Avalanche targets institutional adoption as crypto projects seek use cases

Correction: Sept. 20, 19:00 UTC: A previous version of this story included a percentage for the decrease in active addresses, which has since been removed. Additional context has been added to explain how inscriptions activity drove volume and metrics in December 2023 on Avalanche AVAX +2.45% 's C-Chain. Furthermore, a section on Avalanche's broader ecosystem beyond the C-Chain has been included for a more comprehensive view.

Avalanche, which initially gained popularity as a faster and cheaper alternative to Ethereum, is shifting its focus to institutional adoption.

The number of active addresses on Avalanche's C-Chain has plummeted to a 12-month low of 31,000, matching levels last seen in October 2023. The sideways direction of C-Chain activity reflects a broader trend in the crypto space, where projects are struggling to find compelling use cases and maintain user interest, especially in a bearish market.

In December, Avalanche experienced a significant surge in activity related to inscriptions, which are a way of storing data directly on a blockchain. This trend was inspired by similar phenomena on other blockchains, particularly Bitcoin's Ordinals.

Avalanche, designed as a high-throughput, low-latency blockchain, aimed to solve the scalability issues plaguing older networks. Its unique consensus mechanism and multi-chain architecture promise to deliver the trinity of blockchain design: decentralization, scalability and security.

The December 2023 spike in activity  coincided with JPMorgan and Apollo's announcement of plans to use Avalanche for real-world asset tokenization, highlighting the network's potential for institutional adoption. 

The current state of Avalanche reflects a broader trend in the crypto space, where projects are struggling to find compelling use cases and maintain user interest, especially in a bearish market.

The drop in active addresses could be attributed to various factors, including the general market downturn, increased competition from other Layer 1 and Layer 2 solutions, and possibly a cooling of speculative interest. This situation highlights the importance of developing real-world applications and use cases that can drive sustained user engagement beyond speculative cycles.

While the C-Chain has been the primary focus of Avalanche's ecosystem, the network is actively expanding its capabilities beyond this single chain. Avalanche's unique architecture includes multiple chains, each serving different purposes. The P-Chain (Platform Chain) and X-Chain (Exchange Chain) complement the C-Chain, offering specialized functionality for validator staking and asset exchanges, respectively. Notable examples include DeFi Kingdoms' subnet for gaming and JPMorgan's blockchain for asset tokenization.

This is an excerpt from  The Block's Data Insights newsletter . Dig into the numbers making up the industry's most thought-provoking trends.