Key Insights
- Avalanche (AVAX) has emerged as one of the fastest and most scalable blockchain networks in the world.
- It achieves this scalability through its collection of subnets and its three-chain system.
- Avalanche is fully EVM compatible, which means that it is poised to grow alongside Ethereum.
- The $AVAX cryptocurrency sits at the heart of this revolution and is used for transaction settlement, governance, and other purposes.
- The cryptocurrency has a $9 billion marketcap and is among the top-20 by market cap.
New cryptocurrencies hit the market almost every day.
However, a few of them stand out from the others, and a major example is Avalanche ($AVAX).
This network is designed to tackle some of the biggest challenges in the blockchain space, including speed and scalability.
Avalanche is also cheap to use and has positioned itself as one of the most powerful platforms for Dapps and custom blockchain networks.
Here’s what makes it so special.
What Sets Avalanche Apart?
Avalanche is a lot unlike traditional blockchain networks that often struggle with congestion and high fees.
This network is built for high performance and is one of the most versatile ecosystems compared to its competitors.
The network also works with a group of subnets and consensus mechanisms, which make it faster and highly customizable.
So what are subnets?
The way that Avalanche works and provides so much scalability is due to its many subnets.
Think of subnets as multiple smaller, independent blockchains within the AVAX network.
This means that they are capable of having their own rules, validators, virtual machines, and even native tokens—much like a real, standalone chain.
Developers and businesses looking to launch tailored blockchain solutions are especially welcome on the AVAX network, whether it be for gaming or finance purposes.
Subnets allow anyone to build the most effective solutions without having to compromise on performance.
The Three Chains of Avalanche
Most blockchains rely on a single consensus protocol to validate transactions.
This is true for Bitcoin with Proof of Work and Ethereum with Proof of Stake.
However, Avalanche takes a different approach to things with its three-chain system:
X-Chain (Exchange Chain)
This chain is responsible for regular transactions. It handles creating and exchanging digital assets by being fast and secure.
C-Chain (Contract Chain)
This chain is designed for smart contracts and is fully compatible with Ethereum’s Virtual Machine (also known as the EVM).
This means that developers can build solutions on Ethereum and migrate (or even duplicate) them on the AVAX chain, and vice versa.
P-Chain (Platform Chain)
This chain is responsible for the network validators. It also coordinates the subnets and is essentially the backbone of the entire network’s governance.
Avalanche taking this multi-chain approach to functioning makes it able to process thousands of transactions per second.
It also allows the chain to keep costs low without compromising on efficiency.
Avalanche’s Consensus Mechanism
Regular blockchains often rely on a leader-based consensus mechanism.
However, this model has been known to create bottlenecks and vulnerabilities for the network as a whole.
It introduces a unique consensus mechanism based on a directed acyclic graph (DAG) structure.
This means that validators can communicate randomly with others to confirm transactions in parallel.
In essence, AVAX becomes faster and more attack-resistant because of it.
This DAG structure features the “Avalanche protocol,” which is used by the aforementioned X-Chain to make sure that the network is fast in terms of asset transfers.
Another feature of Avalanche’s DAG structure is also the “Snowman Protocol,” which is used by the C-Chain and P-Chain.
This Snowman protocol makes transaction ordering more efficient, which is great for smart contracts and governance.
All of the above procedures make Avalanche incredibly fast and able to achieve sub-second finality—this means that transactions are processed almost instantly, in less than a second.
Avalanche is therefore one of the fastest blockchain networks in existence.
$Avax at the Heart of It All
Amid all of this transaction processing and smart contract execution, the $AVAX cryptocurrency sits at the heart of it all.
The cryptocurrency is used for processing, like staking rewards, where users can stake their AVAX to become validators and secure the network.
Another use case of the $AVAX cryptocurrency is in transaction fees, where all transactions within the Avalanche network are settled with $AVAX.
Developers also need the AVAX cryptocurrency to launch and manage custom subnets.
Another interesting thing about the $AVAX cryptocurrency is that it has a limited supply of 450 million tokens, which means that its value is expected to appreciate over time as adoption increases.
At the time of writing, the cryptocurrency has a $9 billion market cap and is the 16th largest cryptocurrency on the market by capitalization.
Why Avalanche Matters?
Avalanche is one of the biggest solutions to the blockchain dilemma.
For context, the blockchain dilemma is the ongoing struggle to establish a network that balances decentralization, security, and scalability without having to sacrifice one for the other two.
Avalanche transactions are typically finalized in under a second, which means that it is significantly faster than Bitcoin or Ethereum and has the scalability part in check.
The subnet architecture also establishes strong decentralization for Avalanche.
This is because the more subnets are created, the better the network capacity is, without congestion becoming an issue.
The Avalanche network is also flexible and EVM compatible, meaning that the chain can scale alongside Ethereum.
