Big Token Unlock Boosts Avalanche, Staking Rewards Dip

Price Surge and Token Unlock Details

On August 21, the Avalanche (AVAX) token reached a high of $23.25, marking its highest level since August 3. This surge represents a 32% increase from its lowest point in August.

The price boost came just a day after the network unlocked 9.5 million AVAX tokens, valued at over $202 million. The next token unlock is scheduled for November 18 this year. Notably, only 64% of the total AVAX tokens have been unlocked so far, with over 255 million tokens set to be unlocked by August 2029.

Impact on Staking Rewards

Token unlocks generally have a negative effect on existing holders by increasing the supply of available coins, which impacts staking rewards as some of these tokens flow into staking pools.

• According to data from StakingRewards, AVAX’s staking yield has been on a downtrend over the past few weeks, nearing its lowest level in months.
• As of August 21, the staking yield dropped to 7.93%, down from 7.97% on July 21.
• Post-unlock data shows that staking inflows increased after the August 20 token unlock, reversing a six-day decline. This suggests that some investors exited their stakes before the unlock.

Market Trends and Patterns

AVAX’s price increase was also supported by data from Santiment, which indicated that intraday trading volume surged to over 309 million, the highest since August 7.

Despite this, Avalanche has faced significant challenges this year. The token has decreased by over 64% from its peak in March and formed a death cross and head-and-shoulders pattern in June, often signaling further declines.

Declining Market Share

Avalanche has been losing market share in the Decentralized Finance (DeFi) space. Data from DefiLlama reveals:

• The total value locked (TVL) on Avalanche is $882 million, positioning it as the ninth largest chain in the industry.
• Newer chains such as Base and Arbitrum (ARB) have surpassed Avalanche, with TVLs of $1.49 billion and $2.68 billion, respectively.
• In terms of decentralized exchange (DEX) volume, Avalanche’s weekly volume stands at $421 million, compared to Arbitrum’s $3.7 billion and Base’s $3.18 billion.

Comparison with Other Networks

Unlike Solana (SOL) and Base, Avalanche’s meme coins, including Coq Inu (COQ), Kimbo, and Gecko Inu, have not achieved high popularity. In contrast, Solana tokens such as Dogwifhat (WIF) and Bonk (BONK) have gained significant market share.