Introduction: In this article, we take a deep dive into the Avalanche blockchain and the AVAX tokenomics. With its unique consensus protocol, Avalanche promises unparalleled scalability, security, and decentralization. We explore how Avalanche is different from every other player in the market and examine it's advantages!
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Avalanche History
Avalanche is a blockchain platform that was introduced in 2020 by a team of experienced individuals in the crypto space. The project was created with the aim of addressing the scalability issues faced by other blockchain networks, such as Ethereum.
Avalanche website
The history of the Avalanche project can be traced back to the development of a novel consensus protocol called Avalanche consensus.
This consensus protocol was first introduced in a whitepaper titled "Snowflake to Avalanche: A Novel Metastable Consensus Protocol Family for Cryptocurrencies".
The whitepaper was published by a team of researchers and scientists including Emin Gün Sirer, Kevin Sekniqi, and Maofan Yin in 2018. Following the publication of the whitepaper, the Avalanche project started to gather attention from both the academic and blockchain communities.
The successful launch of the Avalanche mainnet in 2020 can be considered a major milestone for the project. The mainnet release marked the transition from a research-oriented project to a fully functional blockchain platform.
Since then, Avalanche has gained popularity among developers and users due to its fast transaction speeds, high scalability, and low transaction fees.
Avalanche has raised a total of $350 million in funding over seven rounds. The latest financing round was in April 2022 when the Avalanche team raised $350 million in a Series B funding round led by Polychain Capital and Three Arrows Capital.
What is Avalanche?
Avalanche was developed by a group of researchers and developers led by Emin Gün Sirer, a well-known computer scientist in the field of blockchain technology.
At its core, Avalanche uses a novel consensus protocol called Avalanche consensus, which is the key reason behind its scalability and fast transaction times.
Avalanche consensus is a Byzantine fault-tolerant protocol that achieves consensus through a technique called random sampling.
In this protocol, participants in the network vote on the validity of transactions, and consensus is reached when a threshold number of votes is obtained.
This consensus protocol can provide finality for transactions within one second which makes it ideal for dApps that require high transaction throughput.
Avalanche is built using the Go programming language which is known for its speed, simplicity, and reliability.
Avalanche also provides a comprehensive set of developer tools and APIs that allow developers to build decentralised applications (dApps) on top of the platform easily.
For executing smart contracts on Avalanche, the platform provides a virtual machine called the Avalanche VM.
The Avalanche VM is based on the Ethereum bytecode format, ensuring compatibility with existing Ethereum smart contracts.
This allows developers to seamlessly port their Ethereum-based dApps to the Avalanche platform, taking advantage of its higher TPS and lower transaction fees.
How does Avalanche work?
To address scalability challenges, Avalanche employs a technique called subnets.
Subnets allows the network to be divided into smaller subnetworks, each capable of processing a subset of transactions independently.
This approach enables horizontal scaling by adding additional subnetworks as the transaction volume increases.
In addition, Avalanche supports the creation of custom blockchains, known as subnets, that can be customized to fit specific requirements, such as privacy or regulatory compliance.
Avalanche uses a unique consensus mechanism called Snow White which is delegated proof-of-stake (DPoS) consensus mechanism.
Avalanche is divided into three different blockchains:
X-Chain: The X-Chain is the main blockchain and is used to create assets like tokens, NFTs, and smart contracts. C-Chain: The C-Chain is a compatible implementation of the Ethereum Virtual Machine (EVM). P-Chain: The P-Chain is the governance blockchain on Avalanche used to manage the network's parameters and to vote on proposals.
Avalanche Coin (AVAX)
The AVAX token serves multiple purposes within the Avalanche ecosystem.
To begin with, it acts as a native currency for paying transaction fees on the network.
Users can also use AVAX to participate in securing the network by staking their tokens and earning rewards.
AVAX can also be used as a medium of exchange for trading on different dApps built on the Avalanche platform.
Like most other blockchains, token holders can also participate in the decision-making process for platform upgrades and network parameters.
AVAX holders can submit proposals, vote on these proposals, and help shape the future of the Avalanche ecosystem.
Avalanche (AVAX) Tokenomics
AVAX is the native cryptocurrency of the Avalanche blockchain network and has a maximum supply of 720 million tokens.
The current AVAX APY is around 7% which is the amount of AVAX that you can earn by staking your AVAX tokens.
The inflation rate of AVAX is designed to decrease over time with a reduction in block rewards for validators.
This gradual reduction in supply and inflation is designed to create scarcity and potentially drive up the value of AVAX over time.
The Avalanche Foundation also burns a portion of the fees collected on the network each month, which helps to offset the inflation rate.
Att the time of writing, the AVAX token has a price of $13.2 dollars and a fully diluted market cap of $9.5 billion dollars.
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Auteur
Mike Harry
Mike is a passionate crypto enthusiast who bought his first Bitcoin in 2016. With a natural curiosity and a love for learning and tinkering, Mike is always trying out new DeFi applications. Mike excels at breaking down difficult concepts into easy-to-read guides for beginners.
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