Avalanche is a smart contract platform that uses its own consensus mechanism and THREE (3) interconnected blockchains to process transactions at a faster, cheaper, and more eco-friendly rate than its competitors.
Among other advantages, projects that use Avalanche can execute smart contracts designed for Ethereum’s EVM (good for dApps), finalize transactions in under three seconds (good for DeFi), and have the option to control who validates a private blockchain (good for government and corporate voting and validation activities).
How does Avalanche work?
Unlike the Bitcoin blockchain where nodes need proof-of-work to validate transactions and “mine” bitcoins, Avalanche’s network uses its own proof-of-stake protocol called the Avalanche consensus to validate transactions and reward validators.
Avalanche consensus basically gets a staked validator to select a random subset of validators and ask whether they accept or reject a transaction.
The random subsampling of validators is repeated until the system builds enough confidence to reach a decision.
The consensus protocol is used across Avalanche’s three built-in blockchains, each performing a different task.
- The Platform Chain (P-Chain) coordinates validators and facilitates new and active “subnets”.
- The Contract Chain (C-Chain) creates smart contracts.
- The Exchange Chain (X-Chain) enables the creation and transfer of digital assets.
Both the P-Chain and C-Chain use the Snowman consensus protocol, a version of the Avalanche consensus protocol.
Because Avalanche consensus can reach decisions quickly and having three interconnected blockchains rather than one results in a less congested network, Avalanche can process AND finalize transactions in less than three seconds.
What is the AVAX token?
AVAX is the native token of the Avalanche platform. It’s used to pay network fees, reward validators, and secure the platform through staking.
AVAX is traded on Avalanche’s X-Chain but is available on any major crypto trading platform.
Avalanche is a product of AVA Labs, which was built on a 2018 paper by “Team Rocket” on consensus protocols for cryptocurrencies.
Avalanche’s development was led by AVA Labs co-founder Emin Gün Sirer, a computer scientist and a prominent figure in the cryptocurrency scene.
Sirer had helped conceptualize Karma, a virtual peer-to-peer currency developed six years before Satoshi Nakamoto published Bitcoin’s whitepaper. He was assisted by AVA Labs co-founders Kevin Sekniqi and Ted Yin.
These days, AVA Labs is managed by a team from blockchain, tech, and Fortune 500 companies.
- Circulating supply: 296M AVAX
Max supply: 720M AVAX
- Inflation rate: 23.34%
- A portion of every fee in AVAX is burned; Burned on fees: 1,989,534 AVAX on Oct. 22.
- Instead of a regular minting schedule, AVAX monetary policy is designed to “react to changing economic conditions”
Andreesen Horowitz, Galaxy Digital, Polychain Capital, Dragonfly Capital