Introduction

What Is Avalanche (AVAX)?

Avalanche (AVAX) is a cryptocurrency and blockchain platform that rivals Ethereum. AVAX is the native token of the Avalanche blockchain, which—like Ethereum—uses smart contracts to support a variety of blockchain projects.

The Avalanche blockchain can provide near-instant transaction finality. AVAX is used to pay transaction processing fees, secure the Avalanche network, and act as a basic unit of account among blockchains in the Avalanche network. \n

KEY TAKEAWAYS

• Avalanche is a blockchain platform with the native currency AVAX.
• Avalanche is a competitor to Ethereum that prioritizes scalability and transaction processing speed.
• AVAX is used to secure the Avalanche blockchain and pay transaction fees across the network.
• Transaction fees and the rate of AVAX coin creation are determined using a governance model.

The Avalanche blockchain reportedly can process 4,500 transactions per second.1 Launched in 2020, Avalanche aims to be fast, versatile, secure, affordable, and accessible.2 In addition, Avalanche is an __open-source__project, meaning anyone can view and contribute to the platform's code. \n

Understanding Avalanche

Avalanche's smart contracts platform supports both decentralized applications (dApps) and autonomous blockchains. Here are some of the features that make Avalanche unique:31

• Coin creation rate: The maximum supply of AVAX is capped at 720 million tokens, but AVAX users govern how fast new coins are minted. AVAX holders can control the rate of new coin creation by voting to adjust the amount of AVAX paid as a reward for adding a new block to the Avalanche blockchain.
• Transaction fee structure: Transaction processing costs vary depending on the type of transaction and Avalanche's network congestion. All fees are burned—removed from circulation—to enable AVAX to become scarcer over time. Avalanche users vote to decide the Avalanche transaction fee, making AVAX fees subject to change.
• Consensus mechanism: Transactions on the Avalanche blockchain are confirmed using a unique method that requires many small, random subsets of network participants to confirm transactions before the transactions are considered finalized.
• Participation incentives: High uptime and fast response times can both boost the amount of AVAX rewards that a network participant can earn for processing AVAX transactions. \n

Avalanche is generally governed by the __proof-of-stake__mechanism. AVAX holders are required to stake—agree not to trade or sell—AVAX in exchange for the right to validate AVAX transactions. AVAX holders with the most staked, and who actively participate as validators, are the most likely to be chosen as validators for new Avalanche blocks. Holding AVAX tokens is also required to vote on Avalanche governance proposals.2 \n

Advantages and Disadvantages of Avalanche

Let's dig into what's to like and dislike about Avalanche:42

Pros

• Fast transaction processing times
• Reward structure incentivizes participation
• Capable of supporting many blockchain-based projects

Cons

• Stiff competition from platforms like Ethereum

• Avalanche validators must stake 2,000 AVAX tokens

• Malicious or careless validators are never penalized by losing their AVAX

  1

Method

During recent weeks, the activity over Avalanche mainnet has increased significantly and consequently, the $Avax token price has experienced a rally from $10.9 on January 1st to $21 on February 3rd.

we will have 8 main sections to analyze Avalanche Network on occasion of that:

1. Token prices: The token price of a network can represent all the activities that happened within the network, so we started this dashboard with the Avax, Eth, BTC and OP token price.

2. Network performance: In this section, we will review the overall performance of the network, including TPS and other important and influential parameters

3. Transcations stats: Here we analyze the number of transactions and active addresses and see if the network was active during this period or not.

4. Token transfers Volume: We take a look at the volume of Luna transfers within Terra

5. Swap Stats: Swapping is the most popular activity within the network, so I think that's reason enough to check it out

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• I extracted token prices from the crosschain.core.fact_hourly_prices table

• I used avalanche.core.fact_blocks and terra.core.fact_transactions tables for network performance, TPS : the total number of transactions of all blocks of the day divided by the number of seconds of the day

  Average block Time: the average Time (seconds) between two blocks

• I got all the information about the transactions from the avalanche.core.fact_transactions table

• Luna transfers Volume calculated with help of avalanche.core.fact_token_transfers table

• I extracted number of deployed contracts with help of

  • avalanche.core.fact_traces table

• for swap stats I avalanche.sushi.core.ez_swaps

  
  
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1. $Avax Price vs Giants

Observations

• In this section, the daily price of Avax token is compared to Ethereum, Bitcoin and Optimism tokens. As can be seen, this price increase is not specific to Avax token and other reviewed tokens have also experienced a price increase in the reviewed time frame with a completely similar pattern. There is a positive correlation between the price of Avax token and Ethereum as well as Bitcoin. Considering that these tokens are actually the leaders of the market, it can be concluded that the price increase of Avax was more influenced by the bull market. Next, other angles of the network will be examined.
• Looking at the moving average chart, it can bee seen that, Avax could have passed tha 7 Day moving average barrier and also its way higher than 100day moving average which puts it in a very good situation .
  • A moving average (MA) is a stock indicator commonly used in technical analysis, used to help smooth out price data by creating a constantly updated average price. A rising moving average indicates that the security is in an uptrend, while a declining moving average indicates a downtrend. 2

2. Network performance

Observations

The average time to form a block (between two blocks) was at its highest value at Feb 12 with 2.56sec . Looking in general, we can conclude that a upward trend for this average was formed in January.

In the 11th of January, we see a sharp increase in TPS . On this day we see a 5x increase over the average of the rest of January for this metric.

Although we saw the highest daily percentage of failed transactions in the studied timeframe on Jan 11th with 10%. It indicates a kind of carelessness that was probably caused by emotional behavior.

3. Transactions Stats

Observations

The charts show an increase in the total number of transactions in Avalanche Blockchain on Jan 10-12th .total number of txns was 108k on Jan 8th,reached 192k on Jan 11th which shows a 77% increase!

Daily Active addresses also increased from 22k on Jan 8th to over 44k on Feb 1st. this was also a 100% increase!

Daily New addresses also increased from 5k on Jan 8th to over 23k on Feb 1st. this was also a 450% increase!

4. transfers Volume

Observations

As well as prior studied metrics, on Jan 9th , the value of daily transfers increased significantly. the transfer value on Jan 8th was 25M$ which increased to 141M$ ,the respected percent is ~600% which is incredible !

the other chart also shows the correlation between Avax price and its transfer amount in the native network . There is a strong and positive correlation between two mentioned factor, which shows the more transfer value, the more increase in the price or maybe inverse!

As the following charts reveals, the daily capital flow to/from Defi sector of Avalanche blockchain were most TO Defi than From Defi on last two months !

as we can see , there were 2 days with the highest To DEFI amount accrued on Feb 2 with 2.9M$ and Dec 28 with over 3M$.

Also the following chart shows that, the daily capital flow to/from CEX sector of Avalanche blockchain were most TO CEX than From CEX on last two months !

but, there is no deep difference.

5. Swap stats

Conclusion

• We saw the price of Avax token rised 90% to around 22$ , on Feb1st and we analyzed some metrics to determine the cause of this incident. the outcomes show that , After Jan 9th to Feb 1st ,:
• There is a positive correlation between the price of Avax token and Ethereum as well as Bitcoin. Considering that these tokens are actually the leaders of the market, it can be concluded that the price increase of Avax was more influenced by the bull market. Next, other angles of the network will be examined.
• We see a 5x increase over the average of the rest of January for TPS.
• Daily Active addresses also increased by 77%
• Daily New addresses also increased by 450%
• The transfer value also increased by 600%
• With all cases reviewed in Avalanche blockchain ,It can be said, considering that the token value of a network is an output of all events related to that network and an indicator of its prosperity and users' interest in it, factors such as a significant increase in transactions, users, transfers, new users and other things can be the reason for the increase in the price of this token. Of course, this is a two-way relationship because the increase in these areas can be seen as the result of the price increase. The increase in price can have different factors, some of which were mentioned in this research.
• While the exact reason for the rally remains unknown, it seems that technical factors might have supported the latest rise. ==Avalanche== broke out of its month-long consolidation range on Jan. 9 and surpassed a key barrier that had hindered its price since November 2022.