Avalanche (AVAX) has fallen 45% in 30 days, while at the same time, the total market capitalization of cryptocurrencies has decreased by 29%.

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Despite the recent downturn, this decentralized application (DApp) platform remains a top contender in the tier 1 and 2 race and ranks high in terms of smart contract deposits and active addresses. However, the low price of the token is still causing investors to rethink whether the network remains a “serious” competitor.

AVAX token/US dollar on FTX. Source: Trading View
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A brutal sell-off in risky assets has caused AVAX to test the $14.80 support multiple times while the current market capitalization is $4.8 billion. It is also important to note that the total network value locked down (TVL) is an impressive $3.2 billion.

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By comparison, Solana (SOL) offers incredibly low network fees and has a TVL of $2.1 billion. However, the market capitalization of the SOL token is $12.9 billion, which is almost 3 times the Avalanche valuation at $14.8.

The TVL indicator is extremely relevant as it measures the deposits in the smart contracts of the network. If we use Polygon (MATIC), an Ethereum layer 2 solution, as a proxy, the network will contain $1.8 billion of TVL while the market cap of the token will be $3.5 billion.

In short, Avalanche looks heavily discounted given how peer networks’ market caps far outstrip their respective TVLs.

The total blocked cost has increased, but the number of users has decreased

The main metric of the Avalanche dapp has strengthened over the past 60 days as the network’s TVL jumped to 184 million AVAX tokens. This suggests that even when the price of AVAX collapsed, investors did not withdraw tokens from its decentralized applications.

The total cost of the Avalanche network is locked, AVAX. Source: Defillama

In terms of AVAX tokens, the network’s TVL has actually grown by 35% in two months. In comparison, Ethereum TVL increased by 10% in Ether terms, while the BNB network decreased by 14% over the same period.

To make sure the increase in TVL in Avalanche is encouraging, traders should look at DApp usage metrics. Some applications, such as games and marketplaces, do not require large deposits, so the metric does not matter in these cases.

Avalanche DApps data for 30 days. Source: DappRadar

As revealed by DappRadar, on June 21, the number of Avalanche network addresses interacting with decentralized applications decreased by 42% compared to the previous month. In comparison, the BNB network saw a 16% drop in users, while Polygon dropped 29%.

The price follows fundamentals that have declined

Even though TVL Avalanche has outperformed competing Dapp networks, the decline in network usage is a concern. For example, Trader Joe’s 93,130 active addresses are less than Polygon’s leading DeFi app, QuickSwap, which has 161,040 active users.

The above data suggests Avalanche is in murky waters and may explain why AVAX price has dropped 45% in 30 days. Investors are likely to be skeptical of the $14.80 support until network usage improves, especially the number of active addresses in DeFi.

The views and opinions expressed here are solely those of author and do not necessarily represent the views of Cryptooshala. Every investment and trading move involves risk. You should do your own research when making a decision.