Avalanche C-Chain Burning AVAX at an Accelerated Rate
Recent data reveals that the Avalanche C-Chain is burning approximately $12.65 of AVAX every second. This surge in AVAX burning is a result of the launch of inscriptions, which allow for data storage on the Avalanche C-Chain. As a result, a significant amount of AVAX is being taken out of circulation.
Potential Long-Term Benefits for AVAX
If the current burn rate is maintained, it could lead to approximately $400 million worth of AVAX being removed from circulation. This reduction in supply, combined with constant demand, has the potential to drive up the price of AVAX in the long term.
Inscriptions Driving Increased Activity
The recent increase in activity on the Avalanche C-Chain is primarily due to over 2.3 million daily transactions related to users creating and transferring “ASC-20” tokens for data inscription. On average, the Avalanche C-Chain processes around 450,000 transactions daily. However, this number has been significantly higher in recent days.
This surge in activity has also led to a fourfold increase in on-chain activity and has driven revenue for the network through gas fees collected.
New Use Cases and Gas Fees
Inscriptions have introduced new use cases on Avalanche, similar to those seen with Bitcoin, particularly around provable ownership and identity. Since Avalanche operates as a public ledger maintained by distributed validators, gas fees must be paid. Part of these gas fees is burnt as part of Avalanche’s structure.
FTX Group Selling AVAX Raises Questions
It remains uncertain how the increased number of inscriptions on the C-Chain will impact prices. While more inscriptions could support bullish sentiments, external market factors need to be considered. For example, FTX Group recently transferred a significant amount of AVAX to Binance, which is often interpreted as bearish.
Price Stability and Uptrend
Despite some price contraction this week, AVAX has maintained an uptrend. It experienced a 190% increase from October 2023 lows and reached a peak of around $16 in November. Although prices have cooled off and dropped by approximately 18%, the overall uptrend remains intact. A break above $16 could potentially lead to more activity and push the coin towards its previous highs of around $30 in August 2022.
Hot Take: Avalanche C-Chain Burning Boosts Long-Term Potential for AVAX
The accelerated burning of AVAX on the Avalanche C-Chain has significant implications for the long-term potential of the cryptocurrency. With approximately $12.65 of AVAX being burnt every second, there is a substantial reduction in supply. This, combined with constant demand, has the potential to drive up the price of AVAX over time. Additionally, the increased activity on the C-Chain through inscriptions and the emergence of new use cases further strengthens AVAX’s position in the market. However, external factors such as FTX Group’s selling of AVAX should also be considered when evaluating its future performance.
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