Intro to Avalanche (AVAX)
Avalanche (AVAX) is an open-source platform that provides support for smart contracts and enables developers to create decentralised applications (dApps). The enterprise blockchain allows projects to be deployed in one interoperable, highly scalable ecosystem.
AVAX is the native token on Avalanche, and acts as a staking mechanism and is required to run a node on the platform. These nodes receive rewards for participating in consensus and distributing transactions across the network. It also provides users with the ability to tokenise securities, trade digital assets and more.
Ava Labs launched Avalanche in 2020 with the goal of delivering a scalable solution while maintaining decentralisation and security, focusing on lower costs, fast transaction speeds, and eco-friendliness.
With Avalanche, users can create an unlimited number of customised and interoperable blockchains. To operate a blockchain on the Avalanche coin, AVAX, one must pay a subscription fee.
What is AVAX used for?
The native token AVAX is a utility token and serves as the medium of exchange for Avalanche’s ecosystem. In other words, the token is used as currency within the network, typically for fee collection in transactions, incentives and many other use cases.
It is also used for staking AVAX, which serves to secure the network. Stakers are then rewarded with more AVAX. Some users stake AVAX to earn passive income on the network.
History of Avalanche (AVAX)
When the Bitcoin blockchain was launched in 2009, it paved the way for the design and invention of blockchains that came after it, including Ethereum. With today’s wide-scale use of nonfungible tokens (NFTs) and decentralised finance (DeFi) protocols, however, the technical limitations of the original blockchain design became more apparent.
Bitcoin’s proof-of-work (PoW) consensus, for example, inhibits decentralisation to an extent due to its resource-intensive validation process. Transactions also tend to be slower. Most Ethereum apps today use layer-2 scaling solutions to address these issues. By using layer 2, transactions are taken away from the main chain. They are then rolled in neat “bundles,” which are sent back to the Ethereum chain, taking pressure off Ethereum.
Although effective, this solution adds layers of complexity, making the network open to certain security threats. So, how can a blockchain keep everything within a layer-1 protocol that is decentralised and scalable, but also secure?
Enter Ava Labs, the founders of Avalanche, who came up with a brilliant three-blockchain solution to address the top problems that plague blockchains. In September 2020, Ava Labs US launched the Avalanche blockchain after raising $6 million USD during their financing round. Their subsequent token sales — private and public — amounted to $48 million USD.
Who is behind Avalanche (AVAX)?
The three people behind Avalanche are Kevin Sekniqi, Maofan “Ted” Yin and Emin Gün Sirer. A pseudonymous group called Team Rocket first released fundamental information about the protocol in May 2018 on the InterPlanetary File System.
A group of researchers from Cornell University then developed the technology, led by Cornell professor of computer science and software engineer, Emin Gün Sirer. He was assisted by two of his doctoral students: Maofan “Ted” Yin and Kevin Sekniqi.
The AVA codebase for the Avalanche consensus protocol became open-source in March 2020, making it available to the public. Avalanche’s initial coin offering (ICO) ended in July of 2020, followed by the launch of Avalanche in September of the same year.
What problems does Avalanche (AVAX) solve?
As mentioned earlier, Avalanche was built to address many of the issues most blockchain networks face. By providing an alternative to networks such as Ethereum, platforms like Avalanche work to combat centralization within the crypto space.
Two of the top issues that Avalanche addresses are:
Avalanche was deliberately designed with scalability in mind. On par with top-tier payment processors like PayPal and VISA, Avalanche has sub-second transaction times.
Avalanche is also tremendously powerful and efficient, having the capacity to process up to 6,500 transactions per second with sub-second finality. This is a vast improvement on Ethereum’s limitations in terms of the number of transactions that can be processed per second.
Considered by many as an Ethereum competitor, Avalanche also trumps Ethereum in terms of gas fees. Fees on Avalanche are more affordable than Ethereum by a wide margin.
Fees on the network are used for various purposes such as for creating and minting assets, staking, transaction fees and blockchain creation, after which these fees are burned, permanently reducing the number of AVAX within the platform.
According to Avalanche’s Twitter account “AVAX is a hard-capped, scarce asset used to pay fees and secure the network.” in response to used fees being burned. Burned AVAX can be checked on burnedavax.com
Continue exploring AVAX:
To stay up to date on the latest from the AVAX community or learn more about upcoming features, please visit AVAX community page.
To learn more, visit the AVAX basics page.