Institution influx, gaming adoption, network upgrades fuel and upgrade Avalanche’s Defi rebound.
The total value lock (TVL) of the Layer 1 blockchain Avalanche has more than doubled over the past two quarters driven by a combination of facility influx, gaming ecosystem expansion and network upgrades.
According to Defillama, Avalanche’s TVL is rising sharply from $4 billion, at nearly $2.1 billion.
Several developments have contributed to the rebound. Earlier this year, Avalanche announced an octane upgrade, leading to cheaper gas prices. Then, in June, Asset Manager Vaneck announced that it would launch a Vaneck purpose fund, a private digital assets fund targeting Avalanche projects.
The Avalanche Game Project also gained traction over the summer. In particular, Maplestory helped drive total transactions from all 620 million in 2024 to over 1.4 billion (H1) in the first half of 2025 (H1). Meanwhile, in August, investment firm Skybridge Capital announced plans to transfer roughly $300 million in assets to the avalanche blockchain.
Experts say these factors have created favorable conditions for avalanche liquidity and distributed finance (DEFI).
“In my opinion, there is a mix of factors that contribute to rebound. Octane upgrades reduce fees and increase efficiency, but tokenization and influx of financial vehicles related regimes will bring about more capital.” “The outcome is a cheaper and popular network, and Avax prices show that as Defi Activition and Stablecoin adoption grows, it will restore and promote staking and liquidity delivery.”
Avax is currently changing its hands at $29, an increase of 52% over the past three months per Coingecko.
Puckrin added that growth will strengthen the avalanche status as a hub for both tokenized real-world assets (RWAS) and Defi.
“With more liquidity and cheaper transactions, developers and users have a stronger incentive to build and participate,” he said. “This means that Avalanche is equipped to directly compete with Solana and Ethereum Layer 2, especially in areas where tokenization has gained traction.”
Still, Puckrin warned that the majority of growth is heavily dependent on institutional demand, “if these trends change in the opposite direction, it will make avalanches vulnerable.”
The network’s focus on tokenized assets can be subject to regulatory scrutiny and slow progress. “Subnet fragmentation remains a concern when activity is too thin,” Paklin said. “And don’t forget that TVL can be misleading because it can be influxed as quickly as it can be influxed without sticky users or protocols.”
Fogo’s first contributor, Doug Colkitt, agreed with Puckrin’s sentiment, saying, “TVL is a dull indicator, but when it doubles in a few months, we found that ecosystems fit into niches like RWA and Defi derivatives.”
Kolkit added, “The question now is whether that fluidity will cool down once, or whether it’s just another wave of mercenary.”
Blockchain, like the broader Defi market, experienced a recession earlier this year after post-election rally. Avalanche’s TVL fell from $1.7 billion in mid-December 2024 to just $1 billion in April.
“The current challenge is not to rely on short-term capital surges, but to turn traction into sustainable and widespread adoption,” concluded Paklin.