Proof-of-stake blockchain network Algorand appears to be in a rough season as on-chain metrics show that more than 80% of users holding its native token, ALGO, are in losses.

According to a tweet by pseudonymous X user Slim Daddy, data from blockchain intelligence firm IntoTheBlock shows that Algorand is experiencing stress in its profitability, growth, and token metrics.

Algorand $ALGO faces challenges as data from @IntoTheBlock shows 88% of holders at loss, 14% price fall in 7 days and50% drop in dev activity over 2 weeks.

Network stress signals from profitability, growth and token metrics. But usage & transactions volume are still rising,… pic.twitter.com/bcpkliXlIf

— Slim Daddy ₿ (@felixreads) January 12, 2024

Algorand Faces Difficulties

Slim Daddy, a content creator at IntoTheBlock, disclosed that Algorand has witnessed a significant drop in developer activity in the past two weeks. Roughly 88% of ALGO holders also battle losses as the token records minimal gains.

Out of 19.88 million addresses on the network, only 1.91 million, representing 9.62%, are in profit, while a whopping 17.58 million, accounting for 88.38%, are in loss.

Algorand’s figures are a far cry from that of Bitcoin, which has over 90% of BTC holders in profit. The network’s rate also differs starkly from that of fellow top altcoins like ether (ETH), which has more than 70% of its holding addresses in the green.

Despite the general market rally, which has seen BTC and ETH soar over 151% and 92% in 2023, ALGO is in the red, down 3.6% within the same period. At the time of writing, the asset was trading at $0.20, per data from CoinMarketCap.

Usage and Transaction Volume on the Rise

Last year was unfavorable for Algorand as its largest decentralized finance (DeFi) protocol, Algofi, shut down its operations, citing a “confluence of events.” The DeFi platform said it could no longer continue building and maintaining its business to the highest standards and decided to transition into withdrawal-only mode, closing its social media accounts except Discord.

Algofi’s dissolution affected Algorand’s total value locked (TVL), which fell by more than 73% from its November 2022 peak of roughly $300 million to $58 million. At the time of writing, the network’s TVL had recovered a little and was sitting at $71.5 million, per data from DefiLlama.

Meanwhile, Algorand’s challenges are not affecting the network’s usage and transaction volume, which are rising.

“Network stress signals from profitability, growth, and token metrics. But usage & transactions volume are still rising, monitoring is needed if longer term prospects will dim. Fundamentals may outweigh recent gloom, but near-term hurdles appear for the ambitious blockchain. Time will tell if the solid technology and platform outweigh fickle indicator moves,” the IntoTheBlock content creator stated.

The post Algorand Investors Face Setbacks, 88% of ALGO Holders in Loss: Analysis appeared first on CryptoPotato.

---

Filed under: Bitcoin - @ January 12, 2024 7:04 pm