Avalanche

High throughput smart contract blockchain platform

Summary

The Avalanche project was incubated at Cornell University, USA by the associate professor Emin Gun Sirer, a Turkish computer scientist and software engineer. He then founded AVA Labs in 2020 with a goal of developing an alternative blockchain technology to be used for financial sector.

Avalanche is a smart contract enabled layer 1 blockchain platform that aims to improve network efficiency, speed, and cost-effectiveness.

By creating the opportunity for developers to build their own purpose-built subnetworks, Avalanche allows for scaling that makes dapps and DeFi more approachable for an increased number of users

Avalanche has 3 built in blockchains that each have different use cases.

What is Avalanche

Avalanche is a smart contract platform that allows developers to build and launch decentralised applications. Its focus is to establish greater blockchain interoperability by integrating several decentralised finance (DeFi) organisations, those that include well renowned projects such as Aave, Curve and Sushi Swap. Being one of the growing amount of layer one blockchains, it priorities low cost, transaction speed and time for crypto transactions.

Avalanche’s central feature is its distribution of tasks across three separate blockchains to help solve blockchain pain points that are scalability, security and decentralisation, with its one-of-a-kind Proof of Stake (PoS) mechanism.

The Trilemma problem in blockchains states that a blockchain can only be two of these three options: Scalable, Secure, Decentralised

The platform’s medium of exchange is the AVAX token. It can be used to purchase goods and services, pay transaction fees and staking to help secure the network. AVAX tokens that are used to pay transaction fees are burned from the supply and permanently removed from the circulation.

Avalanche’s Unique Proof of Stake Mechanism

The Avalanche Model uses sub-sampled voting. This means that there’s a large group of people who volunteer to take part in the network and get randomly asked to check whether the transaction should be accepted or rejected. If it is accepted, a process called “Network Gossip” starts to take place. Here, participants exchange information and continue to validate or deny the transactions.

One of the benefits of this is that contrary to proof of work and proof of stake mechanisms it doesn't matter how many nodes there are in the system. Consensus will be reached within a certain desired time frame. Because of these AVAX technicalities, this consensus model is actually much more difficult to attack, unlike Bitcoin where you would need 51% of all the computers to attack the network or Ethereum 2.0 where you would need 51% of all the staked tokens to attack the Network. With Avalanche one would need to control up to 80% of the network to perform an attack.

This unique model allows for up to 4500 transactions per second per subnet and has a finality clock of less than 3 seconds, making it faster than any other blockchain.

Network infrastructure

To put it simply, Avalanche has one primary network, and that network has 3 built-in blockchains. The first block chain in the network is called the X chain (Exchange Chain). This is the part specifically for the creation and management and transaction of tokens on the network. It is based on a DAG, which is a unique form of a consensus model, unlike a blockchain. It shows that the Avalanche team does not engage with one protocol only.

The team is aiming to reduce the complexity of the network by allowing for different niche chains to exist at the same time by dividing the platform into various subnets.

Next is C Chain (Contract Chain), it is specifically for smart contracts and is an exact copy of Ethereum virtual machine (EVM). Users can copy and paste to use Ethereum dapps on the Avalanche Network. This allows developers to move their projects over effortlessly. C Chain also uses the Snowman Protocol, which is a powerful consensus model developed by AVA labs. Snowman Protocol is a linearised version of the Avalanche Protocol so that it can adapt the needs of the Ethereum virtual machine. It has been optimised for smart contracts and high throughput.

Finally, P Chain (Platform Chain) is used to create and manage subnets, which are individual blockchains and coordinate validators and the staking mechanism. Each subnet is a new network in the Avalanche ecosystem. Each subnet can have multiple blockchains, just like a primary Avalanche Network. Second, each Block Chain in a subnet can have its own consensus model. Each blockchain can have its own VM (Virtual Machine). Finally, subnets can be permissionless or permissioned. They can either be public or private blockchains.

Developers can make up rules that govern their own subnet when they create it. For example, they can determine how many validators are allowed or limit who can run a node. all subnet validators must also validate Avalanche’s main chain.

AVAX Coin

AVAX Coin powers and secures the Avalanche network and it is primarily used for decentralised peer-to-peer (P2P) payments. Coins can be used as a governance on the platform, meaning the more coins that you hold and stake, you have more voting rights and you get to make important decisions in the network's future. AVAX used for transaction fees are burned, a process meant to offset the inflation of the minting process.

Pros and Cons

Technical Analysis

Long Term Picture: Downward trend with strong support approaching

The major pattern over the last year is the downward trend channel that has been seen across equity markets since October. AVAX suffered more than the other majors, falling to a low of $16. It has since found support, along the major trendline formed from the June 21 low. This is encouraging because equity markets are still weak and there is an interesting disconnect. Expect support along the trendline and resistance at the 100DMA.

Short Term - Downward trend running out of momentum

Short Term: Bearish with reduced momentum.

In the short term there is also a bearish downward trend, however we see RSi indicate that the momentum is slowing and the market looks unable to form a new Lower Low. This could indicate that the sellers have run out of momentum and therefore a potential break of the channel could see some relief from the recent market weakness. In the short term the smart buys would be along the major trendline formed from the June ‘21 low or on the break of the short term trend channel. Target the 100 DMA or hold for the long term.

Where Can You Buy AVAX?

AVAX can be purchased from multiple cryptocurrency exchanges, including but not limited to Scallop Exchange.

Remember that cryptocurrencies are very volatile investments and that previous performance is never a guarantee of future outcomes. Any investment decision should be based on risk tolerance, market knowledge, portfolio diversification, and how comfortable you are with losing money. A BNB coin forecast is based on previous data and does not reflect all market situations. Never put more money into something than you can afford to lose.

Conclusion

Although AVAX is still young, it has a strong team behind it and it has a lot of potential that with its super speed and scalability. It competes with Ethereum and supports both decentralised applications and autonomous blockchains.