BCGAME - Free 5BTC Daily Bonus!Launched in 2020, Avalanche (AVAX) is an open source platform where developers can build and launch decentralized applications (DApps) in a highly scalable ecosystem. AVAX trades at $13 per currency, with a current offering of 172 million, with a market value of $2,2 billion.
What is an avalanche (AVAX) token?
The Avalanche story begins with decentralized finance (DeFi). DeFi is an ecosystem based on blockchain which gives users access to financial services without relying on centralized financial intermediaries. Users can lend or borrow funds from third parties through the use of smart contracts on blockchains. The most common of these blockchains is Ethereum (ETH), but its rapid influx of users has generated sky-high fees and slow transaction speeds that cannot compete with traditional systems. Although Ethereum plans to resolve its scalability issues through the ETH 2.0 upgrade, completion has been delayed several times and is currently not expected until 2022.
For those who want to access DeFi now, without the scalability-related downsides, Avalanche is a potential solution. Avalanche is a betting proof blockchain network designed with financial applications in mind. It provides a platform for launching enterprise-ready DeFi applications and blockchain solutions.
Avalanche is the first smart contract platform capable of completing transactions in less than a second and can process large transaction volumes while keeping fees low. Its developers claim that the platform can process 4.500 transactions per second, with security guarantees well above the 51% standard. Avalanche is still secure, even if up to 60% of the network is malicious.
As stated by the founder of Avalanche, the platform is not intended to be an “Ethereum Killer”, but rather a safety net for Ethereum during the transition to ETH 2.0. The Avalanche network also supports Ethereum virtual machines ( EVM ) and the entire Ethereum development toolkit. Developers can port their apps from the Ethereum network to Avalanche to test their apps at higher throughput and faster finishing speeds. This is possible with the Avalanche-Ethereum Bridge.
The AVAX token is the native token of the Avalanche network and the basic unit of account on the Avalanche blockchain. Users can stake AVAX tokens to earn passive income, use them to pay fees and receive them as incentives. The staking reward increases with the number of tokens staked and the duration of the staking.
How does Avalanche work?
Unlike Ethereum, each Avalanche application runs on its own subnet, which is a group of validation nodes coordinated to reach consensus on the state of a set of blockchains. Developers can create custom subnets using a toolkit. With these subnets, applications do not need to compete for network resources, thus maintaining fast transactions and low rates on the Avalanche network.
The Avalanche network achieves high performance through its revolutionary Proof of Bet (PoS) consensus protocol, called the Avalanche Consensus Protocol. Its combination of classic consensus protocols and the Nakamoto consensus protocol ensures decentralization, scalability and security. In this way, Avalanche solved the blockchain trilemma for the first time in history.
The Avalanche Consensus Protocol is a family of four mechanisms – Slush, Snowflake, Snowball and Avalanche – that complement each other and become more secure in the process. In short, the Avalanche Consensus Protocol is a unique voting protocol that relies on a process called “repeated random subsampling”. In the process, validator nodes randomly consult other validators until the network reaches a consensus and decides whether to accept or reject an incoming transaction.
All validators are members of the Primary Network, which consists of three blocking chains: the Exchange Chain (Chain X), Contract Chain (Chain C) and Platform Chain (Chain P).
- The X-Chain is based on Avalanche. It is a decentralized platform for creating and exchanging digital assets.
- C-Chain is based on Snowman. It allows the creation of smart contracts through its API.
- Chain P is based on the snowman. It coordinates validators, oversees existing subnets, and creates new subnets.
Who is behind the Avalanche?
Ava Labs is the US-based for-profit company behind Avalanche. The Ava Labs team is made up of experts in computer science, economics, finance and law. Emin Gün Sirer, Kevin Sekniqi and Maofan “Ted” Yin founded the company in 2018.
Sirer is a veteran computer scientist and currently an associate professor of computer science at Cornell University. He is known for being the first to create a coin that used proof of work (PoW) to mint coins. Its co-founders are also associated with Cornell University.
Kevin Sekniqi is the COO of Ava Labs. He holds a PhD in computer science from Cornell University. Sekniqi previously worked as a researcher and software engineer for NASA's Jet Propulsion Laboratory and Microsoft.
Maofan Yin is chief protocol architect for Ava Labs. Like Sekniqi, Yin also holds a PhD in computer science from Cornell University. During Yin's graduate studies, Sirer was one of his advisors.
Ava Labs managed to attract several institutional investors. The project raised $6 million in February 2019 following a Series A funding round. Four months later, the company raised $12 million in a private token sale led by Bitmain, Dragonfly Capital Partners, Galaxy Digital, Initialized Capital and NGC Ventures. In July 2020, Ava Labs conducted a public sale offering of up to 72 million AVAX tokens and raised $42 million.
AVAX price history
The price of AVAX has remained stable from its launch in late 2020 until early 2021. Driven by news of the possible launch of the Avalanche-Ethereum bridge in January 2021, the price quickly rose from $4 to around $13. A short delay, the bridge went online on Feb. 9, causing the price to increase by more than 300% to its historic high of $55.
The price dropped sharply a few days later, possibly caused by reports of an invalid coinage bug that occurred on February 11th. The AVAX price then entered a sideways trend and traded between $21 and $38 over three months. On May 19, the price plummeted to its current value of $13 after several negative headlines such as new cryptocurrency regulations in China and Tesla's suspension of Bitcoin payments. The negative news affected the cryptocurrency market as a whole, resulting in widespread price declines.
AVAX is currently ranked 47th by market capitalization. The token has a limited maximum supply of 720 million tokens. 360 million tokens were coined in genesis, while the other 360 million tokens are for wagered rewards. Like Bitcoin, reward rates will decrease over time as supply approaches maximum. When users use AVAX to pay network fees, tokens are burned. Through this firing mechanism, the network reduces the supply of AVAX and increases its scarcity.
What is the Avalanche forecast?
The Avalanche ecosystem is diverse, including platforms for everything from NFT-based games to projects that offer DeFi products. Projects involved with the Avalanche ecosystem include SushiSwap, Pangolin, Polyient Games, GameSwap and many others. As indicated by recent activity, the Avalanche is still growing rapidly. Over the past three months, nearly 100 projects have joined the Avalanche ecosystem.
However, there are some issues, mainly the invalid minting bug mentioned earlier. Although the Avalanche team managed to fix the issue within a few days, the bug still cast doubt on the cryptographic verification used by the Avalanche platform. The bug occurred when network traffic increased after Pangolin was released, in turn generating a large increase in the number of concurrent processing blocks. On a good note, this event proved that Avalanche is a truly immutable platform, as the developers were unable to reverse the stapled bullets.
The security and scalability of the Avalanche network, in general, is not without its critics. As Polkadot (DOT) founder Gavin Wood notes, a scalable network must provide the same security guarantees across the entire network, and a network is only as secure as its least secure subnet. With the different levels of security on Avalanche blockchains, messages from less secure subnets can be transmitted to a more secure subnet, compromising scalability and security. Wood further criticized Avalanche's reliance on a single, central network to run potentially sensitive operations that will lead to a bottleneck. The single network may not have enough data handling capacity for a large volume of traffic, resulting in scalability issues such as slow transactions and high fees. An Avalanche staff member responded with several rebuttals to Wood's points. A rebuttal involves Wood's perspective on how Avalanche is only as secure as its less secure subnet. The developer claims that Wood is wrong, as the security of a subnet is independent of the entire network.
Conclusion
The Avalanche project's consensus protocol is one of the most exciting advances in blockchain history, allowing the network to be secure, decentralized, and scalable. With good funding and a steady stream of projects joining the network, Avalanche has a good chance of making its own way into the blockchain world. However, the project lacks an impeccable record, having faced an invalid coinage bug and some criticism focused on security and scalability. That said, almost all major blockchains experience bugs and security issues eventually. What matters is Avalanche's responses and how they can turn these events into opportunities to strengthen your system.
