Avalanche is a smart contract enabled layer 1 blockchain that provides high-speed transactions at low cost.
Avalanche targets three types of customers:
Users who want to transfer crypto assets
Developers who want to build a dedicated blockchain, either private or public,
and want to integrate digital identity processes, document tracking, or issue a central bank digital currency (CBDC).
This article will guide you through all aspects of the Avalanche blockchain, which One of the most talked about DeFi ecosystems in 2022.
Avalanche: Protocol overview
Avalanche started in 2018 as a research project by a team called Team Rocket. That year, software engineer and computer science professor Emin Gün Sirer founded Ava Labs to undertake the project with a team of researchers at Cornell University.
To conclude the research phase in late 2019, Ava Labs held several private and public sales to raise funds for the development of the blockchain. 360 million AVAXs were sold for $0.30 during the seed sale, $0.50 during the private sale, and $0.85 during the public sale.
ICO closed in July 2020, raised over $40 million. In April 2022, Ava Labs began fundraising to to reach a $5 billion valuation.
The team at Ava Labs. Source: Ava Labs. How does avalanche work?
Avalanche is a layer 1 blockchain that uses the native token AVAX to power the entire ecosystem.
On the other hand, Layer-2s, such as the Polygon protocol, is a chain parallel to the underlying blockchain to help scale the network in terms of throughput and scalability The capacity of.
The Avalanche network is divided into three chains. While each chain performs a specific task, newcomers to the protocol are often confused about which one they should use.
Exchange Chain (X-Chain):
x-chain allows users to send and receive funds and pay transaction fees using AVAX.
For example, if you want to deposit/withdraw AVAX on Binance using Avalanche wallet, you will have two options: yes x chain) and c chain.
It should be clear by now that choosing c-chain over x-chain will result in the loss of your funds with no chance of getting them back.
In addition, x-chain can interoperate with Avalanche’s subnets (we will explain this in another section) and allow users to create “Digital Smart Assets,” including digital representations of real stocks, commodities, and resources such as stocks or bonds.
Contract Chain (C-Chain)
c-chain is for DeFi purposes. It allows users to create smart contracts compatible with the Ethereum network. Note that the addresses used by c-chain are similar to Ethereum’s strings, starting with 0x, and are compatible with MetaMask.
Platform Chain(P-Chain)
p-chain allows users to stake AVAX to become a validator (the minimum amount a validator must stake The number of coins is 2000 AVAX). The chain monitors and coordinates all validators in the Avalanche ecosystem and distributes rewards to validators and delegators.
p-chains also enable developers to create new subnets and track their performance.
Avalanche Subnet
Avalanche allows developers to create subnets: sovereign blockchains that can issue them tokens and their respective economies, such as distribution and network fees.
In general, developers can customize the subnets according to their needs, and have a good understanding of governance and DAOs (Decentralized Autonomous Organizations) , set your own rules in terms of security properties, membership and virtual machines. The validators on the
subnet are a subset of the validators of the Avalanche network that work together to be on one or both subnets reach a consensus. However, subnets may require validators to meet certain conditions and requirements. For example, by knowing your customer (KYC) checks and proving that they are located in the country they claim to be in.
Avalanche Proof of Stake and Yeti Protocol
Avalanche usesProof-of-Stake (PoS) consensus algorithm. It relies on thousands of users, also known as network nodes, acting as validators. These validators need to stake a certain amount of AVAX before they can vote and validate new transactions entering the blockchain.
However, Avalanche’s PoS mechanism is based on DAG.
Avalanche’s x-chain achieves its high transaction throughput through a mechanism called DAG (Directed Acyclic Graph). A DAG is a form of Distributed Ledger Technology with a different data structure than a blockchain.
DAG consists of vertices and edges, allowing transactions to be recorded on top of
Previous trade. In other words, all new transactions must refer to previous transactions in order to be successfully confirmed, rather than being aggregated in one block, as shown in the following diagram:
District compared to Directed Acyclic graph of blockchain infrastructure. Source: Research Gate
Only a few DeFi protocols use DAG systems to increase throughput. A popular example is Fantom.
In contrast, p-chain and c-chain use the Yeti protocol (based on the blockchain) to provide sequential ordering. The rationale here is that both chains need to absolutely order all dApps and smart contracts created in them, and orchestrate validating nodes.
AVAX Token: Utility and Governance
AVAX has three use cases:
acts as the basic unit of account for exchanges in the Avalanche ecosystem, including subnets.
Payment of transaction fees.
Stake AVAX to participate in the network and vote on governance proposals. AVAX Token Distribution
AVAX The supply is capped at 720 million, with 360 million remaining on the mainnet. At the time of writing, circulation — the number of tokens in public hands — was 284.4 million, according to CoinMarketCap )
AVAX tokens are distributed as follows:
Founders and projects: 19.3%
Shareholders: 16%
Rewards and airdrops (pre-mining stage): 64.7%
AVAX is an inflation token, and the governance protocol can decide to change certain parameters, including the inflation rate. For example, in November 2021, the inflation rate was over 35%; as of August 2022, 24.64%. The rationale here is to adjust inflationary emissions to changing economic and market conditions.
AVAX supply schedule. Source: Messari Avalanche Ecosystem: What dApps are on Avalanche?
At the time of writing, there are over 300 dApps of various types on Avalanche. The top four most popular are:
Trader Joe: A popular one-stop decentralized platform for trading, lending, borrowing, farming and staking cryptocurrencies.
Aave: Built on the Ethereum blockchain on the cryptocurrency platform. It allows users to lend, borrow, and earn interest on their cryptocurrency funds.
Benqi: Avalanche Leading Staking Protocol, Locked Total Value (TVL) in excess of $300 million.
Pangolin: a decentralized exchange (DEX) that allows Cross-chain transfers between Avalanche and Ethereum with high throughput and low transaction fees.
Where can I buy AVAX?
AVAX is very popular in the crypto community, so you don’t have to mine that much money to buy tokens. You can find it on popular centralized exchanges like Binance, Gate.io, Kraken, and Coinbase.
Final Thoughts: Avalanche: Fastest Layer 1 Protocol
Avalanche is the largest One of the largest decentralized platforms with over $2.2 billion in TVL at the time of writing. It is a widely discussed layer 1 protocol in the crypto community. Its core functionality appeals to a diverse audience: from everyday traders and investors to blockchain developers, validators and digital asset institutions interested in its technology stack.
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AVAX Token: Utility and Governance 
AVAX Token Distribution
AVAX Token Distribution
