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Avalanche (AVAX) – scalability from a unique network architecture

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PDAX

January 06, 2023

4 min read

TokensDeFi

Avalanche (AVAX) broke into the cryptocurrency scene in 2020, and was  meant to rival Ethereum (ETH) as a scalable Layer-1 blockchain with smart contract functionality, capable of blazingly fast speeds at a low cost.

Avalanche was built with the scale of global finance in mind, as the network can handle up to 4,500 transactions per second, with near-instantaneous finality. Avalanche is also known for its growing decentralized finance (DeFi) ecosystem which hosts a number of different applications that are easily accessible because of the network’s low fees. These include decentralized exchanges (DEXs)  such as TraderJoe and Pangolin, fundraising platforms like Avalaunch, and automatic market makers such as Platypus Finance

Avalanche has also begun to expand into the play-to-earn space with applications such as Crabada and integrations with DeFi Kingdoms. Moreover, the network offers cross-chain bridges to other networks such as Ethereum (ETH) and Bitcoin (BTC).

How does the Avalanche blockchain work?

As with other up-and-coming blockchains that have learned from the lessons of Ethereum, Avalanche was developed around addressing the issue of balancing usability, scalability, and decentralization–otherwise known as the “blockchain trilemma”–wherein optimizing in one area usually leads to compromises in another area. To achieve this, Avalanche came up with its own consensus mechanism and its own unique network architecture.

Avalanche’s primary network in fact, consists of three separate blockchains each tasked with a different role:

  • The X-Chain, which runs the Avalanche Proof-of-Stake (PoS) consensus protocol, and where the creation and transaction of Avalanche assets take place, such as payments and trading. 
  • The C-Chain where developers create smart contracts for new tokens, NFTs, and applications for the Avalanche network. It is also EVM (Ethereum Virtual Machine) compatible, allowing the Avalanche blockchain to be interoperable with the Ethereum network.
  • The P-Chain which acts as the metadata blockchain and keeps track of subnets and the coordination of blockchains. 

Because of its heavily streamlined architecture, Avalanche is able to achieve its fast transaction speeds at a low-cost, making it one of the most eco-friendly blockchains around. 

What is AVAX used for? 

AVAX is the native token of the Avalanche blockchain. It is used as a medium of exchange and for payment for fees within the Avalanche ecosystem:

  • AVAX can be used to trade other tokens on decentralized exchanges in the Avalanche network.
  • AVAX can also be used to yield farm and earn other tokens that are interoperable with the Avalanche blockchain, such as on platforms like TraderJoe and Pangolin. 
  • AVAX can also be staked, which is usually done by running a validator for the network or by staking it on a Defi application. 
  • AVAX is also used to pay fees to validators when making transactions on the Avalanche blockchain. 

AVAX trivia

The Avalanche protocol was developed by a team of researchers from Cornell University  led by Emin Gün Surer who later founded Ava Labs. However, the original concept behind Avalanche originated from a mysterious paper that was shared on the InterPlanetary File System (IPFS) network by a pseudonymous group called “Team Rocket” in 2018. Avalanche was then launched in September of 2020 and at its all time high in 2021, was able to break into the ranks of the top ten cryptocurrencies. 

Tokenomics

AVAX has a total supply of 720 million tokens of which 50% were allocated for staking rewards, while the rest were broken up among public and private sales, airdrops, community and foundation funds, and incentive programs. AVAX tokens are burned with each transaction in the network, reducing the overall supply over time.

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DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.

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