What is Avalanche? Know More About AVAX

The “Ethereum-killer” debate has been dominated over the years by the likes of EOS, Cardano, Neo, and Solana. It looks like we have a new contender to the throne – Avalanche (AVAX). Today, let’s understand why AVAX has jumped >540% over the last year and why the likes of Raoul Paul have handpicked the protocol as the one to look out for in 2022.

Avalanche In Numbers

More often than not, visuals speak a lot louder than words, so we’d like you to quickly go through a few charts.

what is avalanche

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The first chart shows us the total value locked (TVL) in Avalanche DeFi apps. According to DeFiLlama, Avalanche has the fourth biggest DeFi platform in the world after Ethereum, Terra, and BSC. 

what is avalanche

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Avalanche also happens to be one of the top 8 NFT platforms in the world, with a total volume >$13 million USD. And lastly, check out this chart from Dune Analytics, displaying the most popular Ethereum bridges in the world. 

what is avalanche

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An Ethereum bridge is a cryptographical structure that connects other blockchains to the Ethereum ecosystem. As per the chart, Avalanche has the most valuable Ethereum bridge in the world.

Who Made Avalanche?

Avalanche is run and maintained by the Ava Labs team. Ava Labs has offices in New York City and Miami and aims to create a frictionless world by disrupting global finance the way we know it. Led by Emin Gun Sirer, a former professor at Cornell, the team has collective experience from leading Fortune 500 finance and tech companies.

The team’s vision is to create a “platform of platforms” wherein each platform represents a particular form of a virtual machine. A virtual machine is a platform where you actually execute and deploy smart contracts. With this multi-platform offering, Avalanche gives developers a wide variety of developing opportunities.

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Avalanche – The Triple Blockchain Ecosystem

The Avalanche ecosystem consists of three blockchains that have specific roles:

  • Exchange Chain or X-Chain
  • Contract Chain or C-Chain
  • Platform Chain or P-Chain

X-Chain

As the name suggests, the X-Chain is responsible for creating, transacting, and settling Avalanche assets. All the transaction fees in Avalanche are paid in AVAX.

C-Chain

This chain runs smart contracts for the Avalanche platform and is compatible with EVM (Ethereum Virtual Machine). Due to this, developers can easily port over their Ethereum applications to Avalanche.

P-Chain

This is the most intriguing part of Avalanche and allows anyone to create Layer-1 (L1) or Layer-2 (L2) chains. In Avalanche terminology, all L1 and L2 chains are called subnets. You can think of P-Chain as the default subnet. As you can imagine, the subnets are absolutely crucial for scaling the network. Subnets are created by users on-demand. The P-Chain can manage ~4,500 transactions per second – making it 300 times faster than Ethereum.

How Does Avalanche Consensus Work?

Avalanche uses the Snowball consensus mechanism – which is a variation of proof-of-stake. The consensus protocol has received a lot of positive feedback due to the way it combines classical consensus with modern Nakamoto consensus and achieves speed without compromising decentralization.

This is how the algorithm works:

  • Validators must stake at least 2,000 AVAX to participate. All validator nodes must be a part of the Primary Network
  • Delegators must give at least 25 AVAX to a validator to participate indirectly.
  • The validators nodes in a specific subnet continually send a query to each other to determine transaction validity.
  • The more AVAX staked by a node, the more their voting power.
  • Validators get rewards proportional to their stake. The delegator gets rewarded when their validator gets rewarded. The delegator’s reward is also proportional to their stake.
  • The longer the validator locks up their stake, the more their rewards.
  • Unlike other PoS algorithms, Avalanche doesn’t slash your stake for perceived malicious behaviour. You just don’t get your reward.

AVAX Tokenomics

AVAX is the native token of the Avalanche ecosystem. As per CoinGecko, there are currently 244,349,003.50 AVAX in circulation. AVAX also has an upper limit of 395,891,290. Avalanche also burns all transaction fees to bring in a deflationary mechanic into the overall tokenomics. As of writing, 667,287 AVAX (worth $56 million) have been burnt out of circulation. 

Conclusion

Avalanche is one of the fastest-growing projects in the space, and for good reason. The Ava Labs team has not only used an innovative triple-chain architecture, but the subnet system ensures future scalability, as well. Moreover, seeing its rich DeFi and NFT ecosystems, it looks like the developers have identified Avalanche as the ideal platform to host their projects.