What is Avalanche(AVAX)?
Avalanche seeks to improve scalability while preserving speed and decentralisation. Its core platform is comprised of three blockchains: the Exchange Chain (X-Chain), the Contract Chain (C-Chain), and the Platform Chain (P-Chain). The X-Chain is used for asset creation and trading. The C-Chain is used to create smart contracts. The P-Chain is used to connect validators and subnets.
Avalanche Consensus, a method that uses repeated sub-sampled voting by validators to achieve fast and affordable consensus, is one of the protocol's most significant breakthroughs. Additionally, Avalanche employs Subnets as a novel technique for horizontal scaling, enabling the creation of customizable, interoperable blockchains. There are no restrictions on the number of Subnets that can be created.
Introduction
blockchain technology will provide new solutions to solve the problems of scalability, interoperability, and usability that had previously plagued the industry. In order to provide a unique platform for its users, Avalanche uses three distinct blockchains and makes use of each of them in its primary platform. The Avalanche platform is powered by its native token AVAX and a variety of consensus mechanisms and claims to be "the fastest smart contract platform in the blockchain industry, as measured by time-to-finality".
When was Avalanche launched?
The Avalanche platform was launched by Ava Labs, a team based in New York, in September 2020. Ava Labs has raised approximately $300 million (U.S. dollars) in funding, and the Avalanche Foundation has sold tokens worth more than $48 million. Kevin Sekniqi, Maofan "Ted" Yin, and Emin Gün Sirer are the three founding members of Ava Labs.
What problems does Avalanche solve?
Three main problems are addressed by Avalanche: scalability, transaction fees, and interoperability.
Scalability vs. decentralization
The blockchain has traditionally found it difficult to strike a balance between the scalability and the decentralization of the system. A network with increasing activity can quickly become clogged and unable to work properly. A good example of this is Bitcoin (BTC), which sometimes has been known to take hours, or even days to process transactions during periods of network congestion.
One method of combatting this problem is to make the network more centralized, giving fewer people more authority to validate network activity, thus increasing network performance. decentralization is crucial to the security of blockchains. As technological advancements lead to new blockchain applications, Avalanche has developed a unique approach.
High fees
The gas fees, which can increase if the network traffic is high, is another problem with larger blockchains like Ethereum. As a result, these blockchains ultimately discourage users, but the competition on offer has less established ecosystems than these. For instance, Ethereum's popularity combined with the lack of alternatives has led to a high level of traffic and high fees. A simple transfer can cost more than $10 at certain points, and complex smart contract interactions may cost more than $100 at certain points.
Interoperability
In terms of blockchains, different projects and businesses have different requirements. It was previously necessary for projects to use either Ethereum, another blockchain that was not tailored to their requirements, or a private blockchain. The challenge for blockchain developers is finding the balance between customization and cooperation between multiple blockchains. Avalanche's solution features Subnets - custom blockchains tailored to specific apps that share their primary network's security, speed, and compatibility.
How does Avalanche work?
The Avalanche protocol utilizes a unique combination of methods and is composed of three interoperable blockchains: the X-Chain, C-Chain, and P-Chain.
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The Exchange Chain (X-Chain) It is used to create and exchange AVAX tokens and other digital assets through the Exchange Chain (X-Chain). Avax is the currency that is used to exchange transaction fees, and the blockchain is based on the consensus protocol.
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The Contract Chain (C-Chain) is the platform on which developers can develop smart contracts for their DApps. Implementation of this chain enables EVM-compatible Distributed Applications (DApps) to run. The protocol uses a modified version of Avalanche Consensus called Snowman.
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The Platform Chain (P-Chain) It coordinates validators for networks, tracks active Subnets, and provides the ability to create new Subnets. Snowman is also used by the P-Chain.
How do Avalanche's consensus mechanisms work?
Avalanche's two consensus protocols have some similarities with Avalanche's. The dual system is one of the most important factors contributing to the network's excellent transaction performance and scalability.
Avalanche
Avalanche does not require a leader to reach consensus as do Proof of Work (PoW), Proof of Stake (PoS), or Delegated Proof of Stake (DPoS). The Avalanche network benefits from this decentralization factor without sacrificing scalability. PoW, PoS, and DPoS involve one actor processing transactions, whose work is subsequently validated by others.
The Avalanche consensus protocol is an optimization algorithm for directed acyclic graphs. The DAG provides a network with the capability of processing transactions in parallel. The validity of new transactions is determined by validators polling a sample of other validators for confirmation. Once a certain number of these subsamplings have been carried out, it is statistically proven that it is nearly impossible for a transaction to be false.
In addition, all transactions are finalized immediately without the need for any further confirmations. The running of a validator node and validating transactions require low and accessible hardware requirements, which contributes to decentralization, performance, and environmental sustainability.
Snowman
In Snowman, the consensus protocol, transactions are ordered linearly, which is based on the Avalanche consensus protocol. The appeal of this property is that it can be used in smart contracts. Snowman creates blocks rather than following the Avalanche consensus protocol.
AVAX token
The native token of Avalanche is AVAX, and it has a capped supply of 720 million coins. The network payouts are used as a deflationary mechanism, benefiting the whole community as well as the wider Avalanche system. In AVAX, there are three main use cases:
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A validator may stake their AVAX in order to become a validator or may delegate their AVAX to a validator. Validators can earn up to 10% Annual Percentage Yield (APY), as well as set the percentage fee they will charge delegators who decide to back them up.
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AVAX is the unit of account for all Subnets and is responsible for improving interoperability.
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Subnet subscriptions and transaction fees are denominated in AVAX.
How do you stake AVAX?
In order to earn AVAX rewards, holders can become validators or stake their tokens with validators and earn rewards. A validator must stake 2,000 AVAX prior to becoming a validator. The hardware requirements are so low that most laptops or desktops should meet the minimum requirements to begin validating. It is also possible to stake tokens with a validator and receive rewards if the validator is able to validate transactions successfully.
Customizable Avalanche blockchains
Avalanche is a Blockchain platform similar to Ethereum and other layer-one blockchains. In addition, developers can create NFTs, DApps, and tokens as well. The platform allows users to stake tokens, validate transactions, and use more than 400 DApps. According to its proponents, Avalanche is beneficial due to improvements in these capabilities. Avalanche also offers the capability to create interoperable, customized blockchains called Subnets.
Subnets, which can be built based on a customized blockchain, are well suited to large enterprise needs, and many are already constructing Subnets. This is a convenient way for big and small independent operators of these custom blockchains to interact with each other in a rich ecosystem and to leverage the security provided by Avalanche's primary network.
How is Avalanche different from other scalable blockchains?
The problems and solutions that we are proposing aren't unique to Avalanche. In addition to Avalanche, there are other blockchain platforms and scalable platforms that compete with Avalanche like Polkadot, Polygon, and Solana. What makes Avalanche superior to the alternatives?
Consensus mechanism
One of the most significant differences is probably the Avalanche Consensus. The Avalanche blockchain is not the only one to utilize a novel consensus mechanism. In addition to Proof of History, Solana claims to be able to handle up to 50,000 TPS (transactions per second), significantly more than the 6,500 TPS claimed by Avalanche. The TPS, however, is only one metric for measuring network speed, and it fails to account for the finality of blocks.
Decentralization
The biggest claim of Avalanche is that they are decentralized. Due to its size and age, it does have a large number of validators (1,300+ as of April 2022), largely due to the fact that its requirements are fairly minimal. It has become increasingly expensive to become a validator as the price of AVAX has risen.
Interoperable blockchains
Avalanche's interoperable blockchains have the potential of being unlimited in number. This project competes directly with Polkadot, another project offering customized and interoperable blockchain technology. Polkadot has limited space that is auctioned in Parachain Slots, while Avalanche charges a subscription fee.