Digital money will be the fate-determining factor of the future economy since decentralized finance and blockchain technology are getting wider acceptance and popularity. Blockchain platforms are an integral part of web3 services and applications. It is used to facilitate the decentralized transaction in favor of a particular blockchain.
Avalanche is an eminent figure in blockchain technology. It is a blockchain platform that provides an opportunity to launch decentralized finance applications to its users. Along with that users can enhance their digital assets and engage in other web3 programs. Smart contracts based operations are the basic function of Avalanche
This article focuses on the comprehensive analysis of the Avalanche blockchain platform and what are the important factors associated with it.
What is Avalanche?
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Avalanche is a decentralized blockchain platform developed by Ava Labs, it aims to provide better blockchain services than its arch rivals like Ethereum like high scalability and low transaction fees. Avalanche is one of the best figures and best service providers in the entire blockchain community. It can process over 4500 transactions per second which makes it one of the fastest blockchain technologies in the world. In Avalanche, users and enterprises can build and customize their decentralized applications and digital assets that can be used in both private and public blockchains.
AVAX is the native token of the Avalanche blockchain with a value of $27.62 at the time of writing. This coin can be used for paying the transaction and other fees in the Avalanche network. AVAX can be used for trading and governance of the network.
Avalanche was introduced in 2020 into the crypto sphere and after that, it showed a significant growth in market performance and blockchain services. Stephen Buttolph, Amani Moin, Kevin Sekniqi, and Emin Gun Sirer are the mastermind developers behind the establishment of Avalanche.
How does it work?
Avalanche is a platform that uses the consensus mechanism to verify the transaction and validate the legitimacy of it. Avalanche consists of three blockchains that actively work for the optimization of the entire network. Exchange chain, contract chain, and platform chain are the three blockchains associated with it.
The exchange(X-Chain) chain is the responsible blockchain for the creation of new assets, transfer assets, and exchange assets in the Avalanche network. The contract chain(C-Chain) is the one that is exclusively designed to run the smart contracts and power the dApps. It is the one that allows the developers to build and deploy dApps (decentralized applications). The platform(P-Chain) chain is responsible for the management of the network’s staking mechanism. Users can stake their AVAX coins in the network and receive rewards according to it. The P-Chain allows the provision for creating new subnets in the network.
Avalanche uses a Proof-of-Stake consensus mechanism to validate the transactions in the network. In this method, users stake their AVAX coin in the network and receive the rewards. The user with a higher amount of AVAX staked will be selected as the validator of the network and will be the responsible figure for adding new blocks of transactions to the network. After the addition, other validators will confirm the accuracy of the blockchain.
Also Read: Decentralized Finance (DeFi) Risks And Rewards
Pros and cons of Avalanche Platform
Pros
- There are numerous positives and negatives for the Avalanche platform, fast transaction processing time is an important positive factor of Avalanche, it can process 4500 transactions per second, which is a mesmerizing figure for a blockchain platform. It is one of the most preferable blockchain platforms only because of the transaction speed, it can enable the process much quicker.
- The reward structure is another key benefit of using the Avalanche platform. It provides more improved incentive programs based on participation in the blockchain system. The current reward rate is 4.47%.
- Avalanche is comparatively much cheaper than the main competitor Ethereum, even in peak times, Avalanche offers low blockchain fees. Low fees combined with faster transactions per second is still the factor that gives Avalanche a competitive advantage.
- Avalanche is capable of supporting many blockchain-based projects in the network. This is because of the higher degree of flexibility, customization, and control. This is also a factor in the higher preference of Avalanche over the rival platforms.
Cons
- Avalanche has to face tough competition from its fierce competitors like Ethereum, even though Avalanche provides faster transaction speed and lower blockchain fees, having a wider and larger ecosystem than Avalanche will always provide a superiority to Ethereum.
- Another disadvantage regarding the Avalanche platform is, that the validators need to stake the whole 2000 AVAX tokens to participate in the project. The price of a 2000 AVAX coin will be very much higher since one AVAX is valued at around $27.62. It is a big inconvenience for the users.
- The lack of slashing, which is the process of penalizing the stoked funds of dishonest validators is a major concern in the Avalanche network. The lack of implementation of slashing to the dishonest validators arouses a lot of questions about security concerns and exposes it to possible attacks in the future.
Conclusion
The blockchain platform is an essential factor in the smooth processing of blockchain services and applications. The increased popularity of decentralized finance and blockchain technology has nourished the blockchain platforms and eventually led to the unmatched growth of Avalanche.
Avalanche is a unique blockchain platform that uses the consensus mechanism to provide enhanced scalability and security for decentralized application development. All the transactions in the Avalanche ecosystem are done with AVAX, which is the native coin of the project. AVAX has a total supply of 1.67M with $44.14M market capitalization. Crypto enthusiasts who are keenly interested in crypto investment can consider AVAX as a good investment option.
