{"id":485828,"date":"2022-08-18T23:08:20","date_gmt":"2022-08-18T20:08:20","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction\/"},"modified":"2022-08-18T23:08:20","modified_gmt":"2022-08-18T20:08:20","slug":"a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction\/","title":{"rendered":"# A sharp drop in TVL and DApp use preceded Avalanche\u2019s (AVAX) 16% correction"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27c12d95913\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27c12d95913\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction\/#%E2%80%9D_A_sharp_drop_in_TVL_and_DApp_use_preceded_Avalanches_AVAX_16_correction_%E2%80%9C\" >&#8221; A sharp drop in TVL and DApp use preceded Avalanche\u2019s (AVAX) 16% correction &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction\/#Avalanches_TVL_dropped_40_in_two_months\" >Avalanche\u2019s TVL dropped 40% in two months<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanches-avax-16-correction\/#DApp_use_has_also_underperformed_competing_chains\" >DApp use has also underperformed competing chains<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_A_sharp_drop_in_TVL_and_DApp_use_preceded_Avalanches_AVAX_16_correction_%E2%80%9C\"><\/span>&#8221; A sharp drop in TVL and DApp use preceded Avalanche\u2019s (AVAX) 16% correction &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-28d77a7a>After an impressive 73% rally between July 13 and Aug. 13, Avalanche (AVAX) has faced a 16% rejection from the $30.30 resistance level. Some analysts will try to pin the correction as a &#8220;technical adjustment,&#8221; but the network\u2019s deposits and decentralized <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications reflect worsening conditions.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/18cc0d45-3104-4840-93c9-0b76fbe908b5.png\"><figcaption style=\"text-align: center;\"><em>Avalanche (AVAX) index, USD. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>To date, Avalanche remains 83% below its November 2021 all-time high at $148. More data than technical analysis can be analyzed to explain the 16% price drop, so let\u2019s take a look at the network\u2019s use in terms of deposits and users. <\/p>\n<p>The decentralized application (DApp) platform is still a top-15 contender with a $7.2 billion market capitalization. Meanwhile, Solana (SOL), another proof-of-work (PoW) layer-1 platform, holds a $14.2 billion market cap, which is nearly twice as large as Avalanche&#8217;s.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Avalanches_TVL_dropped_40_in_two_months\"><\/span>Avalanche\u2019s TVL dropped 40% in two months<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Some analysts tend to give too much weight to the total value locked (TVL) metic and although this might hold relevance for the decentralized finance (DeFi) industry, it is seldom required for nonfungible token (NFT) minting, digital item marketplaces, crypto <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>s, gambling and <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> applications.<\/p>\n<p>Using the layer-2 solution Polygon (MATIC) as a proxy, it currently holds a $2.2 billion TVL while MATIC\u2019s market cap stands at $7.2 billion; thus, a 3.3x MCap\/TVL ratio. Curiously, the same ratio applies to Avalanche, which currently holds a similar $2.2 billion TVL and $7.2 billion capitalization.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/af305001-8c71-4e6e-ac29-4bc4f89023e5.png\"><figcaption style=\"text-align: center;\"><em>Avalanche Total Value Locked, AVAX. Source: DefiLlama<\/em><\/figcaption><\/figure>\n<p>Avalanche&#8217;s primary DApp metric began to display weakness in late July after the TVL dropped below 110 million AVAX. In two months, the current 85.4 million is a sharp 40% cut and signals that investors have been withdrawing coins from the network&#8217;s smart contract applications.<\/p>\n<p>The chart above shows how Avalanche&#8217;s smart contracts deposits peaked at 175 million AVAX on June 13, followed by a constant decline. In dollar terms, the current $2.2 billion TVL is the lowest number since September 2021. This number represents 8.2% of the aggregate TVL (excluding Ethereum), <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/defillama.com\/chains\">according<\/a> to data from DefiLlama.<\/p>\n<p>Initially, the data seems disappointing, especially considering Solana\u2019s network TVL reduced by 27% in the same period in SOL terms, and Ethereum\u2019s TVL declined by 33% in ETH deposits. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"DApp_use_has_also_underperformed_competing_chains\"><\/span>DApp use has also underperformed competing chains<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To confirm whether the TVL drop in Avalanche is troublesome, one should analyze a few DApp usage metrics. <\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-08\/783a7b31-2551-4c61-9ad0-c1cc2be021d9.png\"><figcaption style=\"text-align: center;\"><em>Avalanche DApps 30-day on-chain data. Source: DappRadar<\/em><\/figcaption><\/figure>\n<p>As shown by DappRadar, on Aug. 18, the number of Avalanche network addresses interacting with decentralized applications declined by 5% versus the previous month. In comparison, Ethereum posted a 4% increase and Polygon users gained 10%.<\/p>\n<p>Avalanche&#8217;s TVL has been hit the hardest compared to similar smart contract platforms and the number of active addresses interacting with most DApps only surpassed 20,000 in one case. This data should be a warning signal for investors betting on this automated blockchain execution solution.<\/p>\n<p>Polygon, on the other hand, racked up 12 decentralized applications with 20,000 or mo active addresses in the same time period. The findings above suggest that Avalanche is losing ground versus competing chains and this adds further reason for the recent 16% sell-off. <\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/a-sharp-drop-in-tvl-and-dapp-use-preceded-avalanche-s-avax-16-correction\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; A sharp drop in TVL and DApp use preceded Avalanche\u2019s (AVAX) 16% correction &#8220; After an impressive 73% rally between July 13 and Aug. 13, Avalanche (AVAX) has faced a 16% rejection from the $30.30 resistance level. Some analysts will try to pin the correction as a &#8220;technical adjustment,&#8221; but the network\u2019s deposits and&#8230;<\/p>\n","protected":false},"author":1,"featured_media":485829,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDgvNzExZGQ3MzgtZjUzYi00NDI3LTk1MWQtOWUyMzcxYjQ2NGM1LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,88119,120396,74894,74863,74860,92608,78168,74868,75916,74939,75434,73785],"class_list":["post-485828","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-altcoin-watch","tag-avalanche","tag-blockchain","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-dapp","tag-dapps","tag-defi","tag-dex","tag-market-analysis","tag-smart-contracts","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/485828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=485828"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/485828\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/485829"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=485828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=485828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=485828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}