Avalanche, everything you need to know about one of the most promising Layer 1 projects

Updated on 22 August, 2022 2:52 PM
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    As of July 2022, more than 20,000 cryptocurrencies that were inspired by bitcoin have been developed. Avalanche, a cryptocurrency with the symbol AVAX, is one of those digital currencies.

    It is well known that Avalanche has one of the quickest transaction rates and presents a serious threat to the Ethereum network. Because it is an intelligent platform, programmers can make autonomous applications that, for instance, process purchase and sell agreements.

    What is Avalanche?

    Avalanche is a platform for payment systems that employ the proof of stake mechanism. Avalanche, which is compatible with the blockchain of Ethereum and claims to be the fastest and safest cryptocurrency platform accessible, will be a fierce competitor to Ethereum.

    Ava Labs introduced the Avalanche platform and AVAX coin in 2020. Furthermore, anyone can develop their cryptocurrency using the Avalanche platform.

    A diverse, decentralised, interconnected web of blockchain systems created by countless people and locations is the goal of the Avalanche platform. To enable a very stable coin, Avalanche is intended to be a system of a large number of subnets.

    What makes Avalanche Unique?

    Avalanche was made to directly challenge Ethereum. The latter was created and launched when much fewer individuals used cryptocurrencies, hence there have been fewer transactions. The algorithm was able to manage the transactions without any problems, but now Ethereum requires two layers to process all of the system's transactions.

    Due to the fact that Avalanche uses three blockchains interconnected by a single layer technology, it increases Ethereum's capacity. This dramatically increases the number of simultaneous transactions Avalanche can process compared to Ethereum, and as it only involves one layer, it also improves security.

    Avalanche can speed up transactions to the point at which they cannot be undone in one second.  On the Ethereum platform, transactions can take up to several minutes to complete. Due to the utilisation of fewer resources, this also lowers the fees per transaction.

    How does Avalanche work?

    The three blockchains in Avalanche are its primary selling point. Instead of one blockchain doing everything, every blockchain has a specific function.

    These are the three blockchains:

    Exchange Chain (X-chain)

    The X-chain serves as the marketplace for developing and exchanging digital smart assets. AVAX coins are also produced here thanks to the proof of stake system.

    Contract Chain (C-chain)

    The smart contract is carried out on the C-chain. Developers can put up their decentralised apps here. Existing Ethereum apps can transfer over because Ethereum contracts can also operate on the C-chain.

    Platform Chain (P-chain)

    Subnets, which are open-source blockchains, are what is found on the P-chain. Additionally, validation takes place here, allowing for the creation of AVAX currencies on the X-chain.

    Tokenomics of AVAX – the currency for Avalanche

    The native tokens for Avalanche are called AVAX coins. Avalanche employs a proof of stake algorithm to create the coin as it is possibly the more secure and less energy-intensive way to create currency as compared to the proof of work mechanism.

    With a maximum of 720 million, there are now 283,100,931 AVAX coins in circulation.

    For Avalanche, proof of stake mandates that users buy 2,000 AVAX in order to take part in a consensus. Instead of using the contested mining of the proof of work algorithm, these owners then turn into "validators" and are chosen at random to get the coin. This algorithm is more user-friendly for those who are new to cryptocurrencies and consumes less energy.

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