What is Avalanche (AVAX)?

As blockchain technology continues to evolve, it offers innovative solutions to the age-old issues of scalability, interoperability, and usability. By utilizing three different blockchains on its main platform, Avalanche has adopted a novel strategy. Avalanche promotes itself as “the fastest smart contracts platform in the blockchain industry, as measured by time-to-finality,” and is supported by its native coin AVAX and multiple consensus mechanisms.

Source: dailyhodl


Avalanche is an open-source platform for creating interoperable, massively scalable decentralized applications (Dapps). Avalanche is the first ecosystem built to handle the scale of global finance, with near-instant transaction finality. It was founded in 2018 by Emin Gün Sirer, a computer scientist and professor at Cornell University, and ultimately developed by AVA Labs, a software development company founded in 2018.

Avalanche allows the developers to participate in a diverse ecosystem of blockchains known as Subnets. Subnets are Avalanche Primary Network subsets that validate a set of blockchains. Failures and performance on each Subnet are separated from other Subnets in the ecosystem, so greater usage on a single Subnet has no effect on other Subnets. Subnets can be permissioned or not, allowing for limitless levels of customisation for any use-case.

Dapps, or decentralized applications, are executed on Virtual Machines, or VMs, which can also be thought of as definitions for blockchain applications. Solidity developers have the option of either building their own customized Virtual Machine (VM) for advanced use cases that demand more flexibility or performance, or building on Avalanche’s implementation of the EVM, which is available “straight out of the box. VMs are available in several languages, including Go and Rust, providing developers with an unparalleled amount of choice in how their implementation is performed.

Avalanche uses a novel consensus mechanism that provides robust safety guarantees, rapid finality times, and high throughput without compromising decentralization. Compared to proof-of-work blockchains, Avalanche is extremely energy-efficient and sustainable due to its usage of proof-of-stake. Avalanche is compatible with widely available consumer-grade technology and consumes the same amount of energy as only 46 US households. The Avalanche public blockchain uses only 0.0005% of the energy used by the Bitcoin blockchain and 0.0028% of that of the Ethereum network, according to research published by the Crypto Carbon Ratings Institute (CCRI), a company that focuses primarily on the environmental impact of cryptocurrencies.

How Does Avalanche (AVAX) Work?

The Avalanche ecosystem is home to a number of projects in the realms of decentralized finance (DeFi), digital securities, non-fungible tokens (NFTs), nodes, oracle, stablecoins, trading bots, wallets, among others. When it comes to storing Avalanche assets, the wallet is safe and non-custodial. The P-chain, X-chain, and C-chain’s recent transaction updates, as well as the network’s transaction volume and network activity, are all available on the Avalanche network. Last but not least, you can use the Coinbase wallet or your browser wallet (like MetaMask) to connect in order to use the Avalanche Bridge.

Avalanche solves the issues discussed above in a novel way: it employs three separate blockchains. Let’s take a deeper look at the three blockchains that form the Avalanche mainnet:

Exchange Chain (X-Chain): Avalanche uses this network to create and transact its assets. The X-chain facilitates the creation of NFTs, new tokens, stablecoins, and more.

Contract Chain (C-Chain): Developers use Avalanche’s smart contracts to create decentralized apps (dApps). Also, the smart contracts that run on this network are EVM compliant, so developers can use Ethereum smart contracts on the Avalanche blockchain.

Platform Chain (P-Chain): Avalanche’s final chain is known as the Platform Chain or P-Chain. For validators and staking AVAX, this chain is primarily used.

By having all nodes operate parallel with each other, the Avalanche consensus protocol randomly verifies validators’ transaction confirmations. The goal is to improve the probability that a transaction is true or legitimate by periodically performing random checks. The Snowman consensus protocol uses blocks in a linear manner but otherwise functions similarly.

What is AVAX?

AVAX is the Avalanche network’s native token. The AVAX token’s maximum supply is capped at 720 million coins. nAVAX is the smallest unit of AVAX, and one nAVAX equal to 0.000000001 AVAX.

AVAX has two key applications in the Avalanche ecosystem.

To begin, all Avalanche network transactions are subject to a gas fee. This cost is payable in AVAX tokens. The platform’s transaction fee algorithms are based on the Ethereum dynamic fees model, EIP-1559. However, any AVAX used to pay transaction fees is burned, reducing the overall supply on the market and boosting its price in the long run.

Second, the crypto token is used to participate in the network through staking. Anyone having at least 2,000 AVAX tokens staked on the network can run a validator node, meanwhile the minimum staking required to become a delegator is 25 AVAX. The minimum lock-up period is 14 days, and the staking rewards are roughly 9% for both parties.

What Makes Avalanche’s Consensus Protocol Unique?

The goal of consensus is to get a group of nodes to agree on a course of action. By following a series of instructions known as a consensus protocol, nodes can reach a consensus. A novel consensus protocol called Avalanche is robust, scalable, and decentralized. It offers a high throughput and minimal latency. It uses less energy and doesn’t require sophisticated computer hardware. It functions effectively in hostile environments and is resilient to “51% attacks.”

Comparison of Consensus Protocols | Image Credit: Avalanche on Medium

Based on system parameters, Avalanche Consensus ensures (with a high probability) that if one honest validator accepts a transaction, all other honest validators will also come to the same conclusion.

The Avalanche engine is a universal consensus engine. It makes no difference what type of application is installed on top of it. The protocol allows the application layer to be decoupled from the consensus layer. If you’re building a dapp on Avalanche, you only need to define a few things, such as how conflicts are defined and what is in a transaction. You don’t have to be concerned with how nodes reach an agreement. The consensus protocol functions like a black box; you feed it information, and it spits out an answer that either accepts or rejects the information.

Avalanche can be used for a variety of purposes other than peer-to-peer payment networks. The Ethereum Virtual Machine is present on Avalanche’s Primary Network, and it is backward compatible with existing Ethereum Dapps and dev tooling. To achieve lower block latency and faster throughput, the Ethereum consensus mechanism has been replaced with Avalanche consensus.

Avalanche is very performant. With an acceptance latency of just one to two seconds, it can process thousands of transactions per second.

Comparison with other blockchains
Avalanche vs. other blockchains | Image Credit: Avalanche


The network is powered by AVAX tokens. These coins are staked by validators to protect the network while they are rewarded for keeping them locked up for a specific amount of time. AVAX tokens have a current supply of over 220 million and a maximum capped supply of 720 million tokens. 360 million AVAX tokens are included in the genesis block, with the remaining 360 million tokens being minted throughout time. In Avalanche, all fees are burned rather than going to the miners like in Bitcoin, which reduces the amount of tokens (scarcity).

  • Token Allocation 
Source: AVAX info
  • Supply Schedule
Source: AVAX info

Avalanche’s (AVAX) initial token went live on September 21, 2020. This token has a 720,000,000 maximum supply. By July 2030, the supply of AVAX is expected to be fully vested.

Why Avalanche (AVAX)?

Avalanche was created to tackle many of the challenges that most blockchain networks face. Compared to other conventional blockchains, Avalanche offers a diverse range of perks. Its most notable benefits include:


The network can scale linearly because of its multi-chain design, and its cutting-edge consensus mechanism can confirm transactions in less than a second. Further, subnet creation is limitless, which eliminates the scalability issues with conventional blockchains. Bitcoin can facilitate ~7 transactions per second. Meanwhile Avalanche, with its multi-chain design, has incredible linear scalability, and it can process up to 6,500 transactions in a second and can go up to millions, proving that it can perform Visa-level throughput.


The ability to create several subnetworks using the blockchain as a common platform makes the Avalanche network extremely interoperable. Avalanche is compatible with Ethereum tools like Remix, MetaMask, Truffle, and others in addition to enabling ERC-20 token swaps. There aren’t many blockchain-based solutions that let multiple blockchains share assets and data. Even fewer are able to achieve constant throughput and quick transaction speeds, let alone interoperability with third-party tokens.

Cost Efficiency

Avalanche’s fees are among the lowest of any programmable network, with the cost of minting new assets and blockchains being minuscule. These fees are then burned, allowing AVAX’s price to escalate due to a decrease in the amount of tokens in circulation and hence greater demand. Avalanche’s low cost immediately addresses Ethereum’s record-high gas fees caused by significant congestion levels.  

Final Thought

The above overview of the Avalanche blockchain reveals key aspects of its design and the potential it has to revolutionize the crypto industry. Avalanche (AVAX) is a new-generation blockchain network that supports smart contract functionality. It makes use of three distinct blockchains to handle the wide variety of tasks associated with cryptocurrency transactions. By using Avalanche, developers can easily develop robust, secure, and customized blockchain networks with sophisticated rulesets, as well as build on already-existing private or public subnets.

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