Strengths and Weaknesses
- Speed - the Avalanche blockchain uses a new consensus protocol developed by a team of computer scientists of Cornell University. One of its main advantages is that you can confirm transactions within less than 1 second.
- Scalability - up to 4 500 transactions per second - an order of magnitude more than other existing blockchains
- Security - strong network security guarantee
- Interoperability - Avalanche allows to share data with other blockchains and communicate with each other efficiently
- Usability - one of the concerns in adopting any technology is usability and the extent to which the software or technology is easy to use and implement in different cases. Avalanche is off to a very good start in this.
- Uniqueness of network structure - by creating a unique network structure, the Avalanche developers have solved many of the common problems that competing blockchains struggle with
- The activities of untrustworthy and malicious validators are not punished - Avalanche states in its documents that "tokens staked on Avalanche are never at risk of slashing", which means that the network does not punish validators for mistakes and fraudulent behavior
- Decentralization - the Ava Labs owns 10 % of the total AVAX token supply, a total of 72 million units. Distributing tokens so that the platform is sufficiently decentralized while no node has more than 1 % of the network is a challenge.
- Avalanche consensus protocols do not work as efficiently when nodes in the network disagree. The developers are working on this problem and are trying to solve it with Frosty consensus, which is supposed to create a leader node to improve performance in case there is a block dispute.
Avalanche is an open source platform for building decentralized applications (dApps) and deploying enterprise blockchains in a single interoperable and highly scalable ecosystem. The Avalanche blockchain officially entered the cryptocurrency space in 2020 and its main goals encompass making it fast, versatile, secure, affordable platform accessible to all.
Avalanche uses a Proof of Stake (PoS) method to verify transactions, aided by its unique consensus. The key difference between Avalanche and other decentralized networks is specifically its consensus protocol – the Avalanche Consensus Protocol – which claims to combine the benefits of two other sets of consensus protocols known as Classical and Nakamoto.
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Functioning of the Chain
Avalanche includes 3 built-in blockchains: the Platform Chain (P-Chain), the Contract Chain (C-Chain) and the Exchange Chain (X-Chain). All 3 blockchains are verified and secured by all validators of the Avalanche network, which is referred to as the primary network. The primary network is a special subnetwork and other members of all custom subnetworks must be part of the primary network, with the requirement of depositing a minimum of 2 000 $AVAX units.
Avalanche P-Chain is a metadata blockchain on Avalanche that coordinates validators, tracks active subnets, and enables the creation of new subnets. P-Chain uses The Snowman consensus protocol.
The P-Chain API allows clients to create subnets, add subnets validators, and create blockchains.
Avalanche C-Chain enables the creation of smart contracts using the C-Chain API and is compatible with the Ethereum Virtual Machine (EVM). Thanks to its compatibility with EVM, Ethereum developers can easily deploy their applications to C-Chain on Avalanche. C-Chain uses The Snowman consensus protocol as well.
Avalanche X-Chain functions as a decentralized platform for creating and trading digital assets. Here, developers can create their own tokens on the Avalanche blockchain.
$AVAX is one of the assets traded on X-Chain. When you enter a transaction on the Avalanche blockchain, you pay a fee denominated in $AVAX.
The Snowman is an optimized consensus protocol between two chains. It is high-performance, totally ordered, and great for smart contracts. The Snowman is powered by Avalanche consensus, and in my opinion, the two consensus protocols are very similar to each other. They are only differentiated by a few functionalities that are more complicated to describe. They are mainly used by developers who choose to build their projects on Avalanche. In case you are a developer interested in these details, you can visit the Avalanche Discord where you will get help with everything. Both the Avalanche P-Chain and the Avalanche C-Chain implement the Snowman consensus protocol.
The Avalanche blockchain price and transaction speed as of the date of writing (November, 2022):
Whitepaper and basic information about the protocol were first published on the InterPlanetary File System in May 2018 by a group with the Team Rocket pseudonym. Subsequently, a test network was launched in May 2019.
The Avalanche Consensus Protocol became open source in March 2020, making it available to the public. The Avalanche Initial Coin Offering (ICO) ended in July 2020, followed by the launch of Avalanche in September of the same year.
My experience with the Avalanche blockchain has been mostly good, however, if I were to compare the reality with the presented statistics in their official documents, a lot of these data points are not entirely truly representative. Compared to other blockchains, Avalanche tries to stand out mainly because of its speed, but my experience with higher pressure is just the opposite. The Avalanche blockchain was very slow many times and transactions did not go through. In today’s (Nov, 2022) Bear market, when there are far less users of the blockchain, this issue has improved, but that doesn't change the fact the data presented should be valid even at the highest pressures on a given chain.
Kevin Sekniqi, Maofan "Ted" Yin and Emin Gün Sirer are behind the development of the Avalanche.
The Ava Labs today is a world-class team of experts in computer science, economics, finance and law with offices in New York City and Miami. They are passionate individuals creating a better world of finance by redefining the ways people build and use finance applications.
The Ava Labs team has collective experience ranging from leading Fortune 500 finance and tech companies to high-growth blockchain companies.
The complete Ava Labs team can be found here.
Avalanche developers Kevin Sekniqi and Maofan "Ted" Yin have studied at Cornell University, where Emin Gün Sirer had been teaching as a professor for many years. In addition to being the official founder of Ava Labs, Emin Gün Sirer is also the founder of bloXroute. Kevin Sekniqi and Maofan "Ted" Yin have gained experience from various universities and have been actively using Ava Labs for the past 5 years.
$AVAX is the governance token of the Avalanche blockchain. What is it used for?
1. It is used to pay transaction fees. After being used for fees, $AVAX are automatically burned.
2. It helps in transaction verifications and network security through staking. You can participate in network security as a delegator for an average annual appreciation of 9 %. AVAX staking rewards calculator.
3. It serves as the basic account unit between multiple subnets created on Avalanche. 1 $nAVAX equals 0.000000001 $AVAX.
Revenue & Tokenomics
The total supply of $AVAX is limited to 720 million. This supply ceiling is expected to be reached by July 2030.
Vesting and Release
360 million $AVAX have been minted at launch (to be released within 1 to 10 years), the remaining 360 million are reserved for staking rewards.
- 2.5 % - Seed Sale, 10 % of which is to be released at mainnet launch and the rest to be released every three months.
- 3.5 % - Private Placement, 10 % of which will be released when the mainnet is launched and the rest to be released every three months.
- 10 % - Public Sale, 10 % of which will be released when the mainnet is launched and 15 % will be released every three months for 18 months.
- 9.26 % - Allocation to the Foundation, to be released over ten years.
- 7 % - Community Capital, to be released over twelve months.
- 0.27 % - Testnet Incentive Program, to be released over one year.
- 5 % - Strategic Partners, to be released over four years.
- 2.5 % - Airdrops, to be released over four years.
- 10 % - Team, to be released over four years.
- 50 % - Staking Rewards
Number of tokens in circulation - 299 745 241.54 $AVAX, 42 % of max supply - Connect live
CEX (centralized exchange) listings - Binance, Coinbase, KuCoin, Huobi, Kraken, Bitfinex, Poloniex, Bittrex, OKX, Bybit, gate.io, crypto.com, Phemex, MEXC
The Uniqueness of the Chain
The Ava Labs' main motivation was to bring together the benefits of multiple consensus protocols that a blockchain should contain.
Avalanche consensus is a very interesting and exceptional technology due to this interconnection. Avalanche states in its documentation that it can handle more than 4 500 transactions per second, which is orders of magnitude more compared to most existing blockchains.
As mentioned above, this is the kind of data Ava Labs is claiming their technology should be achieving. Since the Avalanche consensus to date hasn't worked all that effectively, their goals still aren't quite being met. We believe that Avalanche is well built to handle these statistics and will achieve the data presented after applying modifications the developers are actively working on.
The utilization and great accessibility of the Avalanche blockchain is also appreciated by EVM developers. Avalanche offers scalability and great flexibility for creating both public and enterprise applications.
How the Network is Secured
The entire Avalanche network is secured in two different ways
The security of the network as a whole is handled by the Avalanche consensus. C-Chain and P-Chain security is taken care of by the Snowman protocol. This protocol is optimized for securing smart contracts, while the network as a whole is secured by a split architecture between three different blockchains: P-Chain, C-Chain and X-Chain.
X-Chain is secured through the DAG-optimized Avalanche consensus. This is how transactions are secured and finalization achieved. In this way, transactions are processed simultaneously and random polling of verifiers ensures that transactions are correct with statistical certainty.
Avalanche claims that its network is secure against one of the most common attacks in the blockchain world, called the 51 % attack. Developers and users of the Avalanche blockchain should thus be adequately protected.
$AVAX can be staked on the Avalanche wallet or on almost any CEX.
However, I recommend staking outside of centralized exchanges and choosing some validators on the Avalanche blockchain to store your assets. Make sure you check the status of a particular node before you decide to delegate your funds with it. You can check them here. To check the past performance of the node, the NODE ID will be just enough.
How to become a delegator and its benefits
Most users will choose the delegation path because it will ease a lot of the work that validators will do for them. If you choose the delegation path, you will not have to be online and active as often compared to validators. The delegators will basically choose another node that takes over the validation responsibility.
Becoming a delegator on the Avalanche blockchain requires a minimum deposit of 25 $AVAX, which will be locked in for at least 2 weeks, but no longer than 1 year. Delegates pay a small fee to validators for doing the job for them.
Delegating on the Avalanche blockchain has the same average annual return as validating, i.e. 10 % APY, except you need to deduct the fees you pay to the validator for doing the work for you.
Although delegation seems to be a 100 % trustworthy business, it is not. Always choose your validator responsibly. It may happen that the uptime of your validator drops below 80 %, either because of technical issues or because they are an intentional attacker. In this case, you will lose all your rewards and will have to wait for a pre-agreed minimum period to unlock your $AVAX after canceling your stake with that validator.
A list of validators can be found here.
How to become a validator and their benefits
A validator is an active node that must be online for at least 80 % of the time. The main requirement to become an Avalanche blockchain validator is to stake at least 2 000 $AVAX for a period of at least two weeks and no longer than one year. Validator´s participation activities and corresponding rewards increase with the number of $AVAX staked.
- Staking rewards - as a validator, you earn an average 10 % annual percentage yield (APY) + you can set your own fees for accepting delegations to your node.
- Your work contributes to the security of a growing network. New applications are regularly launched on Avalanche. Help them on their way and become a part of the Avalanche blockchain.
- Low hardware requirements. Avalanche claims to have the lightest HW requirements of all blockchain platforms.
If you are interested in validation on the Avalanche blockchain, you can find more information here.
Ava Labs, 2H, 2022Product Roadmap | Avalanche House | FE Brooklyn
Core - Google Chrome extension
The Core extension, backed by the developers at the Ava Labs, is now available. The Core supports chains like Avalanche, Bitcoin, Ethereum and any EVM compatible network. Through the app, you can swap and bridge your assets, easily manage your assets on different blockchains and view your NFTs in a neat layout.
Official download link
The three biggest projects on the Avalanche blockchain according to TVL are:
- AAVE - Lending & Borrowing platform
- Benqi - Liquidity market protocol
- Trader Joe - DEX
On Avalanche, there are currently 250 DeFi protocols and the total TVL is 804.5 million USD.
Building on the Avalanche blockchain attracts many experienced developers. In addition, Avalanche provides grants and assistance to new projects if they prove they are beneficial to the future of the ecosystem.
Many developers who aim to create on the Avalanche blockchain meet at the official Avalanche DC. The admins are active and they respond promptly. The whole community is friendly and helpful. Overall, really large communities are forming on the Avalanche blockchain as there are a lot of new DeFi projects being created that investors and traders are happy to participate in. Traveling anywhere online comes with its fair share of toxicity, but I rate my overall experience with the communities on Avalanche positively.
Where to Buy
The easiest way to access $AVAX is through a centralized exchange, such as Binance.
The other option is to use a decentralized exchange, such as TraderJoe.
Avalanche is a consensus protocol that is both secure and achieves high performance. All this while being scalable to thousands, perhaps even millions of users in the future. It is purposefully designed to be open to the largest possible group of users.
Since its inception, it has already attracted thousands of developers who have been involved in building the network. Thousands of validation nodes have been created and dozens of different partnerships have been acquired under decentralized and institutional funding. App developers really like the Avalanche blockchain and feel comfortable working on it. It may be also due to the activity of the team that works really hard on new updates, improving the technology, or communicating with the community to which they are always available. Avalanche makes the most of the potential of digital assets, blockchain environment and decentralized finance.
There are some drawbacks, such as the problems with Avalanche consensus protocols, which sometimes don't work that efficiently, or the decentralization issues that accompany Avalanche. However, it is gratifying to see that the developers are showing that they are working hard on fixes. We'll see how they manage to deal with these problems in the future and how the Avalanche blockchain intends to approach the coming years.