I’m a firm believer the future of crypto is multichain. In this article, we’ll do a deep dive into one of the most popular networks, Avalanche.
Intro to Avalanche (Avax)
Avalanche was created due to the growing popularity of DeFi applications and the blockchain. These high levels of growth have created congestion on smart-contract-based blockchain networks. Many DeFi applications turned to layer 2 scaling solutions to improve these issues. While layer 2 solutions successfully reduced the processing time, they increased the complexity of the system leading to increased security threats.
Avalanche was created as a solution for all of these problems combined. It is a layer 1 protocol with desired decentralization, security, and scalability levels. It is a blockchain platform containing smart contract functionalities that allow transaction speeds to be increased with reduced cost to users. Avalanche offers a more eco-friendly alternative than traditional proof of work networks.
The goal of Avalanche is to achieve the best “time to finality” in blockchain transactions. This includes processing a crypto transaction and verifying it as irreversible. Avalanche can help achieve this finality within one second as compared to the one minute on ethereum. The developers of Avalanche claim that they have created the fastest blockchain platform with smart contract functionalities.
Therefore Avalanche can be summarized as the first decentralized smart contracts platform built for the scale of global finance, with near-instant transaction finality. It has created a network with solid safety guarantees, quick finality, and high throughput, all while maintaining the aspect of decentralization.
Technical aspects of Avax (speed, bandwidth, trans per second, etc.)
Some key technical features of Avalanche improve its effectiveness. Firstly, its speed. Avalanche uses a novel consensus protocol that can permanently confirm transactions in under 1 second. Its scalability also ensures that it is capable of 4500 transactions per second which is much higher than other current blockchains. Avalanche guarantees security well above the standard 51% among other blockchains.
Avalanche is also very flexible, allowing the user to create customized blockchains and dApps. Overall, Avalanche is more environmentally sustainable as it uses energy-efficient proof-of-stake consensus rather than proof-of-work.
Chain overview (x chain is main, p and s chain also)
Avalanche is built around a system of three interoperable blockchains.
The main chain used is the Exchange Chain (X-chain) used to create digital assets. It is the distributed ledger technology that lets users and systems record transactions related to assets. DLT technology stores the information at multiple locations at any given point in time. In addition to creating digital assets, it also facilitates the transactions of the assets. The native token of the platform is the AVAX coin which is the most popular crypto on the blockchain. All transactions on the X-chain require an AVAX token fee to be used.
The next blockchain involved in the Avalanche platform is the contract chain (c-chain). The C-chain is Avalanche’sAvalanche’s Ethereum Virtual Machine (EVM) implementation. EVM compatibility offers the flexibility for deploying Ethereum smart contracts on the Avalanche blockchain. This allows users who commonly use Ethereum developer tools to access avalanche features. The C-chain also executes smart contracts, which serve as crucial functionality in the blockchain as they help developers create dApps on the platform.
The final chain of Avalanche is the platform chain or P-chain. The P-chain enables anyone to develop layer 1 or 2 blockchain solutions. It also allows users to create groups of L1 or L2 blockchain solutions. The P-chain also serves as a default subnet and helps manage other Avalanche subnets.
A subnet is a dynamic set of validators working together to achieve consensus on the state of a set blockchain. Each blockchain will be validated by one subnet. When a validator is determining whether a transaction should be accepted or rejected, it asks a small, random subset of validators if they think the transaction should be approved. The transaction will be rejected if the validator thinks the transaction is invalid, has already rejected the transaction, or prefers a conflicting transaction. If a significant portion of the validators sampled think that the transaction should be accepted, the validator will prefer to accept the transaction. This process will continue until many of the validators respond the same way.
The P-Chain and C-Chain are secured by the “Snowman” consensus, enabling high throughput secure smart contracts. The X-Chain, in contrast, is secured by the DAG-optimized Avalanche consensus. By splitting its architecture across three separate blockchains, Avalanche can optimize flexibility, speed, and security without any trade-offs, making it useful for developers.
The Avalanche Ecosystem
Much of Avalanche’s growth relies on its core innovation of the three-blockchain model. However, this only defines how it has been designed and not the ways it delivers value to its users. Some of these fey functionalities include:
Avalanche Rush Program
The Avalanche Rush program gives incentives for fueling liquidity in the AVAX ecosystem of DeFi apps. The program has a $180 million fund that offers rewards to liquidity providers with AVAX coin incentives. It has prompted notable DeFi projects like Aave and Curve. They have launched Avalanche markets, and many new players are joining the program.
The Avalanche Bridge was a functionality created to facilitate ERC-20 token swaps. It is vital for ensuring interoperability in the blockchain, which is essential in allowing different blockchains to communicate with each other without the help of intermediaries. This means that blockchains can transfer value between each other. With interoperability, users can try out the avalanche blockchain with the existing ERC-20 tokens in their possession. The bridge opens up the Avalanche blockchain to the opportunity for billions of dollars in token liquidity. It can work seamlessly with platforms like Metamask for efficient use of ERC-20 tokens on the blockchain.
To better understand how this process works, we can look at how tokens can be transferred from Ethereum to Avalanche. First, the bridge contract for spending the token of Ethereum will be approved. Then the user will deposit and lock the approved token to the bridge contract and emit the deposit event to relayers. A proposal is then created on the Bridge contract on Avalanche and marked as active. Active proposals contain a hash of the transfer data, which prevents the deposit data from appearing on Avalanche before being approved. Next, relayers will look at the hash and compare it between Avalanche and Ethereum data and vote on the accuracy of the data. If the vote is approved, the Avalanche token is created.
What Can You Do with Avalanche
Avalanche enables users and firms to quickly deploy their blockchains built for their own individual purposes, whether for private use cases (permissioned blockchains) or public ones. The uniqueness of the Avalanche platform, with the combination of multiple blockchains and decisive proof of stake consensus mechanism, makes it an ideal platform for users. Avalanche is an incredibly decentralized and powerful platform to build on.
Avalanche is compatible with the Ethereum toolkit, making it easy for users to port their Ethereum dApps to Avalanche and launch a diverse array of dApps. Each app is allowed to run on its independent blockchain, which gives developers sole control over how they are secured and function and who has access to them.
Many users are already taking advantage of Avalanche in recent months, and there is now a wide range of applications using Avalanche’s technology. Some of these applications include those surrounding prediction markets (Prosper), Stablecoins (Bilira), and private securities (Securitize).
Overall, the platform has many opportunities for new users to get involved and have immense control over their own projects and functioning.
Where and How to Buy Avalanche
The Avalanche token is available to purchase and trade on various exchange platforms. Some of these platforms used for purchase include, but are not limited to, Binance, OKEx, Huobi Global, Bitfinex, CoinEx, WazirX, OKCoin, Paribu, and Hotbit.
Future of Avalanche
As Avalanche continues to grow, the platform is looking for ways to cater to an increased usership while maintaining its signature speediness and affordability. Subnets are crucial to the platform’s ability to do this. It allows the individual projects built on Avalanche to remain connected to the Avalanche mainnet via individual chains without taking up space on the main chain. Distributing projects this way allows Avalanche to avoid transaction speed and gas issues as popularity increases.
Avalanche announced a $290 million initiative dedicated to helping developers incorporate subnets into their Avalanche-backed projects in March 2022. The initiative is titled the Avalanche Multiverse, and it will encourage developers to create fully-customizable, application-specific networks on the Avalanche blockchain. Subnets could theoretically enable entire crypto networks, such as bitcoin or ethereum, to exist on the Avalanche platform while still using their own individual cryptocurrencies.
Subnets can further be customized to include Know Your Customer features, allowing traditional financial institutions to build on Avalanche. Subnets have already been adopted by several large-scale projects, including DeFi kingdoms. DeFi Kingdoms is a play-to-earn game built on the chain Harmony, which recently launched Crystalvale on an Avax subnet.
Avalanche has also announced a new platform-specific wallet titled Core which will streamline transactions on Avalanche and make the platform more user-friendly for non-crypto native users. There is expressed interest in attempting to build out Core to incorporate all major blockchains.
Overall, Avalanche has been a promising solution to mainnet congestion and is one of the first decentralized smart contracts platforms built for the scale of global finance, with near-instant transaction finality. Its use of 3 interoperable blockchains and subnets allows it to achieve this and open up many opportunities for the platform and crypto as a whole.
Thanks for your time — Juanbug