What is Avalanche (AVAX)?

Avalanche (AVAX) is a cryptocurrency that fancies itself the biggest competitor to Ethereum. This blockchain is another platform for Decentralized Finance (DeFi), created to counter the drawbacks of Ethereum. 

This platform is much faster (capable of handling 4500 transactions per second), costs much less for transactions, and is eco-friendly. It’s a great solution to the world’s finance system due to its capability of making rapid transactions. This blockchain is also an open-source platform, enabling people to contribute to its code.

The network is one of the largest DeFi-supporting blockchains after Ethereum and Binance. Besides this, the platform also has interests in the metaverse. Hence, they also support metaverse investments. They believe it would be a shame if a cheap network doesn’t support virtual reality and blockchain-based games.

Since this platform seeks to supersede Ethereum, it’s also compatible with many Ethereum dApps. Users can use it to launch DeFi applications, ERC-20 tokens, assets, etc.

AVAX is the native token of this network, which makes it the basic unit of account on the Avalanche blockchain. Its also used to secure the network and pay for transactions across the network.

Who Created Avalanche (AVAX)?

The brain behind Avalanche (AVAX) is Emin Gün Sirer, a Turkish-American computer scientist who launched the network in 2020. He is a Computer Science professor from Cornell University in Ithaca, New York. The plan to develop Avalanche got proposed in 2018 by Team Rocket (which now goes by the name Ava Labs).

How does Avalanche (AVAX) Work?

Avalanche (AVAX) works using the Avalanche Consensus Protocol, based on the Nakamoto and the Classical protocol. The Nakamoto Protocol (bearing the same name as Bitcoin founder Satoshi Nakamoto) offers a scalable, decentralized, and robust blockchain. Like the Bitcoin blockchain, it’s also costly to run and isn’t fast either.

The Classical Protocol is the opposite of the Nakamoto Protocol. Hence, it’s fast and cheap. However, it’s neither scalable nor robust like the Nakamoto Protocol. As such, Avalanche was built to combine all the advantages of these protocols, making it fast, cheap, scalable, and robust.

Hence, the Avalanche blockchain is built on three chains:

• Contract chain (C-chain): This creates smart contracts and uses the Snowman consensus protocol.
• Exchange chain (X-chain): This manages blockchain assets and uses the Avalanche consensus protocol.
• Platform chain (P-chain): This coordinates validators on the blockchain and uses the Snowman consensus protocol.

The Avalanche Consensus Protocol uses a proof-of-stake mechanism, so users validate transactions using their stakes in the network. Users need to stake their cryptocurrency (not selling or trading it) to gain a right to participate in validating transactions.

Users who participate in the staking consensus also receive incentives for their work. The faster they validate transactions, the more they earn.

Similar to Bitcoin, congestion on the Avalanche blockchain can affect the rate of transaction fees. However, users can also vote to decide on what the transaction fee is going to be. After each transaction, the fees get removed from circulation (burned) to make the digital coin scarcer over time.

Is Avalanche (AVAX) a good investment?

Although Avalanche claims to be strong competition for Ethereum, it’s not the only competition out there. This blockchain is just a few years today, making it very young.

Although Emin just created Avalanche in 2020, there has been a surge in value since its inception. While its young age isn’t much to go by for future analysis, there’s hope in its capabilities.

Avalanche has been dubbed the ‘Ethereum killer’ by many investors since it offers similar services to Ethereum. The good part is that it’s also faster and offers these services for less. Hence, if people keep looking for a cheaper Ethereum alternative, Avalanche will still be valuable.