AVAX Dips 91.28% in 24 Hours Amid Network Upgrades and Governance Shifts

Avalanche (AVAX) experienced a sharp decline of 91.28% within 24 hours on August 5, 2025, closing at $21.91, despite a 92.98% surge over the past seven days. The recent volatility is attributed to a series of developments centered on network upgrades and governance restructures that have sparked mixed market sentiment.

Network Optimization and Delegation Changes

Avalanche announced the activation of a major network optimization protocol on August 3, 2025, aimed at enhancing transaction throughput and reducing node maintenance overhead. The update is expected to improve the scalability of the platform, particularly as enterprise adoption grows. The change was implemented through a hard fork, which required validators to upgrade their software to maintain consensus.

In addition, the project introduced new delegation rules for stakers, allowing for more flexible reward distribution models. These adjustments are intended to attract a broader range of stakers and reduce centralization risks. However, some early reports indicated short-term uncertainty among token holders regarding liquidity and reward predictability.

Governance Reforms and Tokenomics Adjustments

A key component of the recent changes involves the restructuring of the Avalanche governance model. A new tokenomics framework was proposed, redistributing a portion of the network’s inflationary supply to incentivize developers and long-term stakeholders. The reform package also includes a revised roadmap for the Avalanche Subnets, with a greater emphasis on cross-chain interoperability and modular smart contract deployment.

Community voting on the proposal concluded on July 31, 2025, with more than 60% of AVAX holders in favor. The implementation phase is set to begin by late August, with phased rollouts across the core and subnet ecosystems. While these changes are expected to provide long-term value, the immediate market reaction reflected cautious investor behavior.

Developer and Ecosystem Activity

Developer activity on the Avalanche network has remained robust, with a 20% increase in monthly active developers in July 2025. Multiple decentralized finance (DeFi) and non-fungible token (NFT) projects have announced new integrations, including a cross-chain lending protocol and a metaverse platform leveraging Avalanche’s cost-efficient environment. Despite these advancements, the recent price drop indicates a short-term recalibration as the market digests the broader implications of the upgrades and governance shifts.

Analysts project that the full impact of the changes may not be reflected in the price for several weeks, as the market assesses the long-term utility and adoption potential of the updated framework.