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Avalanche Monthly Analysis – May 2022

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Granted, the crypto market was generally not as bad in May as it was in the first four months, most altcoins still shed a significant chunk of their value. Avalanche (AVAX), like other top alts, fell to multi-month lows in May as bearish sentiment prevailed in the market. The token posted a steep slump in the second week of the month, losing more than half of its value in less than seven days. The AVAX/USD pair consequently touched a bottom of $25.70, after which it hovered between $30 and $35 for the rest of the month.

Here's a closer look at other metrics that show how the Avalanche ecosystem fared in May:

Market Metrics

Market capital

AVAX market performance usually mirrors the broader state of Avalanche and the price action of Bitcoin. The altcoin's market cap printed a heavy downtrend in the first two weeks of the month. The dip became gradual until May 28, when it slightly recovered.

At the beginning of the month, Avalanche's circulating market capital was $15.3 billion, while the concurrent token price was $58.77. The capitalization figure touched the monthly apex of $18.08 billion five days later.

The monthly trough came on May 27, when the Avalanche network market cap fell to $6.34 billion following a progressive decline across the month. The $27.87 billion figure recorded on January 2 remains the highest market capitalization recorded of any day this year, with figures as of the end of May sitting around 74% below that peak.

Blockchain and Network Metrics

Avalanche C-chain transactions

The number of daily Avalanche C-Chain transactions has remained consistently above 800,000 since mid-March, and the trend continued into May. The count remained relatively even throughout the early days of the month before charting a catastrophic fall as markets collapsed around mid-May.

The Avalanche blockchain registered 798,532 transactions on the first day of the month, and this figure ballooned by 17% to reach a monthly peak of 934,030 on May 6. The numbers dilly-dallied and steadily increased for about a week, then the plunge began. Within a space of 10 days, the daily transactions fell four times over to reach 225,201 on May 22.

The monthly low came a week later, on May 29, when there were 201,939 c-chain transactions.

Avalanche C-chain unique addresses

Total unique addresses are a measure of a network's activity, and for Avalanche, this metric continued the historical pattern of an increasing sum in the total count. The number of unique addresses on Avalanche's smart contract chain grew from 2,634,725 addresses at the start of the month to reach 2,932,804 addresses on May 30. This increase represented an addition of 298,079 unique addresses, 34% more than the addition recorded in April.

Average gas price (AVAX)

The network's average gas price reached some of the highest levels recorded in 2022 this month, with the figure growing above 200 nAVAX for the first time since August 2021.

The C-chain average gas price grew to 212.09 nAVAX on May 11, the highest fee there has been all year. The following day, the cost recorded was 183.53 nAVAX, also a feat that hasn't been realized since the turn of the year.

Notably, afterward, it only took a few days for the numbers to redefine lower prices, as May 14 saw the gas price fall to levels below the lowest figures of April (57.05 nAVAX). On May 17, Avalanche's gas price sat at the bottom of May, with figures reaching 37.15 nAVAX, nearly six times less than the monthly peak.

Avalanche C-chain network utilization

The network utilization of the Avalanche C-chain consistently grew month after month in the first quarter of the year, but the narrative changed in May.

The C-chain's network utilization was 45.38% at the start of the month but grew to clock a monthly high of 46.86% on May 7. The decline began thereafter. It was steady in the initial days, but from May 13 onwards, things became bumpy. A rapid decrease was established, with the network tumbling towards a monthly low of 10.55% on May 29. Notably, the utilization remained below 20% from May 20 to the end of the month.

DeFi Performance

DeFi market share

Avalanche ranked fourth in market share for the better part of May, only rising to third place following Terra's implosion. However, the rise of Tron displaced Avalanche for market share and pushed it to sit fourth again.

At the start of the month, Avalanche had a market share of 4.58%, which then grew to reach 4.83% as the network jumped to third on May 12. Less than two weeks later, Tron (4.65%) flipped Avalanche – 4.04% in market share on May 23.

As of May 31, the market share of Avalanche had declined further to 3.7%, in a falling pattern that had been recorded in the latter days of the month.

Total Value Locked

The Total Value Locked (TVL) on any blockchain represents the aggregate value of assets locked up in its decentralized finance protocols. As of May 31, the TVL of Avalanche sat at $4.1 billion, down 54.11% of the month. Markedly, Avalanche had the worst-performing DeFi ecosystem of the top five networks last month.

Starting the month with $8.93 billion in TVL, the figure peaked a $9.28 billion on May 5, before the slump began. The chain hit a monthly TVL low of $3.95 billion on May 28, marking the first time the network recorded a TVL below $4 billion since October 2021.

The chain's TVL, measured in AVAX, recently touched new heights – a rise that Avalanche attributed to “innovative builders continuing to ship” in a shared tweet.

Protocols performance

Avalanche's leading protocols posted massive TVL declines relative to the end of April.

Of the top ten protocols on Avalanche, lending protocol AAVE V3 saw its TVL fall by a further 26.42%, falling off the billion mark to reach 964.28 million in value. Decentralized trading platform Trader Joe, having lost 33.47% across April, relinquished a further 52.64% in May, taking its market capitalization to $408.32 million.

Third-ranked Platypus Finance equally logged a massive 53.9% decline in the one-month change ending May 31, with the TVL falling to 377.62 million.

Notably, AAVE V3 holds 23.53% dominance on Avalanche, and yield farming platform Curve has seen the biggest decline of the top ten protocols, recording a -72.92% change.

To learn more about Avalanche, visit our Investing in Avalanche guide.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.