The Avalanche crypto project isn’t your typical “Ethereum killer”.
First–the part most people care about. Does it PUMP?
Check out the price history of the Avalanche cryptocurrency, at the heart of the efforts of the good folks at Ava Labs, below:
Since its inception, there have been dozens of competitors vying for Ethereum’s spot among the top crypto projects. One of the biggest competitors to recently enter the ring – Avalanche.
The tricky part about the Avalanche cryptocurrency, though, is finding a source of info that explains it well enough for the average person to understand it. Most resources online are highly technical and super long, making it difficult to explain to others that aren’t familiar with the technical side of the space.
But, that’s why we’re here.
*throws back shot of whiskey*
OK. Let’s get into it.
Table of Contents
- Avalanche overview
- Consensus Model
- Network Infrastructure
- Final thoughts
So what exactly IS Avalanche?
Avalanche is defined as “a blockchain ecosystem designed to function as a decentralized, secure and global distributed network.” It’s developers refer to it as a “platform of platforms”, where users would be able to easily perform a series of application-specific tasks in uniquely customized environments (i.e. create public/private blockchains, issue/exchange new crypto, create scalable dApps/smart contracts, etc.).
It’s like Inception, or those Russian dolls.. but with crypto platforms.
Avalanche’s mainnet was launched in Sept. 2020. It was created by Ava Labs, a tech company led by Emin Gün Sirer, a Cornell University computer scientist. The rest of the Ava Labs team (which includes two other professionals associated with Cornell) consists of experts from various fields, such as IT, economics, finance and law.
The platform saw early support from companies like Andreessen Hororwitz, Polychain Capital and Galaxy Digital, that are all heavily invested in the crypto space.
The Avalanche Consensus Model
Before we get too deep into it, let’s first touch on their unique consensus model.
We already know of the popular consensus models today in crypto (i.e. Proof of Work, Proof of Stake, etc.). In 2020, Avalanche launched its Avalanche Consensus Model network.
While this new consensus model pretty closely follows the Proof of Stake model, there are some key differences that make it unique:
This model uses a form of “sub-sampled voting.”
Put simply, this means that there’s a large group of people who volunteer to participate in the network. Then, at random, they are requested to verify data to obtain consensus. In this instance, small random subsets of validators are asked to verify the validity of each network transaction.
A benefit of this model is that it doesn’t matter how many nodes there are, or how many people there are in the system – it is designed for consensus to be reached within a short timeframe.
Given its unique architecture, it’s also resistant to attacks that leave other blockchain ecosystems vulnerable.
Unlike the 51% needed to effectively attack networks like Bitcoin and Ethereum, you would need to control up to ~80% of the network to successfully attack it.
It can run upwards of 6,500 TPS (transactions/tx per second).
It can confirm transactions in less than a second and has a finality clock (the time it takes to assure/guarantee that a crypto tx can’t be altered, reversed or canceled after it is completed) of under 3secs – with the majority of them being confirmed in under 1 sec.
Bitcoin, in comparison, has a finality of ~1hr
Ethereum 2.0, in comparison, has a finality of ~6min.
So yes, it’s very fast.
Avalanche’s Network Infrastructure
Avalanche has a single, primary network with 3 different types of blockchains built into it:
This one is the eXchange part of the Avalanche ecosystem.
On the X-chain, we see the creation, management and transaction of tokens within the AVAX blockchain.
This blockchain manages the smart contracts that appear on Avalanche.
Since Avalanche is compatible with Solidity (Ethereum’s programming language), this is essentially a copy of the Ethereum Virtual Machine (EVM), making it easier for Ethereum-based developers to easily migrate over to the Avalanche network. It’s important to note that AVAX isn’t limited to just the EVMs though–they can use any custom virtual machine/VM..
It uses the “Snowman Protocol” which is the linear version of Avalanche that allows the network to fit the needs of EVM. It is optimized for smart contracts and high throughput.
This Avalanche blockchain manages the platform aspects of the Avalanche ecosystem. (yup.. SUPER creative with these names).
Its primary function is to manage the subnets and coordinate the validator nodes and overall staking mechanism.
The network itself was created to run multiple custom virtual machines in addition to the Avalanche Virtual Machine (AVM). It also has great flexibility, since it’s able to use multiple coding languages, such as EVM and WASM (WebAssembly). The network itself was coded using the Go language.
Each subnet is a new network in the Avalanche ecosystem that is fully customizable. Each can have multiple blockchains (just like Avalanche’s primary network) and each of these blockchains can have its own unique consensus model AND its own VM. There is no limit on the number of subnets that can be created and each subnet can potentially scale to have millions of validators.
An important feature in Avalanche, is the fact that each subnet can also be either permissioned or permissionless. This allows organizations with higher regulatory needs and legislative restrictions to fully customize the blockchain to be in full compliance with established rules and guidelines.
For example, a government/business would be able to customize its own subnet rules on Avalanche, to ensure that their custom blockchain is compliant with local and international regulations. Not bad.
In validating your own subnet, you are also contributing to the validation of the entire network via the primary 3 chains, because every subnet validator has a node on the main primary network.
The AVAX token has a hard supply cap of 720M. Tx fees across the main network, fees for creating and minting assets, and fees for the creation of blockchains and subnets are all paid in AVAX, which are burned afterward, reducing the total supply (this scarcity makes the token deflationary). These tokens are also used for things like governance and atomic swaps between assets of the different subnets.
During Avalanche’s July 2020 ICO, ~127M tokens were sold and many of them are subject to an “unlocking period” where they remain “locked” (cannot be moved/sold) until a specific scheduled date and time (we aren’t psychics or anything, but a savvy investor might want to view the unlock dates for these original AVAX bag holders as a “metric to watch” if they were invested in this project.. who knows what kinds of patterns/trends you could find.. *wink wink*). The Avalanche team was given about 10% of the total coin supply up front, while the Foundation was given about 20%.
One major event in Avalanche’s short history is when the Avalanche Foundation announced a $180M incentive called “Avalanche Rush” to incentivize developers to build on top of AVAX. Significantly, platforms like Curve and Aave (that have billions of dollars of liquidity in networks like Ethereum and Polygon) were specifically targeted to build their services to AVAX compatibility.
After this, of course, $AVAX saw that notorious pump where it ran up from ~$15 to ~$55 (almost 4x) in just a few short weeks. Still being in its first year, many investors are drawn to the opportunities like these that Avalanche seems to present with their platform and token.
Avalanche also has a relatively simple and straightforward mining process: you just need to stake at least 2,000 AVAX to be a full block generator on Avalanche and any of its subnets.
Our final thoughts on Avalanche
Avalanche’s network allows for the easy creation of new blockchains, tokens and coin services. Those tokens can be used to represent different financial instruments like stocks, bonds, fractional real estate, NFTs, etc.
AVAX network participants can easily create and exchange digital assets, which can be customized to meet a wide range of technical and regulatory requirements.
This aspect of the network is the selling point for why it would be considered ideal for building DeFi platforms and for building blockchains at an enterprise level. This inclusive nature of the blockchain, combined with its technical aspects, sets it apart in the industry.
In short, in its brief time in existence, Avalanche is already proving to be a decent competitor to Ethereum and one of our favorite altcoins, but it still has a long way to go.
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