The rapidly growing world of cryptocurrencies makes competition very fast in terms of producing blockchain with various feature developments. Various innovations continue to emerge as solutions to problems that blockchain had at the beginning of its generation. One of these innovations is Avalanche, which is a smart contract that develops decentralized financial facilities and the development of transactions that process faster than others.
Avalanche is a blockchain designed as a secure and globally distributed decentralized network. What is unique about this blockchain is that Avalanche utilizes three different blockchains to create a fully interoperable framework. In addition, this network also offers a payment method in the form of digital currency (AVAX).
What Is Avalanche (AVAX)
Avalanche is the development of decentralized financial facilities and transaction processing speed in the smart contract platform. Avalanche can process transactions of up to 4500 transactions per second (TPS) and is the fastest blockchain compared to others and is also cheap and environmentally friendly, making it the fastest smart contract platform.
AVAX token (Avalanche) is said to be the first smart-contract computerized platform that can handle transactions only in less than 1 second. AVAX is founded by Ava Labs and claimed to be able to reach greater scalability than Ethereum by way of its high transaction throughput of up to 4,500 TPS (transactions per second). Consequently, the Avalanche’s presence is said to be an alternative to solve many loopholes and problems found in probably most blockchain networks these days, Ethereum included. Supporting application-specific sharding, this network helps developers to launch applications tailored to their own needs. In addition, Avalanche also has network-level programming that allows developers to control the execution of decentralized applications and manage private data securely.
When Was The Avalanche Launched?
Avalanche was first launched in September 2020 by a computer scientist named Emin Gun Sirer from Cornell University, the USA who initiated this project and led the research with the help of Kevin Sekniqi and Maofan Yin which continued to establish a technology company called Ava Labs to develop blockchain. as a financial alternative.
In their research, technology company Ava Labs received investment funds from venture capital firms Initialized Capital, Andreessen Horowitz, Polychain Capital, and former Chief Technology Officer Naval Ravicant and Coinbase who had previously invested in Foursquare and Uber, Balaji Srinivasan.
How Does An Avalanche Work?
One of the advantages of Avalanche, which is the ability to make transactions with a faster process, can occur because Avalanche has developed three separate blockchain architectures and has different functions. The three blockchains are:
- Exchange Chain (X Chain)
The first blockchain architecture is called the X chain. X chain is designed to be easy blockchain architecture to program, and it is decentralized. This network allows anyone to create and print other SDA (Smart Digital Assets). The SDA can be utility tokens, stablecoins, wrapped tokens, NFTs, equities, and more.
- Contract Chain (C Chain)
C Chain was created to simplify conversion for Ethereum Dapp developers. As a conversion chain, C Chain is compatible with all vital Ethereum devices. Users can migrate their Dapps to this blockchain easily.
- Platform Chain (P Chain)
P Chain is responsible for network utilities. This chain is used to coordinate the Validators. Blockchain also plays a role in monitoring and creating new subnets. P-chain allows for staking tokens on the network.
Avalanche Consensus Protocol
Avalanche has one big difference that distinguishes it from the others, namely the way the network validates transactions, or is called a consensus protocol. They debunk the notion that networks don’t provide scalability and security without decentralization being sacrificed. Avalanche developed the protocol by taking a new approach in terms of high security but without sacrificing decentralization.
Avalanche developed an amalgamation of the Nakamoto consensus found on the bitcoin blockchain with classic consensus emphasizing fast finality, scale, speed, and energy efficiency.
Crypto Projects In The Avalanche Ecosystem
- Decentralized Exchange
Avalanche is currently a platform for several DEXs or applications that provide facilities to exchange tokens for other tokens using smart contract technology, for example, Sushiswap, Pangolin, Paraswap, Pangolin, and Trader Joe.
Ethereum users may be familiar with Sushiswap which is one of the largest DEXs with a total locked value of $1.74 billion as of February 2022. Sushiswap users on the Avalanche blockchain can exchange assets as they do with SushiSwap on Ethereum but at lower fees and faster transaction settlement.
- Optimizing yield
Applications like Snowball, Yield, and Yield yak are yield optimizer applications that have automated Services that help users get maximum return value from investing in cryptocurrencies.
- Manage portfolio
Apps like dApps, DeFi wallets, and Marker for tracking and managing portfolios are part of Avalanche’s crypto project ecosystem.
In the Avalanche ecosystem, there are also applications such as AAVE, which is a blockchain-based loan application that can be used to borrow crypto assets or store assets to earn interest.
Read More: What is Bitcoin?
What Can Be Done With AVAX?
Some of the functions of AVAX, as the official token of Avalanche, include staking, and also as a currency for DApps transactions. Below is a further explanation of what can you do with AVAX tokens.
A resource used during the transaction validation process in a proof of work system is computation. As for Avalanche, the resource used in the proof of work system is AVAX, the original token. In Avalanche, the node must stake within a certain period a certain amount of AVAX to be able to validate the blockchain. AVAX users benefit by staking on this network. On average, the staker will later get a profit ranging from 9.69 to 11.54 percent.
To become a validator on the network, you must have at least 2 thousand AVAX. That way, the validator can later validate multiple subnets and is also required to validate the main network. AVAX asset owners can receive rewards for staking their asset tokens, this is a way to secure the AVAX they have and also a way to be easily incentivized.