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.