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Avalanche Overview

Avalanche Overview

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Avalanche (AVAX) Fact Sheet

  • Avalanche is an open-source, programmable smart contracts platform for decentralized applications focusing on enterprise solutions, interoperability, and scalability.
  • The Avalanche network offers fast transactions per second (TPS). It enables millions of independent validators to participate as the full block producers, facilitated by its unique architecture.
  • AVAX is the native cryptocurrency used across the Avalanche ecosystem. It is utilized as a peer-to-peer (P2P) transfer of value for staking and securing the network, payment for the operations, computation, storage, and creation of new blockchains and subnetworks.
  • Avalanche utilizes four consensus mechanisms to enable its high speed and throughput, including Slush, Snowflake, Snowball, and Avalanche.
  • Ava Labs is a research and development company developing the Avalanche platform and AVAX cryptocurrency. Ava Labs is based in Brooklyn, New York, and is headed by Cornell professor CEO Emin Gün Sirer.

AVAX Historical Data Price Chart in the U.S. Dollars (USD)


Avalanche (AVAX)  Historical Data Price Chart in the U.S. Dollars (USD). Source: TradingView

What is Avalanche (AVAX)?

Avalanche (AVAX) is a blockchain developed to power a new generation of blockchain smart contracts and is aimed at rivaling other blockchains such as Ethereum (ETH).

However, Avalanche stands out because its primary mission is to solve many of the scalability issues found in competing blockchain networks, such as the high fees, slow transaction times, and even network congestion.

Avalanche as a network supports smart contracts and is a Proof-of-Stake (PoS) based blockchain network.

The network has a theoretical network throughput of 4,5000 transactions per second (TPS) and was one of the first blockchains and smart contract platforms that could confirm transactions under a second.

How is Avalanche (AVAX) Used?

Avalanche (AVAX) maintains multiple whitepapers, including:

AVAX cryptocurrency was first introduced in the whitepaper released by Stephen Buttolph, Amani Moin, Kevin Sekniqi, and Emin Gün Sirer on June 25, 2020.

AVAX was outlined as the native token used to secure the network. However, it also serves additional functionalities, such as providing a payment means for the fees and providing a basic unit of account between multiple blockchains deployed on the more extensive Avalanche network.

However, to grasp the full functionality of AVAX and how it is utilized, we will need to review how Avalanche works.

The Avalanche network consists of multiple blockchains and has a Proof-of-Stake (PoS) consensus mechanism through which it achieves a throughput of over 4,5000 transactions per second (TPS).

Each of the chains in the Avalanche network represents its virtual machine, which supports numerous custom virtual machines such as Ethereum Virtual Machine (EVM) and ​ WebAssembly (WASM).

This technology allows chains to include case-specific levels of functionalities. Each virtual machine is connected to a subnet that features its own set of incentives that keep validators honest. It is a custom blockchain network with a dynamic group of validators working together to achieve consensus.

Avalanche is a platform of platforms in this way, where there are thousands of subnets, all of which work together to build a single, interoperable network.

The Avalanche Protocol utilizes four mechanisms: Slush, Snowflake, Snowball, and Avalanche.

We also need to discuss the Snowman Consensus Protocol. Specifically, Snowman is a chain-optimized consensus protocol that is utilized mainly for the execution of smart contracts.

Here is how Snowman is utilized, step-by-step. Essentially, a validator is selected to be in charge of processing the block's transactions. For every valid transaction, the validator can select K random validators weighted by their amount of AVAX tokens staked.

Then, random validators are responsible for checking the transaction and can accept or reject each of them. The main validator waits until they get a percentage of acceptance, or rejection, from the random validators. This percentage is known as alpha.

When transactions get accepted, they are added to the block. A group of trusted validators repeats the process for the rejected transactions until consensus is reached. The main validator will then propose the block.

All of them build upon each other and become a lot more secure by doing so. The Avalanche Consensus Protocol is a unique voting protocol reliant on repeated random subsampling. Within this process, validator nodes randomly query other validators until a point in time, the network ends up reaching a consensus where it decides if it is or if it is not going to accept a specific transaction.

Use-Cases of Avalanche (AVAX)

Avalanche's use-case mainly deals with the scalability issues in competing blockchains. Avalanche as a platform provides developers the ability to create and launch new, customizable blockchains that have smart features associated with them. These made the network one of the best to make Web 3.0 a reality. Due to its capabilities, developers are incentivized to build decentralized applications (dApps) on the Avalanche (AVAX) network.

  • Peer-to-Peer (P2P) Network - Through using Avalanche, any participant can transmit AVAX to other participants with a digital wallet without the involvement of banks, excessive fees, or even delays. Furthermore, AVAX is a cryptocurrency that can be transferred among an unlimited number of people instantly and simultaneously.
  • Distributed Database - Avalanche is also designed to provide unprecedented decentralization with a commitment to multiple client implementations without centralized control. By design, the ecosystem can avoid divisions between classes of users that have different interests. Miners, developers, or users also have no distinctions and preferences.
  • High Level of Transparency - Avalanche is also open-source, meaning that the code can be seen or edited by anyone at any time. The network is natively interoperable, which in turn allows developers to build permissionless or permissioned interoperable blockchains with ease.
  • Solid Record-Keeping Functionality - The Avalanche network consists of three blockchains, all of which function differently and record different types of transactions. These are the Exchange Chain (X-Chain), Contract Chain (C-Chain), and Platform Chain (P-Chain).

Alongside this, Avalanche relies on computational logic through a family of consensus protocols. The system operates by repeatedly sampling the network randomly, which steers correct nodes towards an expected outcome. Each node polls a small, constant-sized, randomly picked set of neighbors and switches its proposal if a supermajority supports it at a different value.

Usability & Primary Features of Avalanche (AVAX)

Numerous features make Avalanche (AVAX) stand out, and we will review them individually.

Protocol

Regarding how Avalanche works, all of the validators within the network are members of the Primary Network, consisting of three blockchains.

It is important to remember that everything in the Avalanche network is created as a sub-network (subnet), where every chain included is included as a part of one subnet.

Every subnet is a subset of the entire validator set, which includes computers that have agreed to participate within the network and validate a group of chains. Each subnet can also create its incentive scheme for the validators, and participating in these subnets is optional for validators. The only exception to this rule is the Default Subnet.

These are:

  • Exchange Chain (X-Chain) is the default blockchain on top of which assets are created and exchanged, and this also includes the native cryptocurrency that is used to power the network, known as the AVAX token.
  • Contract Chain (C-Chain) is the blockchain that allows for creating and executing smart contracts. Since it is based on the Ethereum Virtual Machine (EVM), smart contracts can take advantage of cross-chain interoperability.
  • Platform Chain (P-Chain) is the blockchain that coordinates the validators and enables the creation and overall management of the subnets.

Alongside these three default chains, Avalanche as a network is also capable of supporting multiple other chains and their custom virtual machines. This feature lets developers create custom decentralized applications (dApps) and blockchains containing arbitrary logic that they want to include.

Ledger

Every validator can select random K nodes from the validator list within a specific round. The probability of the selection is typically based on the number of tokens staked, and they can query their preferred decision.

Each of the queried validators needs to respond with their own preferred decisions. If a majority of the responses received within a round differ from the node performing the query, it will update its own preferred decision to reflect that.

Since every validator can randomly select other validators to ask them what their preferences are, the participants within the Avalanche network can build confidence in the correct decisions shared across all nodes within the network.

Avalanche is also a network that essentially supports an arbitrarily large and parameterizable set of adversaries. Since the network features many validators, this leads to immutability, censorship resistance, and other benefits that Proof-of-Work (PoW) based networks cannot achieve.

Smart-Contract Support

Avalanche is the first decentralized smart contract platform built for the scale of global finance that features near-instant transaction finality. Due to its support for smart contracts, any Ethereum (ETH) developer can quickly start building on Avalanche with Solidity – the default language of Ethereum decentralized applications (dApps).

Tokenomics & Supply Distribution

The total supply distribution across the Avalanche (AVAX) project at launch was 720,000,000 tokens.

Half of the supply, or 360,000,000 precisely, was available at the launch of the mainnet.

Regarding detailed AVAX token distribution:

  • 2.50% were reserved for the airdrop;
  • 0.28% were reserved for the testnet incentive program;
  • 2.50% were reserved for seed sale;
  • 3.46% were reserved for private sale;
  • 5.00% went to strategic partners;
  • 7.00% went to community and development endowment;
  • 9.26% went to the foundation;
  • 10% was dedicated to the team;
  • 50% went as staking rewards;
  • 10% were released in the public sale.

Team & History

The company Ava Labs initially launched Avalanche as a network in 2020. The CEO of Avalanche is Emin Gün Sirer, a Turkish–American computer scientist who originally started Ava Labs in 2018.

Currently, the company has offices in New York City and Miami and was initially funded by Andreessen Horowitz, Polychain Capital, and other angel investors such as Balaji Srinivasan and Naval Ravikant.

Activities & Community

When we go over its social media activity and overall community, Avalanche (AVAX) has over 715,100 followers on its official Twitter page.

Over 50,900 members on the Avalanche Discord Channel and over 48,000 users on the Avalanche Official Telegram Group. The Avalanche YouTube Channel also has over 20,000 subscribers.

Development Activity and GitHub Repositories

When we review its development, we need to look at the Ava Labs Official GitHub Page.

Here, there are numerous popular repositories, split across:

On-Chain Activity

The best way to study the on-chain activity of Avalanche is through Avalanche Explorer, the official network explorer maintained by the Ava Labs team.

Throughout the Avalanche Explorer, you can review the details surrounding the C-Chain, X-Chain, and P-Chain, subnets statistics, and monitor validators actively, alongside going over staking distributions.

Each user can also see the details of a defined token on the blockchain and the details of the transactions, smart contracts, and wallets.

Through Avalanche Explorer, we can see that the average price of AVAX as of July 2022 is $15.91.

The market capitalization of AVAX is at $4,528,510,691.233 (284,632,978.707 AVAX), and the latest block is 16846196, with a total of 189.42 million transactions.


Avalanche on-chain activity. Source: Avalanche Explorer.

According to the data showcased by Avascan – an independent Avalanche explorer website, we can see similar stats, where the AVAX price is at $15.93, with a market capitalization of $4,50 billion or 282.47 million AVAX tokens, and a total of 186.65 million transactions.


Avalanche on-chain activity. Source: Avascan.

Then there’s VScout, which is another alternative explorer for Avalanche. It showcases the distribution of the validators on a global scale.

Here we can see that there are 1278 active validators and 18704 active delegators, with a total stake of 237,078,442.6 AVAX or $3,771,918,021.74.

In the last 24 hours, there were 18 new validators and 399 new delegators.


Avalanche distribution of the validators on a global scale. Source: VScout

Activities and Partners

Since Avalanche (AVAX) is one of the largest networks within the crypto space, it has established many partnerships, collaborations, and integrations. Some of the most notable ones include:

  • Colony -  is a community-driven Avalanche ecosystem accelerator.
  • 1inch - is a distributed network for a variety of different protocols that enables the most protected operations within the sphere of Decentralized Finance (DeFi)
  • Aave - an open-source and non-custodial liquidity protocol for earning interest on deposits and a platform that enables users to borrow assets.
  • Arweave - an integration occurred where Arweave integrated Avalanche, and users could pay for Arweave storage using the AVAX cryptocurrency.
  • Chainlink - a decentralized oracle network that enables smart contracts to access various data sources anonymously.
  • Avaxtars - a Play-to-earn (P2E) blockchain game built on Avalanche that utilizes non-fungible tokens (NFTs) as gaming assets.

References & Reports

References

Market Research

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