Dec 19, 2023 Camille A. Hanard
What's Behind the Recent Avalanche Fee and Burn Spike?
The Avalanche blockchain has recently witnessed a significant surge in transaction fees and token burns, primarily driven by the growing popularity of inscription-based tokens. Over the past week, Avalanche users have expended a staggering $13.8 million in transaction fees for minting and transferring these tokens, marking a notable increase in network activity.
What Are Inscriptions In Crypto?
Inscriptions, initially devised as a solution on the Bitcoin network which lacks native token support, involve embedding text into standard blockchain transactions using an off-chain numbering system for tracking. This method has gained traction across various blockchains due to its cost-effectiveness compared to moving native tokens. On blockchains like Polygon and BNB Chain, where tens of millions of inscription-based tokens exist, the fees have totaled around a million dollars for each chain. However, Avalanche has seen a sharp rise in expenses, reaching up to $5.6 million per day in recent days.
What Impact Does the Increased Use of Inscriptions Have on AVAX Token Burns?
This increased activity on the Avalanche network is also reflected in the amount of AVAX, the platform's native token, being burned. In the last week alone, users have burned 439,000 AVAX, valued at approximately $16.7 million, a tenfold increase from the previous week. Unlike Ethereum, where only a portion of transaction fees are burned, Avalanche burns all transaction fees, leading to a significant reduction in the circulating supply of AVAX.
Avalanche's Inscription Tokens: A Catalyst for Network Growth?
The allure of inscription-based tokens on Avalanche is underscored by the network's processing of 61 million inscription-related transactions, ranking third after BNB Chain and Polygon PoS. The rise in non-inscription transactions has also contributed to this boom, increasing the overall demand for block space and driving up transaction costs. The number of addresses involved in inscription-related transactions has surged dramatically, with a record 180,000 addresses participating in a single day, mainly due to heightened activity on BNB, Avalanche, and zkSync Era.
Want To Learn More About Avalanche?
DeFi Teller has created a detailed video review on the network and its unique features, check it out here:
