What is Avalanche (AVAX) and How Does it Work? | KuCoin Crypto Gem Observer

2022/02/22 10:04:19

Avalanche set out to be a major DeFi platform that will support the launch of customized assets, including decentralized finance applications and allied services. It supports the work of developers who desire to launch an asset, embark on its trade, and control its dynamics using a decentralized platform enabled by smart contracts, embedded oracles, and the best available technologies.

Avalanche has a distinct architecture, consisting of three standalone blockchains known as X-Chain, P-Chain and C-Chain. These constituent chains have specific uses that mark the ecosystem out from the norm of Ethereum and Bitcoin platforms where all nodes need to validate each transaction. The consensus mechanism deployed with Avalanche depends on the use cases that are associated with them, marking the ecosystem as agile and responsive.

The project is reputed to be the first to complete smart contract transactions within a second in the crypto space. The Avalanche mainnet went live in September 2020 and has witnessed a surge in transaction numbers to date. Its transaction per second count exceeded 6,500 by the last report. Projects such as TrueUSD and SushiSwap have optimized their operations by integrating with the platform in a move that boosts interoperability.

What is an AVAX token and What is it used for?

The native token in the ecosystem is called AVAX, and it is used for a series of tasks on the platform apart from its use for rewards distribution. AVAX also serves as the payment system that underlies the Avalanche community. The supply of AVAX is 395,891,290 tokens, and the circulation count is over 245,314,873. The platform utilizes token burn as a mechanism for token valuation boost. With each burn, the scarcity of the token increases, enhancing the ecosystem’s value.

Holders of AVAX tokens are able to stake them on the network, earn rewards and boost their investment worth. Each staking is possible with an Avalanche Wallet created just right next to the Key Phrase. When verification is completed, any user is able to move funds to the P chain directly from the X chain, which is responsible for asset creation using the customized settings although data management only takes place on the P chain. Reward allocation is tied to the period specified when staking takes place, and no additional incentives can be received when the tenor expires, unless a new staking is initiated.

How does AVAX work?

The platform is governed as a decentralized platform, making it possible for users to create decentralized apps and their preferred smart assets on a platform that is permissionless, fast, secure, and enabled for interoperability. The ecosystem also works as a suitable marketplace that makes it possible for users to create, trade, swap, store or transfer assets and items of value.

The ecosystem makes it possible for users to create subnets that are defined by core logical flows and functions using permissionless or permissioned frameworks. It is possible to build and trade digital assets and digital representations of customized assets using the AVAX network. Developers can build smart contracts optimized for high scalability and roll them out as or alongside decentralized applications. The platform has become one of the most sought-after DeFi platforms as a result of its customizable products and scalable chains.

The P2P payment mechanism offered by Avalanche is fast and scalable, proving to meet the demands of the DeFi space. Trades take place on a near-instant basis on Avalanche as millions of its validators are available online to meet the demands of users despite its average processing count presently at 6,500 per second. The ecosystem has gone past the 18 billion USD mark in market capitalization as of the time of writing.

What Makes AVAX Unique?

Avalanche provided a solution to the challenges of scaling, speed, and security that first-generation blockchains could not surpass. With its interoperable blockchains, Avalanche pointed the way to optimize a consensus mechanism that is wholly native to its ecosystem. Its Exchange Chain, the X-Chain creates AVAX tokens and customizable assets while also ensuring the exchange processes are governed by defined rules just like the Ethereum ERC-20 standard.

On the Contract chain, C-Chain, you will find the decentralized applications and smart contracts alongside its Avalanche Virtual Machine, which is akin to the Ethereum Virtual machine and enables the forking of decentralized applications that are EVM-compatible. The consensus here is called the Snowman consensus mechanism.

The equally remarkable P-Chain (The Platform Chain) is the coordinator of network validators, used to create subnets and track all existing subnets on the platform. The subnets are made up of validators that can work on several blockchains at a go. Each blockchain is structured to be validated by one subnet, with no repetitive validation as seen in older blockchain mechanisms.

Who created AVAX?

Ava Labs owns Avalanche, and the founders are Emin Gün Sirer, who was a professor at Cornell University, alongside Kevin Sekniqi and Maofan “Ted” Yin, both computer science doctorate candidates at Cornell university at the time.

Gün Sirer has racked up years of research in cryptography over the years with his design of a virtual currency with a P2P outlook six years to the launch of Bitcoin as his seminal work. He is also reputed for his input in Bitcoin scaling possibilities and Ethereum research work. His research outcome led to the birth of Ava Labs in the year 2018.

Closing Thoughts

The founders of Ava Labs have done a remarkable job with Project Avalanche, and this shows in the patronage it receives from the DeFi community across the globe. With its unique blockchains working in sync for the creation, deployment, and exchange of DApps and assets in the ecosystem, the project occupies a pride of place in the crypto world. Its ranking shows a global acceptance having made it to the Top 10 by market capitalization.