Altcoins' Price Plunge at Odds with Network Performance

The cryptocurrency market has witnessed a significant divergence in recent times between the fundamental data of blockchain networks and market sentiment. According to Bitwise's first quarterly staking report, while activity has increased and costs have decreased on the Ethereum (ETH), Solana (SOL), and Avalanche (AVAX) networks, token prices have lost more than 50% of their value over the past year.

Bitwise Onchain Research Manager Kam Benbrik stated that despite the drop in prices, on-chain data shows that the networks are strengthening. In particular, updates to network designs have allowed transactions to be carried out more economically.

The report highlights a concerning trend for investors: staking rewards come largely from new token emissions rather than network fees. This means that investors who do not stake their assets face a dilution risk due to inflation. For example, 93% of Ethereum rewards and over 90% of Solana rewards consist of newly minted tokens.