Avalanche attempts to improve scalability without compromising speed or decentralization. Three blockchains make up its core platform: the Exchange Chain (X-Chain), Contract Chain (C-Chain), and Platform Chain (P-Chain). The X-Chain is used for creating and trading assets. The C-Chain is for smart contract creation. The P-Chain is for coordinating validators and Subnets.
One of the protocol’s most important breakthroughs is Avalanche Consensus, a method using repeated sub-sampled voting by validators to make consensus fast and affordable. Avalanche also uses Subnets as a novel method of horizontal scaling, allowing for the creation of customizable, interoperable blockchains. There’s no limit on the number of Subnets possible.
When was Avalanche launched?
What problems does Avalanche solve?
There are three main problems Avalanche attempts to solve: scalability, transaction fees, and interoperability.
Scalability vs. decentralization
How does Avalanche work?
Avalanche uses a combination of methods that make it unique and is actually made up of three primary interoperable blockchains: the X-Chain, C-Chain, and P-Chain.
With each blockchain taking on different roles, Avalanche improves speed and scalability compared to running all processes on just one chain. Avalanche developers tailored consensus mechanisms to the needs of each blockchain. Users need AVAX to stake and pay network fees, giving the ecosystem a common usable asset.
How do Avalanche’s consensus mechanisms work?
There are similarities between Avalanche’s two consensus protocols. This dual system is a fundamental reason for the network’s improved scalability and transaction speed.
All transactions are finalized immediately without other confirmations needed. Running a validator node and validating transactions have low and accessible hardware requirements, which helps with performance, decentralization, and climate friendliness.
The Snowman consensus protocol builds on the Avalanche consensus protocol but orders transactions linearly. This property is beneficial when dealing with smart contracts. Unlike the Avalanche consensus protocol, Snowman creates blocks.
1. You can stake your AVAX to become a validator or delegate it to a validator. Validators can earn up to 10% Annual Percentage Yield (APY), and set a custom percentage fee of the reward they keep from delegators who back them.
2. AVAX serves as the common unit of account for all Subnets, improving interoperability.
3. Transaction fees and Subnet subscriptions are payable in AVAX.
How do you stake AVAX?
The hardware requirements are low enough that most standard laptops or desktops should be suitable to begin validating. You can also stake tokens with a validator and receive rewards when the validator successfully confirms transactions.
Customizable Avalanche blockchains
A customized blockchain using a highly scalable subnet is well suited to large enterprise needs, and many are already building Subnets. It’s convenient for big corporate and small independent operators of these custom blockchains to interact with others in a rich ecosystem and to leverage the security of Avalanche’s primary network.
Avalanche has its own Avalanche Virtual Machine (AVM), which is EVM-compatible. Developers familiar with Ethereum’s Solidity coding language can easily use Avalanche and also port over existing projects.
How is Avalanche different from other scalable blockchains?
Transaction speed and finalization
One of Avalanche’s biggest claims is decentralization. Considering its size and age, it does have a large number of validators (1,300+ as of April 2022), due partly to its reasonably minimal requirements. However, as the price of AVAX has risen, it has become more expensive to become a validator.
Avalanche’s interoperable blockchains are also potentially unlimited in number. This is in direct competition with Polkadot, another project offering customized and interoperable blockchains. Polkadot has limited space auctioned off in Parachain Slots auctions, whereas Avalanche works with a simple subscription fee.
With Decentralized Finance (DeFi) platforms looking for Ethereum alternatives, blockchains like Avalanche are attractive due to their EVM compatibility and low fees. However, DeFi platforms already have a long list of alternative platforms when it comes to scalability and speed.
Avalanche has increased in popularity since its release and has already caught up with Ethereum in total transactions per day, but whether it will be able to compete with other blockchains like Solana or Polygon is yet to be seen.