Sat 21 September 2024 ▪
4
min reading ▪ acc
In the rapidly changing crypto sector, blockchain projects face a major challenge: keeping users interested and finding specific applications in a market often dominated by speculation. Avalanche, a high-end network originally designed to compete with Ethereum due to its speed and low fees, is no exception to this reality. In 2024, the project faces a significant decline in its activity, especially on its main chain, the C-Chain. However, the Avalanche cannot resign themselves to following the downtrend. The network is making an ambitious strategic shift and relies on institutional acceptance.
Decline in Avalanche activity: a warning sign?
In 2024, the Avalanche network saw a significant drop in its activity on C-Chain, its main chain dedicated to smart contracts. The number of active addresses fell to 31,000, a level not seen since October 2023. This stagnation reflects a general trend in the crypto industry, where many projects struggle to maintain user interest, especially in bear market conditions. This decline in activity, visible through a drop in transactions and active addresses, thus speaks to the challenges Avalanche and other blockchains face in maintaining sustainable engagement.
There are several reasons for this situation. In addition to the overall economic situation, Avalanche faces increased competition from other blockchain solutions such as Ethereum Layer 2 and other Layer 1s such as Solana. These solutions also offer attractive alternatives in terms of cost and performance. The decline in speculative activity confirms the importance for Avalanche of diversification and finding specific use cases beyond traditional cryptocurrency trading.
Institutional admissions: a winning bet for the Avalanche?
To meet these challenges, Avalanche decided to explore new horizons. Blockchain then decided to focus on institutional adoption. In December 2023, the network entered into a strategic partnership with JP Morgan and Apollo to tokenize real assets on the blockchain. “This partnership demonstrates the potential of the Avalanche blockchain to offer reliable and scalable solutions for large enterprises,” Avalanche officials said in a statement. This demonstrates the platform’s ability to position itself as a key player for financial institutions seeking to leverage blockchain technology for specific use cases such as decentralized finance and asset tokenization.
This strategic relocation could be one answer to the Avalanche’s current woes. While individual investors are more hesitant, the entry of institutions could give a new impetus to the platform, especially thanks to applications such as managing cryptocurrencies, transferring securities or even optimizing financial processes. However, the success of this transition will depend heavily on Avalanche’s ability to maintain the trust of institutions and demonstrate that its technology meets the regulatory and operational requirements of these new players.
Through institutional adoption, Avalanche hopes to reinvigorate its ecosystem and demonstrate the viability of its solutions in an evolving market. If this bet pays off, it could not only reinvigorate activity on the network, but also position Avalanche as a leader in the convergence between blockchain and traditional finance.
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A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. I strive every day to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations, and put into perspective the economic and social issues of this ongoing revolution.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.