What is Avalanche (AVAX)? A complete guide

Avalanche is a modular Layer 1 blockchain ecosystem focused on high throughput, sub-second finality, and flexible custom chains. These custom blockchains that exist within the Avalanche network were formerly known as subnets, but have since evolved to become L1 blockchains in their own right.

The platform offers high throughput with sub-second finality, low latency, and customizable smart contract architecture that can be tailored to specific use cases such as DeFi, gaming, tokenization and more.

All chains are interoperable within the Avalanche ecosystem and EVM-compatible, making for a seamless experience for builders and users. 

Avalanche’s native token, AVAX, underpins the ecosystem, used for transaction fees, staking, governance, and resource allocation across the network.

Avalanche was created by Emin Gün Sirer, Kevin Sekniqi, and Maofan “Ted” Yin, who co-founded Ava Labs in 2019. 

The protocol’s origins trace back to a 2018 paper by a pseudonymous group called Team Rocket, which first outlined Avalanche’s novel consensus design.

Sirer, a Cornell University professor known for his work in distributed systems, teamed up with Sekniqi and Yin, both PhDs in computer science, to turn the research into a working blockchain. Ava Labs now leads Avalanche’s development, supported by a global team of engineers, economists, and business specialists.

Avalanche offers a number of innovative features that make it stand out from other blockchains such as Solana and Ethereum.

Avalanche’s approach to consensus blends probabilistic sampling with linear chain consensus all driven by the Snow family of protocols.

The key innovation of the Snow protocols is that instead of relying on a small group of validators to confirm transactions, they use a process where validators sample a small sub-section of random peers in the network.

This allows the system to quickly and reliably agree on the state of the chain. The result is hyper fast transaction finality, often under one second, as well as high throughput, all without sacrificing security or decentralization.

Avalanche is not just a single blockchain. Its core network and modular architecture comprises three specialized chains.

1. X-Chain: for creating and transferring assets.
2. C-Chain: for running Ethereum-compatible smart contracts.
3. P-Chain: for coordinating validators and managing custom blockchains.

By separating responsibilities across three specialized chains, Avalanche can process activity more efficiently than if everything happened on one chain.

One of Avalanche’s key innovations is the ability for anyone to create their own blockchain within the ecosystem. Previously known as subnets they are now considered to be their own fully independent Layer-1 chains.

Developers can customize these chains with their own rules, tokens, and applications, while still benefiting from Avalanche’s shared infrastructure and security. 

This modular approach allows Avalanche to scale horizontally—new chains can be added as demand grows—while keeping both congestion and costs low.

• Scalability & throughput: Through modular architecture and the ability to delegate workload across custom chains, Avalanche avoids bottlenecks on a single monolithic chain. Additionally, all custom chains can scale independently.
• Latency & finality: Its consensus protocol enables rapid confirmation and sub-second transaction finality in many cases, reducing waiting times and improving the user experience.
• Customizability: Developers can launch chains tuned for specific needs (gas model, VM, permissioning) without altering or congesting the base network.
• Economic efficiency: Recent upgrades like Avalanche9000, dramatically lower the cost overheads for deploying and running custom chains and smart contracts.
• Interoperability & composability: Even though chains are modular, they remain interoperable via the Avalanche network and shared security mechanisms, allowing assets and data to move across chains.

Avalanche’s modular approach is just one element that distinguishes the platform from its competitors. This customizable architecture combined with near-instant finality, high throughput and its scalability, makes Avalanche an industry leading Layer-1.

Its use of the Solidity programming language further enhances Avalanche’s interoperability and makes the platform more attractive to developers. 

Polkadot is a blockchain platform designed to connect multiple specialized chains (known as parachains) into an interoperable and scalable network. These are unified by the central Relay chain, which ensures the security and communication of the independent parachains.

Solana is a high performance network that is utilized for a range of use cases, including finance, NFTs, payments, and gaming. Solana is engineered for widespread, mainstream use by being energy efficient, lightning fast, and extremely inexpensive.

Cosmos is known as The Internet of Blockchains, a growing ecosystem of interoperable, decentralized and sovereign chains, applications and services. Similar to Polkadot, the other blockchains are able to exchange assets, share data, and communicate seamlessly using Cosmos’ Inter-Blockchain Communication (IBC) protocol.

NEAR Protocol is a Web3 development protocol that allows developers to create and launch their own decentralized applications. NEAR Protocol leverages sharding technology to achieve increased scalability, enabling comparatively faster and cheaper transactions than other legacy blockchains.

AVAX is Avalanche’s native token and is central to the network’s security, economics, and governance. Its uses include:

• Gas fees—Used to pay fees on transactions and contract execution across chains.
• Staking & network security—Validators stake AVAX to participate in consensus and secure the network.
• Governance—AVAX holders can vote on protocol upgrades, community proposals, and network parameters.
• Fee burning & scarcity mechanics—A portion of transaction fees are burned, reducing supply and increasing scarcity.
• Cross-chain resource allocation—AVAX is used as the base currency when interacting across custom chains built on Avalanche.

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