Avalanche is a fast-growing Layer 1 Proof-of-Stake blockchain and smart contracts platform that prioritizes high transaction speed, low transaction costs, and eco-friendliness. Its ultimate goal is to create a highly scalable blockchain that does not compromise on decentralization or security.
Avalanche (AVAX) Key Statistics
How does it work?
Rather than having a single chain do all tasks inside the ecosystem, Avalanche is created using three separate blockchains to meet the blockchain trilemma’s restrictions. Digital assets can be transferred across each of these chains to perform various activities inside the ecosystem
- Exchange Chain (X-Chain): This chain is used to create and exchange AVAX tokens and other forms of digital currency. These assets, like Ethereum’s token standards, contain customizable rules that control their behavior. AVAX is used to pay transaction fees, and the blockchain employs the Avalanche consensus system.
- Contract Chain (C-Chain): Developers can use the C-Chain to build smart contracts for DApps. This chain provides an instance of the Ethereum Virtual Machine (EVM), which enables developers to fork EVM-compatible decentralized applications (DApps). It makes use of a Snowman-modified version of the Avalanche consensus protocol.
- Platform Chain (P-Chain): This chain manages network validators, maintains a list of active subnets, and enables the establishment of new subnets. Subnets are a collection of validators that act as a consensus mechanism for specialized blockchains. Only one subnet can validate a blockchain, but each subnet can validate many blockchains. Additionally, the P-Chain employs the Snowman consensus system.
Two of these blockchains (the P-Chain and the C-Chain) are secured using the chain-optimized ‘Snowman’ consensus, which enables high-throughput secure smart contracts, whereas the X-Chain is secured using the DAG-optimized ‘Avalanche’ consensus—a secure and scalable protocol capable of achieving transaction finality in seconds.
Key of Scaling: Subnet
Users of Avalanche can create unique chains that function according to their own set of rules. This approach is comparable to previous blockchain scaling options, such as the parachains in Polkadot and the shards in Ethereum 2.0.
Subnets are groups of nodes that cooperate in verifying a certain set of blockchains. All validators of subnets must also validate the Avalanche Primary Network.
In a nutshell, the creation of subnets is limitless (subnets can infinitely create subnets). P-Chain has a transaction capacity of around 4,500 per second, almost double that of Visa. However, due to its limitless capacity for subnet generation, Avalanche does not have a practical TPS limit.
Transaction speed and finalization
Another apparent distinction is Avalanche’s one-second finality time. What does this actually mean? Transaction per second (TPS) is only one statistic for evaluating speed. Additionally, we must account for the time required to ensure that a transaction is finished and cannot be reversed. You might execute 100,000 transactions per second, but if a delay in finalization occurs, the network would remain slower for users. Avalanche is the world’s first decentralized smart contract platform designed for global finance’s size, with near-instant transaction finality.
Support for Private Blockchains
You may create a subnet that only certain pre-defined validators can join and a private subnet that only those validators can see the contents of the blockchains. This is perfect for firms concerned about maintaining the confidentiality of their data.
Separation of Concerns
In a network of heterogeneous blockchains, some validators would decline to validate particular blockchains simply because they have no interest in them. The subnet approach enables validators to focus only on the blockchains that matter to them. This alleviates some of the strain on validators.
AVAX Token use cases
- Staking Rewards: You can stake your AVAX or delegate it to a validator. Validators can earn up to 11% Annual Percentage Yield (APY) and charge a configurable percentage of the return they get from delegated funds.
- Transaction Fees: AVAX is used to pay transaction fees and subnet subscriptions.
- Create Tokens and Subnets Using AVAX: AVAX serves as the standard unit of account for all subnets, increasing interoperability.
Avalanche’s design is kind of unique in that it includes three chains rather than one, resulting in significant speed advantages and low costs. Avalanche is focusing its efforts on expanding its ecosystem, attempting to create a competitive DeFi environment that offers the best of all available DeFi iterations from other chains. As Avalanche expands its application ecosystem and user base, it has the potential to become one of the leading decentralized smart contract networks.
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