sharply (-81.7%), the network has not seen a significant drop in usage and revenue generation. Average daily trading volume fell by a third (-37.8%), total revenue fell 25%, price-to-sales (P/S) ratio reversed, and price-to-income ratio increased from 91x to 379x.

Ecosystem and Development Overview

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

Despite the ongoing incentive program, Avalanche’s Q2 TVL declined about 75% sequentially in dollar terms. The amount of AVAX locked in DeFi has increased while USD TVL has fallen. The quarter started with about 115 million AVAX locked in DeFi and ended with about 152 million. From this perspective, TVL and value are actually captured, and the decline in TVL in dollars is simply the result of falling AVAX prices, not utilization.

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

The two most prominent lending protocols in the Avalanche ecosystem, Aave and Benqi, saw their TVL decline roughly in line with the entire Avalanche DeFi ecosystem (69.3% and 76.7%, respectively). Meanwhile, the all-in-one DEX Trader Joe’s fell even more (87.9%). Interestingly, the decline in overall TVL was transferred to the top protocols, indicating less risk-taking via liquid staking in the long-tail (other smaller) protocols. Olympus DAO forked Wonderland (TVL only dropped 28.3%).

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

There was a massive surge in developer activity in May, bucking the trend in terms of the total number of standalone contracts deployed, up 154.7% in the quarter. Avalanche web developer productivity also had one of the highest quarters, with activity (measured by new GitHub events) up 76.4%.

Staking and Decentralization

The security of a PoS network like Avalanche requires users to lock up the network’s native tokens and participate in verification duties. A distributed network of validators and active participants can help ensure the network operates as intended.

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

Despite recent market volatility, staking and decentralization of the network remains strong. The average shareholding increased by as much as 16% month-on-month. Validator stake is always 6.50 times the amount of delegated stake. Unresponsive validator stake also dropped significantly (40.7% drop), indicating higher levels of engagement, reliability, and network health.

Competitive Analysis

We evaluate Avalanche’s key metrics by comparing it to TVL and the top five EVM-compatible chains of the largest number of DeFi protocols, including Avalanche.

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

The second quarter was a declining quarter for the crypto market, with total TVL falling from $228 billion to $75 billion, a 67% drop in dollar terms. Avalanche’s TVL saw the largest drop (-75%) among the top EVM chains, except for Fantom. A large part of Avalanche’s decline in TVL may have come from the collapse of terraUSD. As mentioned earlier, declines in TVL are usually valued in U.S. dollars. Therefore, the decline in asset value represents a change in price and actual utilization of DeFi. Ultimately, while USD TVL fell, the amount of AVAX locked in DeFi rose.

Detailed explanation of Avalanche's second-quarter operating data and ecological progress

Avalanche’s secondary NFT sales surpassed Ronin, Flow, and Polygon in Q1 and early in Q2. However, secondary sales declined in May around the launch of the Swimmer network subnet. Despite this, Avalanche entered the top 10 all-time sales in a short period of time.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/detailed-explanation-of-avalanches-second-quarter-operating-data-and-ecological-progress/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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