On-chain data continues to reach new highs. In a sluggish market, how does the Avalanche ecosystem "build nests to attract phoenixes"?

Since Q4 2025, Avalanche has been nearly synchronized in its on-chain popularity resurgence and institutional adoption.

On one side, mainnet activity metrics have repeatedly hit high points at the end of the year and in January, while on the other side, there has been a surge of events focused on institutional workflows and compliance distribution. Even in a poor market, the story of assets being onboarded continues to accelerate.

Institutionalization Drives Asset Onboarding

In January 2026, the well-known crypto investment bank Galaxy Digital announced the successful issuance of its first tokenized loan debt (CLO) on Avalanche, with a total scale of $75 million, of which $50 million was subscribed by the institutional credit protocol Grove.

CLO is a structured credit product that packages corporate loans for sale to investors of different risk levels. Its layered debt structure is tokenized and issued via the regulated digital asset platform INX on the Avalanche network, offering trading to qualified investors.

This investment is actually Grove’s second large-scale deployment on the Avalanche platform. In July last year, Grove announced its launch on Avalanche, with an initial deployment strategy aiming to issue up to approximately $250 million in real-world assets (RWA) on the network. Grove allocated funds to JAAA issued through the multi-chain protocol Centrifuge’s native chain, and the share tokens were issued and circulated on Avalanche C-Chain.

As a high-performance public chain designed specifically for institutional finance, Avalanche offers advantages such as EVM compatibility, rapid deployment, and access to compliant distribution channels. Additionally, Avalanche emphasizes quick deployment of customizable Avalanche L1 (subnets), which better balances requirements for access, compliance, performance, and risk control, making it one of the preferred partners for financial institutions deploying on the chain.

For example, in May last year, New Jersey-based real estate infrastructure company Balcony announced that it deployed a scalable, dedicated Avalanche L1 service via the AvaCloud platform, aiming to digitize and tokenize property records worth approximately $240 billion across more than 370,000 land parcels. AvaCloud is a hosted blockchain service provider for Avalanche L1, assisting enterprises in building, deploying, and scaling Layer-1 networks.

Data Shows “Two Extremes”

Avalanche’s institutional route has contributed to steady growth in its on-chain assets. According to Token Terminal data, the total market cap of stablecoins and tokenized funds on Avalanche’s mainnet has increased by about 70% over two years since January 2024.

Data from RWA.xyz shows that as of January 21, Avalanche’s stablecoin assets exceeded $2.2 billion, and RWA assets totaled over $1.351 billion — including approximately $636 million in Distributed Assets (tokens that can be transferred peer-to-peer between wallets) and about $715 million in Represented Assets (assets that cannot be transferred outside the issuing platform, with the blockchain serving mainly as a ledger for accounting and settlement).

Distributed Assets focus on market coverage, inclusive finance, and platform interoperability; while Represented Assets are more like collateralized representations that do not allow transfer outside the platform, with the blockchain acting as a shared ledger for record-keeping and settlement.

By December 2025, the total transaction volume of all Avalanche Layer-1s surpassed 10 billion transactions. With this milestone, the ecosystem officially entered a recovery phase at the end of the year. In that month, Avalanche’s C-Chain repeatedly set new records for the highest single-day and weekly transaction counts in 2025, with active addresses reaching 651.2 million, weekly capital inflows of $43 million, ranking second among all blockchains at one point.

Entering the new year, Avalanche continued its growth momentum from late last year, with its main network (primarily C-Chain, along with P-Chain and X-Chain) daily active addresses hitting new highs, peaking at 1.71 million on January 18.

However, if we shift our focus from on-chain popularity to asset pricing and DeFi activity, we see no corresponding “recovery curve.” According to CoinGecko market data, from mid-January to now, AVAX’s closing price has fluctuated roughly between $12 and $15, closing at about $12.09 on January 20, the lowest since November 2023.

Looking at chain-level metrics from DeFiLlama, Avalanche’s native TVL is approximately $1.66 billion, with bridged TVL around $3.62 billion. Meanwhile, on-chain fees/revenue remain relatively low on a daily basis, indicating that even with increasing transaction and address counts, protocol layer value capture may not be proportionally growing.

Considering macro factors, cryptocurrencies, especially L1 tokens, have generally been under pressure over the past year. Even if the ecosystem sees institutional cooperation or technological progress, it is overshadowed by stronger market beta and the longstanding issue of lack of large-scale applications. Avalanche’s valuation issues are not unique to itself.

Building a Nest to Attract Swallows: Launch of a $1 Million Builder Competition

For infrastructure, a bear market is also a good time for deep accumulation, allowing a more focused effort on ecosystem development.

Taking advantage of this wave of on-chain activity, Avalanche’s initiatives to supply developers have become noticeably intensive. On January 21, the Avalanche Foundation announced the launch of the “BuildGames” builder competition, offering a total prize pool of $1 million. The official program lasts six weeks, with a rolling review process. Registration is open immediately, with no specific direction or track restrictions. Outstanding teams may also receive follow-up guidance and funding from Avalanche’s incubation program.

From the foundation’s existing system, Avalanche’s developer support is not just through a single competition but involves multiple parallel pipelines.

First is the official accelerator Codebase, which focuses on rapid mentoring for early-stage teams and non-dilutive funding support. Selected teams receive a $50,000 donation and practical support covering product development, token design, validator/infrastructure strategies, growth, and compliance.

Second is the foundation’s Grants system, which mainly funds infrastructure and AI-related projects. Lastly, Retro9000, with a maximum fund pool of $40 million, aims to reward teams that have already delivered tangible impact on Avalanche L1 or key toolchains, lowering the barrier of “funding before delivery” and favoring proven builders.

On the infrastructure front, Avalanche completed a network upgrade codenamed “Granite” at the end of last year. This upgrade comprises three ACPs (ACP-181/204/226). Granite introduced dynamic block times, biometric authentication, and more stable validator views, improving cross-chain message reliability and performance.

Overall, in the past month, Avalanche’s ecosystem has incorporated institutional-scale capabilities. With infrastructure development and developer incentives, it has laid a foundation for growth into 2026.