Avalanche (AVAX): Quarterly activity report Q3 2024
October 8, 2024
In this Q3 2024 activity report, we take a look at Avalanche (AVAX), a layer 1 blockchain. Despite a rebound in the cryptocurrency market, AVAX closed Q3 2024 down 4%, as did overall activity on the network. Let's get into the details of the various important metrics to watch.
Key Information
- Avalanche (AVAX) Price Performance: AVAX closed Q3 2024 with a slight decrease (-4.1%), dropping from $29.4 to $28.1.
- Net Profits: Avalanche’s net profits remain negative in Q3 2024, but the deficit has significantly reduced (-$62.5 million).
- Network Activity Decline: Activity on Avalanche’s main network (C-Chain) dropped during Q3 2024, with transaction numbers decreasing by 22.5% and active addresses declining by 25.3%.
- Total Value Locked (TVL) Growth: Avalanche’s TVL increased by 48.2%, rising from $731.3 million to $1.084 billion.
Avalanche (AVAX) Overview
Avalanche is a layer-one blockchain operating on a Proof of Stake mechanism, designed to host decentralized applications. Developed by Ava Labs, Avalanche consists of three chains—P, X, and C—forming the main network that officially launched in September 2020.
Avalanche's technology is built on the Snow consensus, inspired by Nakamoto’s consensus, allowing for high throughput, fast transaction finality, and low energy consumption. It is also well-suited for deploying smart contracts and supports an essential feature on Avalanche: subnets. These fully customizable and interoperable networks provide developers with a flexible environment to build targeted decentralized applications.
Avalanche Q3 2024 Financial Analysis
Price and Market Cap
After a strong performance in Q4 2023 (+317.7%) and Q1 2024 (+40.2%), AVAX (Avalanche’s native token) experienced a challenging Q2 2024 (-45.8%). In comparison, Ether (ETH) posted a more moderate increase (+15.5%) over the same period. Ultimately, despite a relatively volatile Q3 2024, AVAX closed the quarter with a slight decrease (-4%).
Overall, AVAX’s market capitalization increased by 188% compared to Q3 2023, rising from $4.25 billion to $12.1 billion at the end of Q3 2024. This growth is partly due to an increase in the number of AVAX tokens in circulation. Indeed, quarterly inflation ranged between 3% and 4.4% throughout the year, pushing the number of tokens in circulation from 366 million to 407 million.
Revenue and Net Profit
Avalanche’s revenues come from transaction fees paid by network users. Net profits are calculated based on the AVAX issued to reward stakers. Q4 2023 was particularly prolific for Avalanche in terms of protocol revenue, reaching $56.6 million, mainly due to strong user activity. However, net profits remained negative (-$21.4 million).
The revenue decline at the beginning of 2024, following a normalization of activity, significantly deepened Avalanche’s quarterly losses (-$150.3 million and -$631.6 million, respectively in Q1 2024 and Q2 2024). In Q3 2024, Avalanche’s deficits were significantly reduced (-$62.5 million).
Avalanche Q3 2024 Fundamental Analysis
The average daily number of transactions on Avalanche’s main network (C-Chain) fell by 22.5% in Q3 2024 compared to the previous quarter, from 206K to around 160K. This confirms a downward trend that began at the start of 2024 after a strong Q4 2023 marked by high adoption, further exacerbated by a relatively weak market context over the summer.
This trend is also reflected in the number of daily active addresses on Avalanche (C-Chain), which dropped by 25.3% in Q3 2024, from 51.7K to 38.6K. Similarly, the network recorded an average daily number of new users of 7.3K in Q3 2024, a 33.2% decrease from Q2 2024.
These data points confirm the decline in activity on the Avalanche network, which directly impacts revenue generated from transaction fees. Consequently, most of the rewards distributed to stakers come from monetary issuance, leading to a significant deficit for the protocol.
Avalanche Q3 2024 Ecosystem Analysis
After a 42.7% drop between Q1 and Q2 2024, Avalanche’s Total Value Locked (TVL) rose by 48.24% in Q3, increasing from $731.3 million to $1.084 billion locked in decentralized finance (DeFi) protocols. However, it is important to note that Avalanche has not yet returned to its early-year levels, as overall TVL remains down by 14.9% compared to Q1.
In this report, we analyzed the top 5 protocols in the Avalanche ecosystem in terms of TVL: Aave, Benqi, LFJ (formerly Trader Joe), GMX, and DeltaPrime. Here are the detailed results for each protocol:
- Aave: +40.9% (from $273.1 million in Q2 2024 to $384.8 million in Q3 2024);
- Benqi: +72.7% (from $190.2 million in Q2 2024 to $328.6 million in Q3 2024);
- Joe: -14.0% (from $54.8 million in Q2 2024 to $47.2 million in Q3 2024);
- GMX: +12.2% (from $51.6 million in Q2 2024 to $75.1 million in Q3 2024);
- DeltaPrime: +179.2% (from $17.6 million in Q2 2024 to $49.2 million in Q3 2024).
Q3 2024 data show that LFJ is the only protocol to have experienced a decrease in its TVL (-14%), dropping from $54.8 million to $47.1 million. It is worth noting that the protocol changed its name from Trader Joe to Let’s F***ing Joe (LFJ), a decision that was particularly well-received by the community. Meanwhile, DeltaPrime recorded the most significant increase (+179.2%), rising from $17.6 million to $49.2 million.
One of the main reasons behind this significant TVL increase on Avalanche in Q3 2024, despite a slight correction in AVAX price over the period, is the BOOST campaign organized by the Avalanche Foundation. Launched in July 2024, this campaign aims to reward users and liquidity providers across several major ecosystem protocols.
The start of this campaign perfectly coincided with Avalanche’s TVL recovery, which rose from $756 million to over $1 billion by September 30. As a campaign partner, DeltaPrime offered additional incentives to further maximize user returns, which could explain its success in Q3 2024.
Avalanche Q3 2024 Conclusion and Insights
Q3 2024 was marked by a rebound in Avalanche’s TVL. This can be attributed to the BOOST campaign organized by the Avalanche Foundation, which helped attract users and liquidity. Protocols such as Aave, Benqi, and DeltaPrime benefited from the positive momentum, while others, like Joe, continue to lose liquidity.
However, despite this increase in liquidity locked in DeFi protocols, overall network activity remains in decline, as evidenced by the drop in the number of transactions and active addresses.
