As blockchain technology gains popularity globally, developers are developing new solutions such as Avalanche network (AVAX) which solves scalability, usability, and interoperability problems. So, what is the Avalanche network, and how does it work?
Avalanche is an innovative contract blockchain focused on high transaction speed, lower fees, and eco-friendliness. Ultimately, Avalanche network aims to provide a highly scalable, decentralized, and secure blockchain. The platform facilitates users with tools and features to launch DeFi decentralized applications (dApps). It also has tools for creating digital financial assets and enables building enterprise financial solutions.
That said, Avalanche is a network that boasts the fastest smart contracts blockchain technology in the crypto industry. The technology is powered by its native token, AVAX, and other consensus mechanisms. Let’s explore the Avalanche network more and see how it works!
When Was Avalanche Network Invented?
Avalanche technology was first proposed in May 2018 by a group named Team Rocket that recommended the protocol via the Interplanetary File System. The technology was then developed by Emin Gün Sirer, a software engineer and Cornell professor of computer science, and his two doctoral students, Kevin Sekniqi and Maofan “Ted” Yin. Ava Labs made AVA (Avalanche codebase) public in March 2020 and later launched the Avalanche platform in 2020 after collecting $6 million in the financing round.
How Does Avalanche Work?
Avalanche network is a three-blockchain innovation with an architectural design that is quite awesome. The platform is designed so that each of the three blockchains performs a specific task. Distributing tasks amongst these distinct blockchains makes the Avalanche platform agile, thus facilitating scalability, decentralization, and security.
Contract Chain (C-chain)
Avalanche’s C-chain runs on smart contracts and is compatible with Ethereum Virtual Machine (EVM). Consistent with EVM means that developers can deploy their Ethereum smart contract on Avalanche, thus facilitating the creation of dApps and DeFi solutions. Developers can leverage Avalanche features by deploying Ethereum intelligent contracts on Avalanche while using Ethereum developer tools.
Platform Chain (P-chain)
The Avalanche P-chain utilizes the Snowman consensus protocol, allowing developers to create Layer 1 and 2 blockchains. These blockchains are referred to as subnets with the P-chain as the default subnet, meaning it is available to all. P-chain manages the Avalanche subnets by keeping track of validators, although the subnets validate the P-chain.
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Exchange Chain (X-chain)
While leveraging the Avalanche consensus protocol, the X-chain creates and transacts Avalanche assets. Generally, the Avalanche native token (AVAX) is used to generate all transaction fees. Even when transacting with other Avalanche tokens like JOE or PNG, the transaction fees are paid in AVAX.
Which Blockchain Problems Does Avalanche Network Solve?
Older blockchain platforms, such as Ethereum and Bitcoin, operated on Proof-of-Work, can process only 25 and 7 transactions per second, respectively. However, Avalanche network solves these issues with transaction processing speeds by performing up to 4,500 transactions per second.
Although new blockchain technologies are emerging daily, interoperability is still an issue because most of these blockchains are unable to communicate with each other effectively. With Avalanche, the platform solves the interoperability issue by supporting the creation and trade with different cryptocurrencies.
On the other hand, Avalanche facilitates an array of layer 2 blockchains to boost its functionality, which in turn allows it to target enterprises and business entities. The platform also aims to improve network flexibility, security, and sustainability.
What are the Benefits of Avalanche Network (AVAX)?
The main benefits of Avalanche are in its design and are presented through its unique structure. They include:
Usability
Usability, the extent to which the system is easy to use and implement is a significant concern when adopting any technology. However, with Avalanche network, usability is straightforward because the network has proven helpful in different use cases.
Scalability
Avalanche is a robust and scalable network that boasts up to 6,500 transactions per second. This is way more than Bitcoin and Ethereum, which can only process up to 15 transactions per second. Through its sub-second transaction times and incredible processing capacity, Avalanche provides the scalability that a blockchain network needs.
Interoperability
Avalanche massively supports interoperability by allowing distinct blockchains to share data and interoperate effectively. Only a few blockchains allow users to trade in different cryptocurrencies within a common network.
What Gives AVAX Value?
AVAX gains its value from the technical capacity of the Avalanche network, multiple use cases, and its relevance in DeFi and dApps sectors. However, the intrinsic value of this cryptocurrency, which is seen through financial use cases, does not coincide with the market value.
The market value of AVAX, like most cryptocurrencies, is subject to changes because of the volatile nature of the crypto market. The price is usually subject to rapid change within a short period. Currently, AVAX’s market value is at $ 20.78, with a market cap of $7.59 billion.
Conclusion
Through its speed, reliability, and interoperability, Avalanche is a big rival to Ethereum in terms of supporting both decentralized applications and autonomous blockchains. As an investor, this means that AVAX is a viable crypto to invest in as it is destined for a bright future.
Frequently Asked Questions
How to Do AVAX Holders Make Money?
AVAX holders make money through rewards when they stake their tokens to keep the Avalanche network secure. Basically, as a holder, you can run an Avalanche node, stake the AVAX, and by doing so, you will earn the AVAX rewards.
Is AVAX Good or Bad?
Most individuals consider AVAX as a fantastic project due to its low fees, high transaction speeds, and economically friendly Proof-of-Stake consensus protocols. What more could you ask for?
Does AVAX Have a Future?
AVAX’s future depends on factors like adoption rate, technological developments, market trends, and the overall health of the crypto market. However, current price updates by Changelly show that AVAX’s price is $21.98. Additionally, price forecasts show that the value is expected to increase as we move into 2024.
