Avalanche Q1 2025: AVAX Takes a Hit While the Network Goes Wild

Price tanks, but developers and users pile in—classic crypto dissonance.

AVAX’s value drops as network activity skyrockets. Traders panic-sell while builders double down. The blockchain doesn’t care about your portfolio.

Wall Street analysts shrug: ’Another day in the volatile circus of decentralized finance.’

Avalanche Market Cap Fell Nearly 47%

Avalanche had a tough start to 2025 in terms of price performance. The circulating market cap of AVAX fell by 46.7% quarter-over-quarter, dropping to $7.8 billion. That move pushed Avalanche’s rank among cryptocurrencies down from 11th to 15th place.

This decline was mainly due to the falling price of AVAX tokens, which also lowered the amount of fees collected in U.S. dollars. Dollar-denominated fees dropped by 62.1%, going from $4 million to $1.5 million, while the number of AVAX tokens paid as fees fell by 44.7%.

Network Upgrade Lowered Fees, Boosted Activity

The drop in fees was partly because of the Avalanche9000 upgrade, which cut base transaction fees on the C-Chain by an impressive 96%. This upgrade was designed to make the network faster and more efficient.

While AVAX’s inflation rate stayed stable at 3.9%, there was a small rise in staking. 46.5% of AVAX’s eligible supply was staked at the end of Q1, up slightly from 45.6% the previous quarter.

Pulsar Game hint Massive Transaction Growth

The real highlight of the quarter was the spike in user activity across Avalanche’s Layer-1 (L1) networks. A major driver of this growth was Pulsar, a real-time strategy game built on Avalanche. Pulsar alone processed an average of 1.8 million daily transactions, showing a 24% increase from the previous quarter.

Across all L1 networks on Avalanche, daily average transactions grew 21.3%, reaching 3.4 million. One of the top performers was QChain, which saw an incredible 1,720% increase in daily transactions. Meanwhile, Lamina1 grew its active user addresses by 139.5%, contributing significantly to overall network activity.

The Avalanche C-Chain also saw gains, with a 50.4% jump in transactions and a 258.5% increase in token activity. This indicates strong adoption of the network even as the token price struggled.

Mixed Results for DeFi and Stablecoins

Avalanche’s DeFi (decentralized finance) sector showed both strengths and weaknesses. In dollar terms, the total value locked (TVL) dropped 14.7%, falling to $1.1 billion. However, when measured in AVAX tokens, the TVL actually ROSE 61.9%, reaching 59.8 million AVAX. This suggests that users are still active in DeFi but are simply affected by the lower token price.

Among DeFi apps, AAVE led the pack, growing to $515.2 million in TVL. But others like Benqi and LFJ saw declines of 25% and 30%, respectively.

On the decentralized exchange (DEX) front, trading activity also dipped. Daily trading volumes dropped 17.8%, although LFJ continued to hold the largest market share at 50%, even after seeing a 34.2% decrease in volume.

Stablecoins on Avalanche also saw some shifting trends. Overall supply fell from $2.3 billion to $1.9 billion. Tether (USDT) supply dropped sharply by 34.5%, while USD Coin (USDC) bucked the trend, rising 42.7% to $653.5 million.

Final Thought

Although AVAX’s price and market cap dropped significantly in Q1 2025, the Avalanche network itself showed strong growth in user activity, transactions, and DeFi engagement. Protocol upgrades like Avalanche9000 helped improve performance and cut costs, making the platform more attractive for users and developers alike.

The huge activity spikes from gaming apps like Pulsar and strong adoption on Layer-1 chains suggest that Avalanche is gaining real traction beyond token speculation. If this momentum continues and market conditions stabilize, Avalanche could be setting the stage for a strong comeback in the months ahead.