Avalanche (AVAX) is a decentralized finance platform that aims to address the blockchain trilemma of scalability, security, and decentralization using a unique proof-of-stake (PoS) consensus.
The Ethereum-based network powered by smart contacts runs several decentralized finance applications from across different blockchains.
This article is a comprehensive guide to Avalanche where we will explore what it is and how the network functions.
Additionally, we will also take a look at the future price prospects of the AVAX token and conclude by determining whether Avalanche is a good investment in the crypto market.
What is Avalanche?
Avalanche was launched by Ava Labs in 2020.
The CEO of Ava Labs, Emin Gun Sirer, is a professor of computer science at Cornell University and a notable member of the Initiative for Cryptocurrencies and Contracts (IC3).
He is also the founder of Karma, a proof-of-work (PoW) virtual currency for peer-to-peer file-sharing systems that pre-dated Bitcoin (BTC).
The smart contract-powered platform is designed to be capable of processing thousands of transactions per second.
Despite being based on Ethereum, which is known for its high transaction costs, Avalanche typically performs transactions at lowered rates and is more efficient than other blockchain ecosystems.
Now, let us take a look at how Avalanche works.
How Does Avalanche Work?
Avalanche operates by utilizing three separate yet interconnected blockchains, each with a specific role to play in the protocol’s overall functioning.
1. Consensus
Avalanche uses a novel PoS consensus mechanism to validate transactions and remain secure.
When a transaction is initiated by the user, the network’s validator node receives it and samples the transaction with a small but random set of other validators to reach an agreement before processing it.
Validators’ rewards can scale based on the amount of time their node has staked AVAX tokens.
This mechanism is called the Proof-of-Uptime.
The network determines whether a particular node has acted according to its rules using the Proof-of-Correctness consensus.
2. Subnets
Users can launch their chains that function using their own set of rules on Avalanche.
Consensus on these chains is reached by subnets, which are a group of nodes that participate in validating a designated set of blockchains.
Subnet validators are also required to validate Avalanche’s primary network.
3. Built-in Blockchains
Avalanche has three built-in blockchains that are designed to address the limitations of the blockchain trilemma.
Each of these chains is set up to accomplish different functions within the ecosystem.
| X Chain (Exchange Chain) | The Exchange Chain is the default blockchain on which digital assets are created and exchanged. Avalanche’s native AVAX token is also issued on the X Chain. |
| C Chain (Contract Chain) | The Contract Chain allows for the creation and execution of smart contracts on Avalanche. Smart contracts on the network are based on the Ethereum Virtual Machine and, therefore, are interoperable across various other blockchains. |
| P Chain (Platform Chain) | The Platform Chain is responsible for coordinating validators and is pivotal to the creation and management of subnets. |
What is AVAX?
AVAX is an ERC-20 standard token issued on the Ethereum network that is the native utility and governance token of Avalanche.
It mainly serves as a medium of exchange within the network and is also used for other purposes such as transaction fees and staking.
The token can be staked as a way to secure the Avalanche blockchain, for which, the network rewards in AVAX.
AVAX has a fixed supply of 720 million tokens.
Half of this supply was created and distributed at the network’s launch.
The remaining tokens are to be generated by the minting process in the form of staking rewards.
AVAX Price Prediction – 2024, 2025, 2030
At the time of writing, AVAX is trading at $38.72 – down 4.7% in the last 24 hours.
Based on its current valuation, AVAX is expected to trade between $17.18 on the lower end and $31.34 on the upper end this year.
The average trading price for AVAX in 2024 is around $45.49.
After analyzing AVAX prices in the previous years, it is assumed that the token will trade at a minimum price of $73.60 and a maximum of $87.64 in 2025.
The average trading price of AVAX might be $76.19 next year.
It is estimated that AVAX could be trading between $495.11 and $590.81 in 2030.
The average trading price for the token would be around $512.93 during the year.
Where to Buy AVAX?
The most popular exchanges to buy AVAX tokens from are the following:
Is Avalanche a Good Investment?
Avalanche is a high-fidelity, high-security decentralized network that finds the balance between speed and cost-effectiveness when it comes to performing transactions.
The network builds on Ethereum’s PoS consensus to create a decentralized finance ecosystem that is rigid and interoperable.
Avalanche’s native asset AVAX can be used to pay for transactions, and gas fees, to interact with smart contracts, and for staking to secure the protocol.
All things considered, I can say Avalanche is a credible cryptocurrency project.
However, you should always consider the fact that cryptocurrencies are highly volatile and can experience violent price swings.
Therefore, it is crucial to do your due diligence before investing in any cryptocurrency. Always remember to only put in money that you can afford to lose.
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