Investment giant VanEck is considering Ethereum (ETH) rival Avalanche (AVAX), warning that the project faces numerous serious headwinds.
In a new report on the digital asset markets, VanEck analysts say that on-chain activity on Avalanche’s C-Chain has collapsed to critical levels.
VanEck notes how Avalanche generated about $11,000 in fees per day in September, down 98.9% from its peak two years ago.
“Avalanche’s blockchain ultimately became a financial success in the fall of 2021 on the in-house developed EVM (Ethereum virtual machine) blockchain, called the C-Chain (contract chain). At its peak, the C-Chain held over $10 billion TVL (total value locked) in its smart contracts, had $1 million in fees per day, and consistently had over 100,000 DAUs (daily active users).
By September 2023, those numbers were down to $500 million in TVL, $11,000 per day in fees and 34,000 daily active users.”
VanEck says that while Avalanche has great technology, it doesn’t have the same advantages as Ethereum or other ETH competitors and suffers from a lack of venture capital (VC) and a smaller developer community.
“While we have great confidence in Avalanche’s technical capabilities, we are unsure whether Avalanche will be able to use its strong marketing talent to win the enterprise customers needed to revitalize Avalanche’s chain of chains Furthermore, with a rapidly evaporating developer base and a crop of venture capital moving away from all but the top projects in crypto, it’s hard to be optimistic about Avalanche’s long-term prospects.
Avalanche does not have the solid coding base nor the backing of Jump Capital to create a 1 million TPS (transactions per second) chain, nor does it lack the thriving ecosystem of developers and capital that Ethereum retains.
That said, anything can happen in a bull market, and we continue to see Avalanche announce fascinating technical solutions to complex blockchain problems. But until applications emerge that bring in new users, AVAX will suffer.”
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