Avalanche blockchain is one of the ‘Ethereum Killers’. The term is used to refer to DeFi ecosystems rivaling Ethereum. They are DeFi networks trying to perform better than Ethereum, and offer viable solutions to the problem Ethereum network is facing.
Some of the problems with Ethereum is that its transactions are slow and fees are too steep for average users. In response, a wave of contenders like Solana, Cardano and Avalanche have tried to usurp Ethereum’s success by solving its problems. Our focus is Avalanche.
Background
Avalanche development is led by New York-based Ava Labs, which was co-founded by Emin Gün Sirer, a computer science professor at Cornell University, Kevin Sekniqi, a Ph.D. student, and Maofan Ted Yin, who wrote the protocol used in Facebook’s digital currency project, Libra.
Avalanche launched its mainnet in September 2020, two months after raising $42 million in a token sale(sold-out in less than five hours), and has since then become one of the largest blockchains.
The network tags itself as “blazingly fast, low-cost and eco-friendly”. It allows anybody to easily produce their own multi-functional blockchains and decentralized applications (dApps).
According to data from DeFi Llama, Avalanche has 2.66 billion total value locked in its protocol, making it the fourth-largest DeFi-supporting blockchain after BNB Chain and Tron, with Ethereum of course, leading the chart.
The platform is centered around $AVAX, the native utility token for the Avalanche ecosystem. $AVAX is used for paying network fees, staking, and providing a “basic unit of account” between Avalanche subnets.
The native token is the 17th largest cryptocurrency with a market cap of $4.93 billion at press time, according to data from CoinMarketCap.
How Avalanche works
Since Avalanche is designed to address some of the limitations of older blockchain platforms like slow transaction speeds, centralization, and scalability, it uses several innovations to do so.
They include its unique Avalanche Consensus Mechanism, which promises low latency, high throughput capabilities, and resistance to attacks.
Generally, the Avalanche network is governed by the Proof-of-Stake mechanism. It works this way:
AVAX holders are required to stake(agree to not trade or sell AVAX) in exchange for the right to validate AVAX transactions.
Consequently, $AVAX holders with the most staked, and who actively participate as validators, are the most likely to be chosen as validators for new Avalanche blocks.
Holding AVAX tokens is also required to vote on Avalanche governance proposals.
The unique features of Avalanche
According to Ava Labs, the platform can process 4,500 TPS (transactions per second). That is phenomenal compared to other networks like Bitcoin and Ethereum, which handle 7 tx/sec and 14 tx/sec respectively.
Furthermore, Avalanche is able to achieve transaction finality in under 3 seconds, which makes it better suited for massively scaling decentralized applications.
Apart from solving scalability issues, Avalanche solves the long time problem of interoperability. It does this by enabling blockchains both within a subnet and between subnets to communicate with one another, allowing them to complement one another and support cross-chain value transfers.
The Avalanche network is also said to be an inclusive network. While many proof of stake (PoS) blockchains only allow a select number of validators to participate in achieving consensus, Avalanche allows anybody staking at least 2,000 AVAX to participate.
Conclusively, being compatible with the Ethereum toolkit, developers are able to easily port their Ethereum dApps to Avalanche and can easily launch various decentralized applications (dApps) on the platform.
These apps can run on their own independent Avalanche blockchain, giving developers substantial control over how they’re secured and function, as well as who can access them.
Conclusion
Those problem-solving capabilities have made the development activity on Avalanche surge in its short history.
Due to that, there are now a plethora of applications using Avalanche’s technology. Some of them include surrounding private securities (Securitize), prediction markets (Prosper) and stablecoins (Bilira, a Turkish Lira stablecoin).
