In September of 2020, Avalanche was released to the public by Ava Labs. It is an effort to address the centralization and scalability problems that plagued the first and second generations of blockchains. Avalanche’s mainnet combines the C-Chain, X-Chain, and P-Chain in an unconventional three-blockchain configuration to accomplish its goals.
The X-Chain is a blockchain system for asset management that relies on the consensus algorithm. Smart contract generation is handled by the C-Chain, while validator coordination is managed by the P-Chain.
The Snowman consensus protocol is utilized by both the C-Chain and P-Chain. In contrast to the Avalanche consensus protocol’s random transaction confirmation checking, Snowman treats blocks of transactions in a sequential fashion.
By utilizing a parallel processing model, Avalanche is able to reach throughputs of up to 6500 TPS. Subnets, which are specialized blockchains, can be created and are compatible with Avalanche. There is no upper limit on the quantity of these chains; rather, a one-time AVAX subscription charge is required.
What Is Avalanche (AVAX)?
Avalanche is a layer-one blockchain that can host bespoke blockchain networks and decentralized apps. It is a competitor to Ethereum that seeks to displace Ethereum as the dominant smart contract blockchain. It plans to accomplish this by increasing transaction output to as much as 6,500 per second without reducing scalability.
Because of its innovative design, Avalanche is capable of doing this. There are three distinct blockchains that make up the Avalanche network.
These are the X-Chain, the C-Chain, and the P-Chain. Although Bitcoin and Ethereum use a consensus protocol in which all nodes validate transactions, each chain serves a different function. Even the consensus algorithms employed by Avalanche blockchains vary from one use case to another.
Avalanche has been hard at work on its own DApp and DeFi ecosystem in preparation for the 2020 mainnet debut. Avalanche has been adopted by a variety of Ethereum-based projects, including SushiSwap and TrueUSD. On top of that, the platform is always trying to make its ecosystem more Ethereum-compatible, for example by building bridges.
Avalanche Built-in Blockchains and Subnets
Avalanche has three primary built-in blockchains.
Exchange Chain (X-Chain)
The only purpose of the X-Chain is to facilitate transactions on the Avalanche network. In addition, X-Chain offers speed advantages over C-Chain and transaction costs are a flat 0.001 AVAX. X-Chain is based on a DAG, or directed acyclic graph.
Platform Chain (P-Chain)
Used for validator activity and AVAX staking. To receive AVAX rewards on the P-Chain, users can either become a validator themselves or delegate the responsibility to another user.
Contract Chain (C-Chain)
As the blockchain technology behind smart contracts and DeFi apps, Avalanche is ideal for the decentralized financial system. Here you may access the most of the Avalanche DApps that are compatible with MetaMask.
The Primary Network is a unique subnet that safeguards and verifies the other three networks. Validation on the Primary Network via staking a minimum of 2,000 AVAX is required for all bespoke subnets.
Subnetworks, or avalanche subnets, are evolving groups of validators that collaborate to reach an agreement on the state of many blockchains. One subnet is responsible for validating each and every blockchain, but multiple blockchains might be validated by the same subnet. Every validator node might belong to more than one subnet.
Each validator in a subnet has an interest in enforcing the rules set forth for that subnet’s safety and allocation of resources. These incentives can be tailored to each subnet and may take the form of token prizes, decentralized governance, etc.
Subnets is an initiative inside the Avalanche ecosystem with the goal of integrating application-specific networks. It’s possible that specific validator characteristics—like available RAM or network speed—are needed by a given program, item, or service. The Subnet is open to validators who match the criteria. Subnets may also have their own token economy and even their own fee markets.
Private blockchains can also be developed with Avalanche Subnets, with participants being predefined as validators. Private blockchains allow companies to keep sensitive data hidden from the public eye by restricting access to only authorized users.
What Makes Avalanche Unique?
Avalanche is an effort to address the blockchain trilemma, the paradoxical belief that blockchains can’t be sufficiently decentralized at scale. As is frequently the case on Ethereum, this results in prohibitively expensive gas costs.
Avalanche created three compatible blockchains to work together and overcome this issue.
The native AVAX tokens and other assets are created and traded via the Exchange Chain (X-Chain). These tokens adhere to a defined protocol, much as Ethereum’s ERC-20 tokens. The Avalanche consensus algorithm is implemented.
Smart contracts and distributed applications can be found on the Contract Chain (C-Chain). Its Avalanche Virtual Machine is compatible with Ethereum Virtual Machine code, so developers can create new versions of DApps that run on both platforms. The Snowman process for reaching consensus is used.
The Platform Chain (P-Chain) is responsible for coordinating network validators, monitoring running subnets, and allowing for the introduction of new subnets. Subnets are groups of validators, functioning similarly to a cartel of validators. A blockchain can only be validated by a single subnet, but each subnet can validate several blockchains.
The Snowman consensus process is utilized as well.
Increasing throughput without sacrificing decentralization is made possible by separating computing workloads. The network’s private blockchains, for instance, can insist that the validators in a given subnet be spread out geographically or adhere to a certain set of rules.
By adopting a modular design, Avalanche has made it easier for other blockchains to join the Avalanche ecosystem. In addition, the two distinct consensus mechanisms are developed with the specific needs of each blockchain in mind.
Who Were the Original Avalanche Founders?
Ava Labs, which was founded by Cornell University professor Emin Gün Sirer and computer science PhDs Kevin Sekniqi and Maofan “Ted” Yin, is responsible for creating Avalanche. The senior cryptography researcher Gün Sirer came up with the idea for a decentralized, peer-to-peer digital currency six years before the Bitcoin whitepaper was published. Before the infamous 2016 The DAO hack, he was also researching Ethereum and helping with Bitcoin scaling solutions.
The resulting whitepaper served as the basis for the 2018 launch of Ava Labs. A seed round, with backers including Polychain, Andreessen Horowitz, and Balaji Srinivasan, was successfully concluded in February 2019. In 2020, Avalanche raised $42 million from its initial coin offering (ICO), which it successfully concluded in less than 24 hours.
How do you buy AVAX?
In case you qualify, you can use your Coinbase account to buy, send, and receive AVAX. Alternatively, you can use the Avalanche “Bridge” to purchase AVAX by exchanging ETH (or other Ethereum tokens) for AVAX directly with other users. However, you’ll need a non-custodial wallet and decentralized application browser like Coinbase Wallet in order to make the jump from the Ethereum ecosystem into Avalanche.
You can trade Ethereum for Avalanche and keep tabs on your blockchain holdings with the help of Coinbase Wallet by going to the Avalanche Bridge.
How does Avalanche work?
There are three different blockchains that make up the Avalanche network: the Platform Chain (P-Chain), which manages validators and the creation of subnets, the Contracts Chain (C-Chain), which is used to create smart contracts, and the Assets Chain (X-Chain), which is used to manage and trade assets.
The AVAX token is the internal money of the Avalanche network. AVAX is a decentralized platform that allows users to propose and vote on improvements to the AVAX network, and there will only ever be 720 million coins in circulation.
Can you stake AVAX?
Earning AVAX rewards through staking directly on the Avalanche network enables the following capabilities and helps secure, validate, and control Avalanche (note that Coinbase does not presently permit staking directly on its platform).
- Fast, peer-to-peer transactions.
- Decentralized computation and storage.
- Creation of new “subnet” blockchains.
By staking their AVAX on the Avalanche Platform Chain, users can act as general network validators (P-Chain). In addition, participants can assign a portion of their stake to another validator in exchange for a share of the validator award. By staking AVAX, you can also join the ranks of the validators who verify blocks on the blockchains of select subnets.