- The Avalanche network experienced a 16.88% decline in transactions, affecting gas usage and activity in AVAX-based dApps.
- Falling trading and deflationary pressure on AVAX led to a 1.1% reduction in its price in the last week.
In the last week, blockchain network Avalanche (AVAX) experienced a notable decline in its network usage, as reported in a recent post on social platform X (formerly Twitter).
This change has sparked diverse opinions in the market about AVAX, a cryptocurrency that has captured the attention of investors and cryptocurrency enthusiasts for its focus on scalability and efficiency.
Drop in Network Activity
Avalanche’s C-chain, designed to execute smart contracts, processed a cumulative total of 7.66 million transactions in the last week, representing a 16.88% decrease compared to the previous week .
![avalanche-burned-fees avalanche-c-chain-transactions](https://www.ethnews.com/wp-content/uploads/2024/02/avalanche-c-chain-transactions.jpg)
This drop in transactions also led to a 2.74% reduction in gas usage, an important indicator as smart contract interactions require larger amounts of gas due to their complexity. This decrease suggests less activity in Avalanche-based decentralized applications (dApps).
Impact on AVAX
Avalanche has a mechanism whereby it burns all revenue generated by transaction fees, meaning that the higher the fees, the greater the deflationary pressure on AVAX.
![avalanche-burned-fees avalanche-burned-fees](https://www.ethnews.com/wp-content/uploads/2024/02/avalanche-burned-fees.jpg)
However, with the decline in transactions in the last week, the amount of AVAX that actually went out of circulationalso declined , according to Avascan data. This phenomenon could be responsible for the 1.1% weekly drop in the cryptocurrency’s price.
Derivatives Traders’ Perspective
With the falling price in the market, money invested in the speculative market for AVAX also declined, data from Coinglass showed.
![avax-futures-open-interest avax-futures-open-interest](https://www.ethnews.com/wp-content/uploads/2024/02/avax-futures-open-interest.jpg)
At the time of this writing, the Open Interest (OI) on AVAX futures contracts was $193 million, representing a drop of nearly 5% from the previous week. A decline in OI, coupled with a drop in price, reflects bearish sentiment in the market.
![avax-long-short-ratio avax-long-short-ratio](https://www.ethnews.com/wp-content/uploads/2024/02/avax-long-short-ratio.jpg)
In addition, the number of short positions taken for the currency has continued to increase compared to long positions, reinforcing the bearish narrative.