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Avalanche (AVAX) is an advanced, multi-purpose blockchain platform launched in September 2020 by Ava Labs, led by Emin Gun Sirer. The platform has been designed to function as a secure, decentralized, and globally-distributed network. In addition, it was developed as a quick, cost-effective, and environmentally-friendly alternative to Ethereum (ETH). According to Ava Labs, Avalanche is the fastest smart contracts platform in the blockchain industry in terms of finality.
Avalanche is a "platform of platforms," consisting of thousands of subnets that form together to connect a single interoperable network. Ultimately, the network aims to solve the “blockchain trilemma,” which identifies scalability, security, and decentralization as the three main problems facing blockchain technology. Using its own consensus mechanism, the Avalanche Consensus Protocol, Avalanche employs three different blockchains to create a trustless, interoperable framework on which developers can build. Likewise, the Avalanche network also functions as a payment processor for peers to transact with its native cryptocurrency token, AVAX.
Primary Use Case
Avalanche was designed to solve several issues that often occur in blockchain networks. First, the platform eliminates centralization by offering a better alternative to networks like Ethereum and capitalizes on the disadvantages of these networks by offering more features, programmability, and functionality. Secondly, the system is designed to be scalable. The Avalanche network has constantly shown extremely fast transaction speeds, putting it in the ranks of leading payment processors such as PayPal and Stripe. Additionally, the Avalanche blockchain can process up to 6,500 transactions per second (TPS) with most achieving finality within milliseconds. Finally, when it comes to operating costs, Avalanche has significantly lower network fees (gas) than Ethereum. There are fees for transacting, launching subnets, creating assets, minting, and staking on the Avalanche blockchain network. But unlike Ethereum, where gas fees are distributed to validators, AVAX fees are burned to ensure their value does not decrease over time.
While the most common use of the platform is the security and validation of AVAX transactions, the ability to build blockchains—known as subnets—within the Avalanche ecosystem is a major convenience. Anyone can create a subnet on the Avalanche blockchain by paying a subscription fee in AVAX. However, developers have full control over programmability, and networks can be set up with special tokens, fee structures, and rules. Nevertheless, Avalanche offers several use cases when it comes to adopting decentralized finance (DeFi), developing decentralized applications (DApps), creating and minting non-fungible tokens (NFTs), and more.
Competitive Advantages
The Avalanche network allows organizations to easily generate new blockchains, and developers can create various blockchain services, coins, and tokens. While other blockchain networks use a single token on a single blockchain, AVAX allows developers to create multiple tokens that can be distributed across multiple subnets. The native token, AVAX, can represent different financial instruments such as equity, debt, bonds, and real estate. It can also be coded as a non-fungible token (NFT), making the network ideal for DeFi applications. Contrary to Bitcoin (BTC), where network fees are distributed to miners, AVAX fees are burned to counteract devaluation.
With regard to marketability, Avalanche has a maximum supply of 720 million AVAX tokens to be issued. Of this number, 360 million tokens were minted during launch, and the other 360 million were reserved for staking rewards. CoinMarketCap also ranks AVAX among the top 15 cryptocurrency assets, as the market cap and trading volume have increased significantly in a short time, with a circulating supply of about 244 million AVAX as of February 2022. At the beginning of last year, the price of AVAX was about $12 USD. By October 2021, however, it had surpassed $67, and the asset is trading at about $85 today.
