Bitcoin

Impact

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Avalanche

Over the past five days, users of the Avalanche network have collectively paid more than $4 million in transaction fees. This significant expenditure is primarily attributed to creating and moving tokens and non-fungible tokens (NFTs) using inscriptions, a novel method gaining traction in the blockchain world. 
Inscriptions have emerged as a creative bypass on networks like Bitcoin, which lack native token support. By embedding text in standard blockchain transactions and employing an external numbering system, these inscription-based tokens offer a <a href="https://bitcoinist.com/ftx-moves-36m-in-matic-avax-in-last-24-hours/" target="_blank" rel="noopener ">unique approach</a> to token creation and movement. 
Initially developed for Bitcoin, <a href="https://bitcoinist.com/avalanche-polygon-unreliable-and-non-functional/" target="_blank" rel="noopener ">their utility</a> has extended to other blockchains such as Arbitrum, Polygon PoS, and so on, mainly due to the cost-effectiveness of transferring these tokens compared to native ones. The recent phenomenon of Avalanche stands out in terms of scale and cost. 
<h2 id="avalanche-s-unique-position-in-the-inscription-phenomenon">Avalanche’s Unique Position In The Inscription Phenomenon</h2> 
A deep dive into the data reveals intriguing details about this surge in fees on Avalanche. According to a Dune Analytics <a href="https://dune.com/hildobby/inscriptions" target="_blank" rel="noopener nofollow">dashboard</a> crafted by Hildobby, the $4.06 million in fees paid on Avalanche constitutes 75.32% of all inscription-related fees across multiple blockchains on the dashboard. 
<img loading="lazy" decoding="async" class="wp-image-270162 size-large" src="https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?resize=980%2C617" alt="Fees spent on inscriptions" width="980" height="617" srcset="https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=2127 2127w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=640 640w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=980 980w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=1536 1536w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=2048 2048w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=750 750w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.49.05.jpg?w=1140 1140w" sizes="(max-width: 980px) 100vw, 980px" data-recalc-dims="1"> 
This spike in transaction costs is not merely a byproduct of inscriptions but also a result of a significant increase in general network transactions, leading to heightened demand for block space on Avalanche. This has <a href="https://dune.com/hildobby/Gas?Blockchain=Avalanche+C-Chain" target="_blank" rel="noopener nofollow">culminated</a> in a dramatic spike in gas prices, with costs soaring over 5,000 nAVAX per unit on December 18. 
<img loading="lazy" decoding="async" class="wp-image-270154 size-large" src="https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?resize=980%2C549" alt="Avalanche soaring gas price." width="980" height="549" srcset="https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=2420 2420w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=1536 1536w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=2048 2048w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2023/12/Screenshot-2023-12-18-at-18.14.52.png?w=1140 1140w" sizes="(max-width: 980px) 100vw, 980px" data-recalc-dims="1"> 
Notably, the more recent spike in Avalanche fees indicates a growing trend in using inscriptions on the network. To date, Avalanche has processed 63 million inscription-related transactions, according to <a href="https://dune.com/queries/3256830/5451318" target="_blank" rel="noopener nofollow">data</a> from Dune Analytics. 
<h2 id="market-impact-and-broader-implications">Market Impact And Broader Implications</h2> 
The rise in transaction fees on <a href="https://bitcoinist.com/ava-labs-announces-12-staff-cut-ceo-confirms/" target="_blank" rel="noopener ">Avalanche</a> has coincided with notable market movements. The blockchain’s native token, AVAX, has experienced a significant increase in value, surging by over 10% in the last week. 
<img loading="lazy" decoding="async" class="size-medium" src="https://www.tradingview.com/x/eXROAdO0/" alt="Avalanche (AVAX) price chart on TradingView" width="2770" height="1496"> 
Despite a 6.5% drop in the past 24 hours, AVAX continues to trade above the $39 mark. Concurrently, there has been a decline in the asset’s trading volume from over $3 billion last week to around $1.3 billion as of today. 
This trend in Avalanche is not an isolated case in the crypto world. Users on various blockchain networks are increasingly encountering substantial transaction fees. A recent incident involving a <a href="https://bitcoinist.com/oops-a-bitcoin-whale-just-paid-3-1-million-in-fees/" target="_blank" rel="noopener ">Bitcoin whale who accidentally paid a network fee of $3.1 million</a> underscores the potential for high costs in crypto transactions. 
Though the mining pool <a href="https://bitcoinist.com/bitcoin-blunder-mining-giant-set-return-million-fee/" target="_blank" rel="noopener ">AntPool has offered a refund</a>, this incident highlights the complexities and sometimes the high stakes involved in blockchain transactions. 
Featured image from Unsplash, Chart from TradingView

Avalanche Users Shell Out Over $4M In Inscription Fees: A Five-Day Crypto Phenomenon

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