In a remarkable escalation of transactional dynamics on the Avalanche network, last week witnessed an unprecedented surge in burnt crypto AVAX, totaling a staggering $16.7 million.
This figure represents a tenfold increase compared to the previous week, setting a new zenith for the weekly burning of AVAX tokens.
Summary
The reasons for the surge in burned AVAX: a new record for the Avalanche crypto ecosystem
The surge in burned fees can be mainly attributed to the increase in activity associated with minting and transmitting transactions within the Avalanche ecosystem.
Avalanche users engaged in transactions witnessed the burning of 439,000 AVAX in just the last week. This data represents a significant reduction of 3.47% in the circulating supply of the token.
The unique transaction fee mechanism of Avalanche, inspired by the EIP-1559 design used on Ethereum, involves the complete elimination of transaction fees.
Unlike Ethereum, where a portion of transaction fees is allocated to validators, Avalanche takes an uncompromising approach, sacrificing the entirety of transaction fees.
The surge in burned fees challenges historical trends, where between May 2022 and October 2023, only a nominal amount of AVAX would have been consumed weekly.
An isolated peak of 39,000 AVAX in a single day in April 2023 marked the highest point before the recent surge.
However, the final week of November saw a substantial surge to 85,000 AVAX, followed by another peak of 40,000 AVAX two weeks later. The current week has surpassed all previous records, highlighting the profound impact of subscription-related transactions.
The surge is attributed in particular to the proliferation of registrations on Avalanche and other blockchains, initially coming from Bitcoin.
According to a Dune Analytics dashboard created by Hildobby, an enigmatic researcher affiliated with venture capital firm Dragonfly, subscription-based transactions accounted for an impressive 75% of transaction fees incurred and subsequently burned on Avalanche in the last week.
Users have spent a total of 13.8 million dollars in fees for these subscription-related transactions
Registrations, a particular type of token, materialize through the act of incorporating a text into conventional blockchain transactions, combined with an off-chain numbering system to ensure organizational consistency.
They emerged as a pragmatic solution on the Bitcoin network due to the lack of native support for tokens, and registrations have proliferated on various blockchains, partly thanks to their cost-effectiveness compared to native tokens.
The cumulative impact of these developments is reflected in the profound depletion of AVAX, with a total of 3.4 million AVAX sacrificed through transactions. This translates into a monumental valuation of 129 million dollars at current market prices.
This unprecedented surge in burned AVAX not only highlights the evolution of the transactional landscape within the Avalanche network, but also emphasizes the central role of subscription-based transactions in shaping the future trajectory of decentralized ecosystems.
As the Avalanche network continues to witness this unprecedented surge in burned AVAX, it becomes imperative to delve into the mechanisms of subscription-based transactions that have fueled this remarkable trend.
The inscription-based tokens, conceived as an alternative solution to the Bitcoin network due to its intrinsic lack of support for native tokens, have evolved into a versatile solution adopted by several blockchains.
The recent proliferation of registrations on Avalanche, which originated from Bitcoin and then spread to various blockchain networks. This is a data that indicates a broader trend in the industry.
Beyond technical nuances, the appeal of inscription-based tokens lies in their cost efficiency for transactions compared to native tokens.
The increase in transactions related to registration has contributed to the significant growth of AVAX. Highlighting the adaptability and usefulness of this unconventional method of token creation.
By incorporating textual information directly into blockchain transactions, users can create tokens without the need for a native support structure.
The off-chain numbering system adds an additional level of organization, allowing for efficient tracking of these subscription-based tokens.
The Avalanche and AVAX situation from a broader perspective in the crypto ecosystem
The impact of transactions related to registrations is further emphasized by their predominance in transaction fees on the Avalanche network.
According to Hildobby’s Dune Analytics dashboard, these transactions represented 75% of the total fees paid and subsequently burned during the past week.
This domain signals a paradigm shift in the composition of transactional activities within the Avalanche ecosystem.
From a broader perspective, this surge in burned AVAX underscores the integral role that transaction fees play in shaping the economic dynamics of decentralized networks.
In the context of Avalanche, the complete burning of transaction fees aligns with the commitment to reduce the circulating supply of AVAX.
This scarcity mechanism not only introduces a deflationary aspect to the token, but also increases its potential value as a store of wealth.
The implications of this increase extend beyond the Avalanche network itself. The evolution of subscription-based transaction landscape and their impact on transaction fees could set a precedent for other blockchain networks, which would need to reassess and refine their fee structures.
As decentralized ecosystems continue to mature, the allocation and efficient use of transaction fees become fundamental to support and improve the overall health of these networks.
Conclusions on the matter
In conclusion, the surge of burned AVAX on the Avalanche network, fueled by a tenfold increase in subscription-related transactions, highlights the dynamic nature of decentralized ecosystems.
The interaction between technical innovations, transactional dynamics, and economic considerations highlights the resilience and adaptability of blockchain networks.
With the evolution of the landscape, it will be interesting to observe how these trends will shape the future of transactional activities and economic models within the broader space of blockchain and cryptocurrencies.
