Avalanche is a blockchain that rivals Ethereum. Launched in September 2020, it has become a key player in the blockchain. Most recently, the Avalanche foundation has just revealed the Avalanche Multiverse, a $290 million incentive program to accelerate subnets’ growth.
The Avalanche Metaverse is primarily designed to promote the adoption of its ‘subnet’ functionality. This functionality is expected to support a robust environment of scalable app-specific blockchains. Decentralized Finance (DeFi), non-fungible tokens (NFTs), and blockchain-run games are among several new ecosystems expected to be fully supported in the Avalanche Metaverse.
Continue reading to understand what the blockchain is, its applications, pros and cons, and how it compares to other chains.
In a rapidly evolving blockchain environment, two major Ethereum rivals have sprouted strongly; Avalanche and Solana.
What is Avalanche?
Avalanche is a decentralized, smart contract-enabled open-source proof of stake blockchain. Trading as AVAX in cryptocurrency. The blockchain network applies smart contracts technology to support the projects launched within its space.
According to the time-to-finality report, Avalanche is the fastest smart contracts platform in the blockchain. The Avalanche blockchain has been continuously credited for being eco-friendly, cost-effective, and fast.
The platform easily enables near-fast transaction finality. AVAX serves as the basic unit of account on the blockchain while also securing the platform. It also provides the currency for processing fee payments.
How Does Avalanche Work?
The Avalanche platform is powered by smart contracts technology. As such, it effectively supports both autonomous applications and decentralized applications (dapps).
This happens in the following ways;
Avalanche consensus mechanism
Before finalizing a transaction in the platform, a series of systematic and concurrent small transactions should be initiated. A transaction is confirmed through a unique structure that initiates numerous small subsets of network participants to confirm it.
How does the consensus protocol work?
The Avalanche consensus tool comprises four elements that act as the platform’s structural support: Snowflake, Snowball, Avalanche, and Slush. The four mechanisms of the protocol use metastability techniques and random samples to confirm transactions executed within the Avalanche space.
In tech, a consensus protocol is a dynamic mechanism that tasks several computers to agree on a particular decision. Avalanche’s consensus protocol is a decentralized, scalable, and robust tool that allows high throughput while minimizing latency.
Imagine this, a room full of people with diverse preferences. It’s lunchtime; they are all given a choice of either taking chicken wings or beefsteak for lunch. However, the condition is they all have to agree on one of them. In a short while, they begin forming subsets of people within the group according to their preferences.
Then you realize more people prefer chicken wings. This happens several times, with more people opting for the famous option. All of a sudden, everyone agrees. Afterall ‘chicken wings aren’t that bad!
That’s how the Avalanche consensus protocol works. All the participants in the network have to come to a consensus before completing any transaction.
The AVAX Token
As mentioned earlier, AVAX is the native token for the Avalanche blockchain.
At the time of writing, AVAX is trading at $13.20. In the last 24 hours, the market has been down by 3%, with a trading volume of $147,006,697. AVAX token has 310,536,680 coins in circulation with a maximum cap of 720,000,000 AVAX coins. It is ranked #18 in the CoinMarketCap ranking. (Data source: CoinMarketCap)
Coin creation rate
Avalanche’s AVAX token is capped at $720 million. Surprisingly, users control the coin minting rate within the Avalanche platform. Through a voting process, Avalanche users set the rate of new coin creation by adjusting the AVAX payable as a price of adding a new block in the ecosystem.
All transaction fees are waived to promote scarcity over time (removed from circulation) within the Avalanche network.
Avalanche transaction fees usually vary since users vote to determine the fee charges at any particular time. The fee charges are also subject to network status, and the type of transaction carried out.
AVAX rewards within the platform are subject to quick response and high uptime by the network participants. This translates to higher AVAX rewards for participants who respond faster and have higher uptime and vice-versa.
Avalanche vs. Solana
Both Solana and Avalanche are two blockchain platforms with almost similar functionalities. Nicknamed ‘Ethereum Killers’, both strive to provide a better platform for developers to easily and conveniently build their dapps and other autonomous applications.
Without a doubt, developers are looking for what favors them. Low cost, faster speed, and security are the three major issues that differentiate Avalanche and Solana.
Between the two, Solana is relatively cheaper compared to Avalanche. Secondly, Solana is faster than Avalanche blockchain. Solana’s transactions fee stands at $0.00025 on average compared to Avalanche, which charges 1 AVAX ($19) per transaction.
Still, both platforms have announced critical updates that might change their operations’ different aspects.
Avalance vs. Ethereum
Ethereum has been in the blockchain industry since 2015. Needless to say, it has captured a larger portion of the market, with many projects launched and developed within its environment compared to Avalanche.
However, despite having similar functionalities, the platform differs in various ways;
Transaction processing speed
Avalanche’s transaction speed currently outweighs Ethereum’s speed by a big margin. With 4,500 transactions per second for Avalance, Etherimum claims only 15 transactions in the same period.
Ethereum recently announced a significant upgrade that is set to increase the platform’s speed. While announcing the implementation of the sharding mechanism, they reported the platform’s transaction speed would jump to 100,000 transactions per second.
Wow! That’s a boom!
However, with Avalanche’s significant potential to scale, that might not seem to be a big challenge to them. The protocolcan process many transactions simultaneously without requiring more processing time.
Transaction fee structure
There is a major disparity between Avalanche and Ethereum regarding the transaction fee pricing.
As mentioned earlier, the Avalanche transaction fee is waived (burned) to promote AVAX scarcity. Ethereum only burns a fraction of the transaction fees. On the platform, the transaction fees are exclusively determined through user governance.
Both platforms’ transaction fee is subject to the network status and the type of transaction executed.
Advantages and Disadvantages of Avalanche
What are the pros?
- The platform can support many blockchain-based projects
- It is a faster transaction processing speed
- Increased participation through the AVAX reward structure
- Easy and friendly user interface
What are the cons?
- High-stake (2,000 AVAX) tokens for Avalanche validators hinder participation.
- Failure to penalize malicious validators
- Other platforms(Solana and Ethereum) offer stiff competition.
How is the Avalanche Network Secured?
The Avalanche blockchain applies two different protocols to secure its environment. A proof of stake consensus mechanism through the Snowman protocol.
Avalanche’s Snowman protocol secures the C-Chain and P-Chain smart contracts executions while maintaining speed and efficiency. The chain optimization mechanism powers the Snowman protocol’s ability to secure smart contracts.
The Avalanche blockchain is secured on three distinct blockchains; P-Chain, X-Chain, and C-Chain.
Credit where credit’s due; Avalanche provides one of the most secure decentralized blockchain networks for users and developers.
How to Use Avalanche?
This blockchain network allows developers to build decentralized apps, blockchain networks, and financial assets.
The AVAX token governs the networks through stakes and votes. Also, it facilitates fee payments and provides the main currency for the platform’s operations.
The Avalanche system is dynamic, flexible, and scalable. All that developers crave in the blockchain space. It supports the Ethereum developer toolkit and EVM.
How to Choose an Avalanche Wallet?
The type of Avalanche wallet is subject to your preferences. However, there are so many ways you can easily choose to secure your AVAX among various wallets. It’s all dependent on the AVAX amount you possess and its application.
With the AVAX token, users can choose from hardware or software wallets.
Software wallets are easily downloadable and free to use for storing AVAX tokens. They come with two options; either custodial or non-custodial wallets. Service providers manage and secure the custodial wallets’ private keys. Conversely, non-custodial wallets use your device’s security protocols to safeguard the AVAX.
These are offline and mostly serve as backup. However, it is more secure and suitable for storing a large amount of AVAX.
Wallets like Trezor and Ledger provide the most suitable option in this case. Although they don’t come cheap and are a bit technical, a little experience is necessary.
The increasing popularity of DeFi and decentralized apps are coming along with numerous challenges that ought to be addressed.
Ethereum has been facing constant scalability problems. A huge pain in the back for developers.
Avalanche presents significant potential for blockchain scalability, low energy consumption, security, and flexibility. It’s important to note that the protocol offers all the development tools available in the Ethereum blockchain while supporting EVM.
But in a better, more efficient way!
Would you like to be a blockchain developer or user?
Well, begin your journey today in the Avalanche network!