Avalanche (AVAX): Quarterly Activity Report Q3 2024

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Avalanche (AVAX) ended Q3 2024 with mixed results. While the broader cryptocurrency market showed signs of recovery, AVAX posted a modest decline of 4.1%, closing the quarter at $28.1 from $29.4. Despite this, key ecosystem indicators—especially Total Value Locked (TVL)—showed strong growth, signaling sustained confidence in Avalanche’s long-term potential. This report dives into the financial, fundamental, and ecosystem developments that shaped Avalanche’s performance in Q3 2024.

What Is Avalanche (AVAX)?

Avalanche is a high-performance layer-1 blockchain built on a Proof-of-Stake consensus mechanism. Developed by Ava Labs and launched in September 2020, it supports decentralized applications (dApps) and smart contracts through its unique multi-chain architecture: the X-Chain, P-Chain, and C-Chain. The C-Chain is the primary network for executing smart contracts and hosting DeFi applications.

At the heart of Avalanche’s innovation lies the Snow consensus protocol, a novel approach inspired by Nakamoto consensus but optimized for speed, scalability, and energy efficiency. This enables sub-second transaction finality and high throughput—critical features for enterprise-grade blockchain solutions.

One of Avalanche’s standout capabilities is its support for customizable subnets, which are independent blockchains that can be tailored to specific use cases while maintaining interoperability with the main network. This flexibility makes Avalanche a preferred platform for institutional projects and Web3 developers aiming to build scalable, secure dApps.

👉 Discover how Avalanche's subnet technology is reshaping decentralized ecosystems.

Financial Performance in Q3 2024

AVAX Price and Market Capitalization

After a stellar run in late 2023 and early 2024—where AVAX surged 317.7% in Q4 2023 and another 40.2% in Q1 2024—the token faced headwinds in Q2, dropping 45.8%. Q3 2024 brought relative stability, though AVAX closed the quarter down slightly by 4.1%, from $29.4 to $28.1.

Despite the price dip, Avalanche’s market cap grew significantly year-over-year, climbing from $4.25 billion in Q3 2023 to **$12.1 billion** in Q3 2024—an increase of 188%. This growth was fueled by rising token circulation due to staking rewards, with quarterly inflation averaging between 3% and 4.4%. The total supply expanded from 366 million to 407 million AVAX tokens over the year.

Compared to Ethereum (ETH), which rose 15.5% during the same period, AVAX underperformed in Q3 but remains one of the top-performing layer-1 blockchains over the longer term.

Revenue and Net Profit Trends

Avalanche generates revenue through transaction fees paid on the C-Chain. However, net profit is determined by comparing this income against the value of newly issued AVAX tokens distributed to validators and stakers.

In Q4 2023, Avalanche achieved its highest protocol revenue to date—$56.6 million**—driven by intense user activity. Yet net profit remained negative at **–$21.4 million, as issuance outpaced fee income.

The first half of 2024 saw a sharp decline in user engagement, leading to reduced fee revenue and ballooning deficits:

Q3 marked a turning point, with the deficit narrowing dramatically to –$62.5 million. This improvement reflects better alignment between issuance and organic revenue, suggesting a move toward greater economic sustainability.

Fundamental Metrics: Network Activity Declines

While financials show stabilization, core usage metrics indicate weakening on-chain activity.

The average daily transactions on the C-Chain fell by 22.5%, dropping from 206,000 in Q2 to approximately 160,000 in Q3. Similarly, daily active addresses declined by 25.3%, from 51,700 to 38,600.

New user acquisition also slowed, with an average of 7,300 new users per day—a 33.2% decrease from Q2. These trends point to reduced organic demand and lower user engagement across dApps, likely influenced by seasonal market lull and broader crypto volatility.

This decline in activity directly impacts fee generation, meaning most staker rewards continue to come from token issuance rather than user fees—a structural challenge Avalanche must address to achieve long-term economic balance.

Ecosystem Growth: TVL Surges Despite Lower Activity

One of the most striking developments in Q3 was the 48.2% surge in Total Value Locked (TVL) across Avalanche’s DeFi ecosystem, rising from $731.3 million to $1.084 billion.

Although this rebound didn’t fully offset earlier losses—TVL remains 14.9% below Q1 levels—it signals strong investor confidence and effective incentive strategies.

We analyzed the top five protocols by TVL:

Notably, DeltaPrime led growth with a near tripling of TVL, while LFJ was the only major protocol to lose value despite a popular rebranding effort.

👉 See how leading DeFi protocols are driving liquidity on Avalanche today.

The BOOST Campaign: Catalyst for TVL Recovery

The primary driver behind Avalanche’s TVL resurgence was the BOOST campaign, launched in July 2024 by the Avalanche Foundation. This initiative allocated millions in incentives to liquidity providers across key DeFi platforms.

The timing was pivotal: TVL had bottomed out at $756 million in early July but climbed steadily thereafter, surpassing **$1 billion by September 30**.

As a BOOST partner, DeltaPrime amplified rewards for users, contributing to its explosive growth. Other protocols like Aave and Benqi also benefited from renewed interest and yield farming opportunities.

This strategic use of incentives highlights Avalanche’s proactive approach to ecosystem development—using targeted campaigns to stimulate liquidity even during periods of low organic activity.

Frequently Asked Questions (FAQ)

Q: Why did AVAX price drop despite rising TVL?
A: While TVL growth reflects strong investor interest in DeFi yields, price is influenced by broader market sentiment, trading volume, and macroeconomic factors. The disconnect suggests that much of the capital inflow was incentive-driven rather than speculative.

Q: Is Avalanche becoming economically sustainable?
A: Progress is being made. The shrinking net deficit—from over $600 million in Q2 to $62.5 million in Q3—shows improved balance between issuance and fee revenue. However, long-term sustainability depends on increasing organic transaction activity.

Q: What are subnets and why do they matter?
A: Subnets are customizable blockchains within Avalanche that allow projects to create dedicated networks with tailored rules, validators, and governance. They enable scalability and specialization—key advantages for enterprise adoption.

Q: How does Avalanche compare to Ethereum or Solana?
A: Avalanche offers faster finality and lower fees than Ethereum, while maintaining higher decentralization than many competitors like Solana. Its subnet model also provides unique flexibility for institutional use cases.

Q: Will the BOOST campaign continue into Q4?
A: While official details are pending, similar incentive programs are expected as Avalanche aims to maintain momentum ahead of potential ETF approvals and mainnet upgrades.

Final Insights: A Foundation for Future Growth

Q3 2024 underscored a critical dynamic for Avalanche: strong ecosystem funding does not yet translate into robust network usage. While TVL rebounded impressively thanks to strategic incentives, transaction volume and active users continue to trend downward.

The narrowing deficit is encouraging—it suggests Avalanche is moving closer to economic equilibrium. However, real growth will come from increasing organic demand for its network, not just liquidity mining rewards.

Looking ahead, success hinges on:

With solid technology, growing institutional interest, and a resilient ecosystem, Avalanche remains well-positioned for resurgence when market conditions improve.

👉 Explore how you can participate in the next wave of Avalanche’s growth journey.