What are the advantages of the Avalanche blockchain?
- Transaction Fees
To date, Avalanche (AVAX) is the #10 listed cryptocurrency by market cap. Unlike many others on this list, Avalanche surpassed the standard growth trend for cryptos and blockchains, and pushed ahead of thousands — but what is Avalanche?
This major player positioned itself as the newest, most efficient open-source platform for dApp developers, and quickly emerged as one of the front-runners these past two years. In this post, we take a look at the advantages of the Avalanche blockchain, and how these features made it stand out in an increasingly populated industry.
How Does The Avalanche (AVAX) Blockchain Work?
The Avalanche blockchain was developed by Ava Labs to overcome typical blockchain issues of congestion and high gas fees. Following that, the core innovation of this platform is that it uses three blockchains, rather than the standard one. Each one was designed to fulfill vital tasks within the Avalanche ecosystem, instead of relying on one to do them all.
Dividing up these tasks amongst the three allows Avalanche to achieve three crucial elements of an efficient and powerful blockchain: decentralization, security, and scalability.
Exchange Chain (X-Chain)
Also known as the X-Chain, this one is responsible for the creation and transaction of Avalanche assets. The blockchain’s native token AVAX is the most popular crypto on here, but many other decentralized tokens are also traded here.
Any transaction on the Exchange Chain requires fees paid in AVAX, similar to how gas fees on Ethereum are also paid in their native token.
Contract Chain (C-Chain)
The C-Chain runs smart contracts for the Avalanche blockchain. These are one of Avalanche’s key features. Smart contracts enable dApp developers to create their applications on Avalanche, while still utilizing the platform’s security and scalability benefits.
The C-Chain is also EVM (Ethereum Virtual Machine) compatible. Meaning, anyone can deploy Ethereum smart contracts on Avalanche. This feature also allows developers to access Avalanche’s features while still utilizing powerful Ethereum developer tools.
Platform Chain (P-Chain)
The P-Chain enables anyone to make a Layer 1 (L1) or Layer 2 (L2) blockchain. You can even create whole groups of them. In Avalanche terminology, these L1 and L2 blockchains are called subnets, where P-Chain is the default subnet for all.
The purpose of this structure is to allow the P-Chain to manage the landscape of all these different subnets and keep track of validators. In turn, these subnets are connected to the P-Chain and are also used to validate it.
What Are The Advantages Of The Avalanche (AXAX) Blockchain?
The unique structure of the Avalanche blockchain creates the many benefits this platform has to offer. The three-blockchain solution also addresses the common problems of blockchains.
Interoperability is the capacity to trade and interact with other forms of cryptocurrency and data from other platforms. Avalanche is highly interoperable, as it allows for the creation of different subnets, with its blockchain serving as a common platform. This structure enables different blockchains to interoperate with each other, and share assets and data.
Only a few blockchains can accommodate this. Even less can achieve it between third-party tokens, much less a consistent throughput and without time compromises. The fact that Avalanche is so seamlessly interoperable allows it to improve its decentralized finance (DeFi) environment.
Interoperability enables another advantage: scalability. Many other blockchains currently on the market are not scalable, and those that are, lose functionality when trying to scale. It’s a long-running and well-documented issue for older blockchain models.
Take Bitcoin (BTC), as an example. Each transaction uses enormous energy and computing power to complete. Ethereum, on the other hand, is not much faster — it can only process 15 transactions per second. These limitations make these blockchains difficult to scale.
But Avalanche was built to overcome this very problem, and even boasts more validators than other networks, plus speeds of 4,500 transactions per second (TPS). This makes the Avalanche blockchains potentially infinitely scalable. And, it achieves this without compromising its decentralization — thanks to its three-blockchain system and interoperability with multiple blockchains.
One of the main concerns of newer users and developers is usability — mainly, how easy it is to adopt and implement for various applications and uses. For both dApp developers and casual traders, Avalanche has proven in multiple cases to be extremely user-friendly.
Avalanche’s blockchain system allows all users and organizations who wish to utilize their tech to deploy their L1 and L2 blockchains. And, it even enables them to create them for either private use-cases (permissioned blockchains) or public ones (permissionless). This is done in combination with a powerful proof of stake consensus mechanism — which creates a stable, decentralized, and powerful platform for any developer to build on.
Proof of its usability is its thriving ecosystem — several products are already operating on this blockchain (such as Pangolin, Prosper, Securitize, and more), with hundreds more projects lined up for the next year. Each of these dApps can run on their own independent blockchain hosted on the Avalanche platform, which gives developers all the control they want over how they’re secured and function.
To make each transaction secure, and to prevent spam orders, each transaction made on the Avalanche blockchain requires a payment of a transaction fee. This is similar to Ethereum’s gas prices and is paid in AVAX. This transaction fee is automatically deducted from the address you control. Different types of transactions require different fees — you can find the complete transaction matrix here.
While you still need to pay fees to use this blockchain, you’ll find the prices are significantly cheaper than those of Ethereum. This is in part thanks to the efficiency of their consensus system, which allows them to process over 4,500 TPS. To compare, other blockchain competitors, like Polkadot, are only capable of 1,500 TPS. The low fees and fast processing make this blockchain a popular choice for many developers and merchants.
Ava Labs, when developing Avalanche, understood that one of the biggest problems with older blockchains was that their fees and tokens are highly volatile. To counteract this, Avalanche uses deflationary tactics. The first is to have a fixed capped supply of native tokens — there are only 720 million AVAX tokens in circulation at any given point in time. This ensures there will always be scarcity, and that AVAX won’t suffer from dilution and inflation, unlike other blockchains that allow staking.
The second is by using a burning mechanism. As we mentioned, each transaction on the Avalanche blockchain requires a fee — this is collected by the blockchain itself. These tokens are then burned, which reduces the total supply. The burning mechanism helps Avalanche control supply and ensures that prices are stabilized in the future.
The many advantages of the Avalanche blockchain are what make it so intriguing to crypto investors and developers alike — and make its position in the top hundred cryptocurrencies secure. Its unique system is a great asset to users, as it creates high growth and scalability potential. Any project on this blockchain benefits from these advantages, and we’re likely to see many worthy contenders from this blockchain in the crypto universe very soon.