Summary

Avalanche is committed to improving scalability without compromising speed or decentralization. Its core platform has three blockchains: transaction chain (X chain), contract chain (C chain) and platform chain (P chain). The X chain is used to create and trade assets, the C chain is used to create smart contracts, and the P chain is used to coordinate validators and subnets.

One of the most important breakthroughs of the protocol is the Avalanche consensus, where validators use repeated subsampling voting to achieve fast and affordable consensus. Avalanche also uses subnets as a new way to scale horizontally, allowing for the creation of customizable, interoperable blockchains. The number of possible subnets is unlimited.

Introduction

In recent years, blockchain technology has continued to develop, providing scalability and interoperability. It provides new solutions to "old diseases" in terms of practicality and practicality. Avalanche has also launched a proprietary solution, designing three independent blockchains in its main platform. Avalanche claims to be "the smart contract platform with the shortest finalization time in the blockchain field", based on the native token AVAX and a variety of consensus mechanisms. In this article, we will explore the factors behind the above assertion and the solutions provided by Avalanche.

When did the Avalanche project come out?

Avalanche was founded in September 2020 by New York-based Ava Labs. Ava Labs has raised nearly $300 million in funding, and the Avalanche Foundation has conducted private and public token sales totaling $48 million. Members of the Ava Labs founding team include Kevin Sekniqi, Maofan "Ted" Yin and Emin Gün Sirer.

What problem does Avalanche solve?

Avalanche mainly solves three major problems: scalability, transaction fees and interoperability.

Comparison of scalability and decentralization levels

For a long time, traditional blockchain projects have been struggling to find a balance between scalability and decentralization. If activity on the network continues to increase, it can quickly become congested. Bitcoin (BTC) is a prime example: During periods of network congestion, it can take hours, even weeks, for users to complete a transaction.

One way to solve this problem is to increase the centralization level of the network and give some people higher authority to verify network activity and achieve faster speeds. However, decentralization is crucial to blockchain security. The new blockchain attempts to solve the problem through technological improvements, and Avalanche also provides a unique solution, which will be introduced below.

High Fees

Another common problem with large blockchains such as Ethereum is gas fees, which can increase as traffic increases. This will ultimately discourage users from using these blockchains, but the competitor ecosystems are also still immature. For example, Ethereum’s popularity continues, and strong competitors have not emerged, which has led to a congested network and high transaction fees. At some point, the fee for a typical single transfer on the Ethereum network exceeded $10. If complex smart contracts are involved, the fee may even exceed $100.

Interoperability

Different projects and businesses have different needs for blockchain platforms. Previously, blockchain projects could only choose between Ethereum, an independent blockchain that could not be adjusted to needs, or a private chain. Finding a balance between customizability and multi-chain collaboration has always been a difficult problem in the blockchain industry. Avalanche's solution is a subnet that offers the same security, speed, and compatibility as the mainnet.

How does the Avalanche network work?

Avalanche packs a punch and comes up with a unique solution. It actually consists of three interoperable blockchains: X chain, C chain and P chain.

1.Transaction Chain (X Chain)Responsible for the creation and trading of AVAX tokens and other digital assets. Transaction fees are paid through AVAX tokens, and the blockchain uses the Avalanche consensus protocol.

2. In the Contract Chain (C Chain), developers can create smart contracts for DApps. The chain implements an instance of the Ethereum Virtual Machine (EVM) and supports EVM-compatible DApps. The contract chain uses the Snowman consensus protocol, which is a modified version of the Avalanche consensus protocol.

3. Platform Chain (P Chain) Coordinates network validators, tracks subnet activities, and provides support for the creation of subnets. P chain also uses the Snowman protocol.

Avalanche assigns different functions to each blockchain. Compared with concentrating all processing operations on one blockchain, this solution improves speed and scalability. Developers tailor the consensus mechanism to the needs of each blockchain. Users use AVAX to stake and pay network fees, allowing the ecosystem to have a common available asset.

How does Avalanche’s consensus mechanism work?

Avalanche’s two sets of consensus protocols have many similarities. This dual-system operating model is the key to improving network scalability and transaction speed.

Avalanche Consensus Protocol

Traditional consensus protocols such as Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS) require leaders to promote consensus, but The Avalanche consensus protocol is just the opposite, making the Avalanche network highly decentralized and scalable. Traditional consensus protocols such as PoW, PoS and DPoS will eventually evolve into a model where one party processes transactions and other parties verify the transactions.

Avalanche uses a consensus protocol optimized by directed acyclic graph (DAG). DAG supports the network to process transactions in parallel. Validators sample other validators and confirm whether they have verified new transactions. After multiple rounds of random sampling, statistics can prove that the possibility of transaction fraud is almost zero.

All transactions are confirmed immediately without any additional actions. The extremely low hardware threshold for running validator nodes and verifying transactions will attract a large number of participants and help improve performance, decentralization, and climate friendliness.

Snowman Consensus Protocol

The Snowman Consensus Protocol is based on the Avalanche Consensus Protocol. The difference is that the former uses linear transaction verification. This approach is particularly effective when dealing with smart contracts. Compared with the Avalanche consensus protocol, the Yeti consensus protocol also has a block creation process.

AVAX Token

AVAX is the native token of the Avalanche network, with a total supply of 720 million. All fees paid on the network will be destroyed based on the deflation mechanism, bringing benefits to the broader Avalanche community. AVAX has the following three main use cases:

1. You can pledge a certain amount of AVAX and Become a validator and delegate tokens to other validators. Verifiers can enjoy 10% annual yield (APY) and charge a certain proportion of management fees to the delegator. The specific proportion can be set by themselves.

2. AVAX can serve as a common unit for subnets, helping to improve subnet interoperability.

3.AVAX can be used to pay transaction fees and subnet subscription fees.

How to stake AVAX tokens?

AVAX holders can become validators or pledge tokens to other validators to receive corresponding rewards. To become a validator, users should stake 2,000 AVAX.

The validator node has very low hardware requirements, and ordinary personal computers can meet the needs. If AVAX is pledged to other validators, users can receive rewards after the validator successfully confirms the transaction.

Avalanche customized blockchain

Avalanche provides integration with Ethereum and other first-layer blockchains Similar functionality. Developers can create tokens, NFTs, and DApps. Users can stake tokens, verify transactions and use over 400 DApps. Supporters of Avalanche argue that its advantages stem from improvements in these features. One more feature: Avalanche also supports the creation of interoperable custom blockchains called "subnets."

Customized blockchains using highly scalable subnets can cater well to the needs of large enterprises, and many are already building subnets. This makes it easier for large enterprises and small independent operators of these customized blockchains to interact with other users in the rich ecosystem and take advantage of the security of the Avalanche mainnet.

Avalanche has its own Avalanche Virtual Machine (AVM), which is compatible with the Ethereum Virtual Machine (EVM). Developers who are familiar with Ethereum's Solidity language can quickly adapt to Avalanche's programming environment, and it is also easy to transplant existing projects.

What is the difference between Avalanche and other scalable blockchains?

The problems and solutions we propose are not unique to Avalanche. Competitors of Avalanche such as Ethereum, Polkadot, Polygon and Solana have also proposed similar scalable platforms and interoperable blockchains. How does Avalanche stand out?

Consensus Mechanism

Perhaps its most unique feature is the Avalanche consensus mechanism. However, Avalanche is not the only blockchain using an innovative consensus mechanism. Solana uses historical proof and its transaction throughput is said to be up to 50,000 TPS (transaction processing per second), which is much higher than the 6,500 TPS officially released by Avalanche. However, TPS is only an indicator to evaluate network speed and cannot explain the certainty of the block.

Transaction speed and finalization time

Another feature of Avalanche is that the finalization time is less than 1 second. What exactly does this mean? To reiterate, when measuring network performance, transaction processing speed cannot be evaluated solely by TPS. You should also consider the time it takes for a transaction to be finalized and not revoked or changed. Even if it can process 100,000 transactions per second, if there is a delay in finalizing the time, the network will still become slower. Avalanche claims to have the fastest determination time in the industry.

Decentralization

Avalanche has another unique feature, namely its level of decentralization. Given its size and creation time, it does have a large number of validators (over 1,300 as of April 2022) with reasonably reduced requirements. As the price of AVAX continues to rise, the entry threshold for verifiers is also constantly increasing.

Interoperable Blockchain

Avalanche’s interoperable blockchain also has no potential quantity limit, so it directly becomes a competitor of Polkadot. This project also provides customization and Blockchain with interoperability. But Polkadot has limited space to auction off in the parachain slot auction, while Avalanche only needs to pay a simple subscription fee.

Summary

Decentralized finance (DeFi) platforms hope to find an alternative to Ethereum However, Avalanche is compatible with the Ethereum Virtual Machine and has low cost, which is obviously very attractive. However, DeFi platforms have found numerous alternatives when it comes to improving scalability and speed.

Avalanche has grown in popularity since its release, and its total daily transaction volume has caught up with Ethereum, but whether it can compete with other blockchains such as Solana or Polygon remains to be seen.