In an intriguing development for the Avalanche blockchain, a user known as @kevinsekniqi brought to light on November 22 that the network’s C-Chain is incinerating approximately $12.65 worth of its native cryptocurrency, AVAX, every second. This significant rate of token burn implies a promising outlook for AVAX’s future valuation.
The intensified burn rate of AVAX is directly correlated with the advent of inscriptions, a feature that allows for embedding data within the Avalanche C-Chain, thereby accelerating the removal of the cryptocurrency from active circulation.
If the current burn rate persists, estimates presented by @kevinsekniqi suggest that an eye-opening total of $400 million in AVAX could be eradicated from the marketplace. This scenario portends well for AVAX proponents in the long-term, as a dwindling supply amidst sustained demand is traditionally a harbinger of appreciating asset prices.
This uptick in network activity springs from a staggering 2.3 million daily transactions pivoting around users minting and transferring “ASC-20” tokens for the purpose of perpetual data inscription on the C-Chain. The blockchain is typically accustomed to handling around 450,000 transactions on an average day. However, current on-chain metrics show a significant flux in this trend.
Fuelled by the newfound interest in inscriptions, the network’s revenue is on the rise as evidenced by the accumulation of gas fees. In the Avalanche ecosystem, a portion of gas fees is systematically destroyed, aligning with the blockchain’s economic model.
While the mounting inscription activity ostensibly lends support to AVAX’s bullish supporters, it is crucial to deliberate on other external market factors that may also sway pricing.
In a parallel narrative, the FTX Group—charged with the FTX estate’s administration—has reportedly transferred 916,780 AVAX, valued at about $20.7 million, to the Binance exchange. Markets often perceive such transfers to centralized exchanges as a negative sign. Subsequently, AVAX’s value saw a 13% dip on November 21.
Despite a recent contraction, AVAX’s price is maintaining stability and continues to trend upwards. The cryptocurrency marked a remarkable 190% rally from its October 2023 nadir, culminating at a zenith of roughly $16 in November.
Currently experiencing a cooling-off phase with an approximate 18% decline, the asset’s overarching uptrend remains intact. Breaching above the $16 marker might catalyze further dynamism and potentially elevate AVAX towards its prior peak levels of $30 witnessed in August 2022.
