Avalanche

What Is Avalanche?

Avalanche is a blockchain network and decentralized app development platform (dApps). Avalanche, developed by Ava Labs, is vying with Ethereum to become the most popular smart contract platform on the blockchain. Theoretically, Avalanche's 4,500 TPS transaction throughput makes it more scalable than Ethereum (TPS). The Avalanche native AVAX token is used to pay network transaction fees and is capped at 720 million.

Avalanche has tried to compete with Ethereum by creating its own decentralized finance (DeFi) ecosystem, which includes bZx, SushiSwap, Reef, Securitize, and TrueUSD. Avalanche is also working on it, allowing users to seamlessly move assets between the Avalanche and Ethereum networks.

What Is AVAX?

AVAX is the native token of Avalanche, with a limited supply of 720 million. As a deflationary mechanism, all fees paid on the network are destroyed.

You can stake your AVAX or delegate it to a validator. Validators can earn up to 11% Annual Percentage Yield (APY) and charge a configurable percentage of the return they receive from delegated funds.

AVAX acts as the common accounting unit for all subnets, which improves interoperability.

How Does It Work?

The Primary Network is the heart of Avalanche's architecture. In a subnet, transaction validator nodes work together to agree on the state of many blockchains. Exchange Chain, Platform Chain, and Contract Chain are all secured by the Primary Network (C-Chain).

The X-Chain allows you to create and trade crypto assets like AVAX.

With the P-Chain, you may create custom blockchains and subnets, as well as new subnets.

The C-Chain allows for smart contract generation.

A subnet validates each blockchain in the Avalanche ecosystem, however each subnet can validate many blockchains. A validator node can also be in many subnets. It is possible to create Avalanche blockchains with specific attributes, such as requiring validators to meet regulatory standards. For example, a private blockchain built on the Avalanche crypto network may require its validators to complete KYC/AML screening, reside in a given jurisdiction, or hold a specific financial management license.

In other words, validators can choose to be members of as many or as few subnets as they like. Unlike with networks like Bitcoin, where all nodes fight to validate all transactions. As a result, Avalanche subnets and validators can establish ecosystems that are aligned with their priorities.

With a growing degree of interoperability with Ethereum and the larger blockchain ecosystem, the Avalanche network technology is developed to enable modular blockchains that are scalable and interoperable.

The Avalanche Virtual Machine (AVM) is the backbone of Avalanche's architecture (AVM). Notably, Avalanche subnets can use the AVM to reach consensus using “traditional” blockchain databases like Bitcoin, Ethereum, or Cardano, as well as other database structures like the “block lattice” database structure of Directed Acyclic Graphs (DAGs) used by IOTA, Fantom, and Nano. This versatility allows Avalanche-based products to be highly customized while maintaining interoperability with other platforms.

Avalanche uses Ava Labs' Snowball consensus method, which requires users to stake AVAX to become transaction validators. To participate in consensus, validators must stake 2,000 AVAX tokens. A validator can also participate in consensus by delegating AVAX. To participate, you must allocate 25 AVAX.

In Snowball consensus, validator nodes in a subnet continually query each other to assess the legitimacy of network transactions until they achieve an agreement. A node's AVAX currency stake increases its query frequency. Participation in other subnets is optional for validator nodes in the Primary Network.

Validators are rewarded based on uptime and response latency, and their stake. Validators will earn more if they invest for a longer duration. You will also be rewarded if you delegate your AVAX coins to a validator who then rewards you. Finally, unlike other PoS systems, Avalanche does not reduce node stakes if they are malevolent.

Avalanche attempts to differentiate itself in a crowded Ethereum market by focusing on DeFi and offering customizability, scalability, and interoperability. Avalanche is well on its way to building its own ecosystem, demonstrating particular power in DeFi applications.