Avalanche (AVAX) - Is it Worth the Hype?

Avalanche (AVAX) - Is it Worth the Hype?

The DeFi sector is a fast-paced environment where Ethereum holds the lion’s share of the market. Despite its technical limitations, such as the use of the Proof-of-Work (PoW) consensus and scalability concerns, Ethereum is still the top option for developers.  

 It seems like every week there is a new “Ethereum-killer” touting superior technologies, lower fees, and a far more responsive user experience. Projects like EOS have put forth valiant efforts to provide a viable alternative to Ethereum and its scalability problems, but have yet to cut into the network’s community in any major way.  

This situation could be set to change as Avalanche(AVAX) gains traction.  A litany of analysts, traders, and VCs have sung AVAX’s praises since its first crowdfunding days, but is it worth the hype? What makes proponents think Avalanche will actually succeed in delivering the trustless framework and highly secure, distributed, multi-blockchain infrastructure that empowers developers to create more immersive Dapps, tokens, NFTs, and application-specific blockchains?

How Does Avalanche (AVAX) Work?

Avalanche functions using a unique multi-chain approach. Specifically, the protocol has three blockchains, a cryptocurrency (AVAX), and a payments system that all work together to create a better user experience by lowering fees and improving transaction throughput. The three blockchains used by Avalanche include X-Chain, C-Chain, P-Chain.

X-chain

The X-chain is the first layer of the Avalanche system. This blockchain provides support for the minting of new assets. Users can create and issue their own NFTs, stable coins, utility tokens, and any other digital asset. Avalanche has some of the lowest fees in the market for mining NFTs and building blockchains.

C-Chain

The C-Chain is designed to assist in Ethereum developer onboarding. This network operates as a conversion chain. The main goal of this layer is to ensure that Avalanche applications are compatible with all of the key Ethereum tooling. Developers can build Dapps using Remix, Truffle Suite, Meta Mask, Web3.js, and Embark.

Ethereum is the largest Dappand DeFi ecosystem in the world, despite its congestion and scaling concerns. The C-Chain provides developers with a direct way to convert their protocols to Avalanche. Once on Avalanche, users save on fees and enjoy a more responsive experience.

P-Chain

The P-Chain plays an administrative role in the network. It’s the layer that allows developers to create and monitor subnets. It’s also responsible for all the network's staking features. Lastly, the P-Chain coordinates Validators which helps to improve the scalability of the network by improving the efficiency of its consensus mechanism.

Subnets

Subnets are custom-built blockchains. These application-specific networks can be set up to meet any requirements. They can be public or private. They can also be multi-tiered and are interoperable with other Avalanche-powered systems. Notably, each subnet can possess its own token, fee structure, governance mechanisms, and consensus. You can even make your blockchain subscription-based.

Why Avalanche is Important

Avalanche has captured the attention of so many in the crypto world for many reasons. For one, it shares several features of Bitcoin. For example, the network uses Satoshi’s UTXO model. Additionally, it structures transactions in a manner that is similar to the Bitcoin Segwit upgrade.

Segwit was a major step for Bitcoin. Its primary purpose was to remove the transaction’s ID during computation and restore it later. This strategy freed up a lot of space on Bitcoin's main net and opened the door for the Lightning Network.

The main difference with Avalanche is everything is already included in the platform.  Its network structure reduces all congestion concerns and drives scalability upwards. Avalanche can scale to 6,500transactions per second (TPS). Additionally, the protocol provides near real-time transaction capabilities coupled with sub-second finality.

Advanced and Flexible Programmable

Avalanche represents a shift from rigid protocols over to a more fluid programming process. The network supports multiple custom virtual machines. The Avalanche Virtual Machine (AVM)enables developers to use their favorite languages including EVM, WASM, and Go. This flexibility has earned the network the nickname "platform of platforms" by its developers. 

Developers can leverage the multiple layers and programmability of Avalanche to create fully compliant Dapps. These next-gen applications can include complex rule sets and regulatory requirements if needed. The goal of this approach is to expand blockchain adoption into more regulated and enterprise environments.

Avalanche (AVAX) Deflationary Fee Strategy

Another major draw for crypto traders to Avalanche is its deflationary fee structure. Avalanche users pay small fees when they execute smart contracts, send transactions, mint assets, and launch blockchains. All Avalanche fees get burned.

Burning is the act of sending tokens to an address that is non-withdrawable. The goal of deflationary protocols is to reduce inflation and to improve the network’s token value over time by creating more demand via a decreased market supply.

AVAX

AVAX is the main utility and governance token for the Avalanche network. This flexible asset can be used as a money system to make international payments and transfer value globally in a friction less manner. It can also serve as collateral for the launching of stable coins and other digital assets.

AVAX also operates as the main rewards tokens for the network. You can stake AVAX and secure low-risk rewards. These rewards can then be added to your stake to improve the next round's results. This strategy creates a self-appreciating staking reserve. Users who take 2,000or more AVAX can sign up to act as Validators for the network and earn more.

AVAX has a capped supply of 720 million tokens. The token can be found on most top CEXs (centralized exchanges) like Coinbase. Notably, half of the total AVAX supply was issued during the crowdfunding event. The final half is earmarked as staking rewards.

A Brief History of Avalanche (AVAX) of Avalanche (AVAX)[1] 

Avalanche is the brainchild of Cornell researcher Emin Gün Sirer and his team of developers at Ava Labs. His goal was to create amore robust and programmable blockchain that would address many of the limitations found on Ethereum. The Avalanche project launched its main net in September 2020 to much hype from the crypto market.

The protocol managed to secure support from well-known venture firms including Andreessen Horowitz. In total, Avalanche was able to secure $42 million in funding in less than 5 hours. The project even received a nod of approval from one of the Ethereum Genesis addresses. A Genesis address is the first wallet on the blockchain. They are usually held by the main developer.

Get Ready for the Avalanche (AVAX)

After reviewing the facts, it’s easy to see Avalanche does bring some impressive features to the market. The protocol integrates many of the most important technical developments made in the crypto market over the last 13 years. It leverages the UTXO set up from Bitcoin, DeFi capabilities, DPoS consensus, a multi-chain structure, and more to create an inclusive decentralized development environment.