- Avalanche is a cryptocurrency and blockchain network renowned for its fast transactions. Similar to Ethereum, it uses smart contracts.
- The Lightning Network is a Layer 2 solution for Bitcoin’s blockchain. It is implemented to provide faster transactions and reduce network overcrowding.
Avalanche’s blockchain uses its own currency (AVAX) and is seen as a rival to Ethereum in terms of fast transactions and scalability. AVAX provides security to Avalanche’s blockchain to facilitate transactions across networks. On the other hand, the Lightning Network provides channel networks that enable low-cost and fast Bitcoin transactions within seconds. Decentralized exchanges also support the Lightning protocol, allowing traders to withdraw small amounts instantly at low rates.
What is Avalanche (AVAX)?
Avalanche’s blockchain network aims to provide a scalable, decentralized, secure, and user-friendly blockchain solution with low fees and fast transactions. Avalanche gained prominence after reaching a Total Value Locked (TVL) of $8.41 Billion, which boosted its popularity among Avalanche decentralized applications (DApps). For a small subscription fee, Avalanche allows users to set up their own customized blockchain.
Avalanche incorporates smart contract capabilities, enabling the establishment of various blockchain projects. It supports use cases such as building app-specific blockchain networks with or without permission deployment and creating decentralized applications (dApps) with high scalability. Avalanche’s AVAX uses the Proof-of-Stake (PoS) mechanism and raised $230 through a token sale within a year.
Avalanche’s Framework
Each segment (chain) defines a separate virtual machine of Avalanche, to support custom machines like WASM and Ethereum Virtual Machine known as EVM. This allows these segments to consume App-specific functionality.
Avalanche consists of two key components known as Chains and Subnets.
- Chains: Avalanche operates over three Blockchains, the P, X, and C chains, which are part of the subnet.
- P-Chain: This platform chain is responsible for managing the subnet, providing coordination to validators, and managing the staking mechanism. The platform chain implements a high throughput protocol named Snowman Consensus.
- X-Chain: The X (Exchange) chain functions as a decentralized network, primarily used for token creation, transaction, and management. The asset traded on this chain is AVAX, the Avalanche network’s native token.
- C-Chain: The C chain, also called the Contract chain, facilitates smart contracts. It is an Avalanche-powered instance of the Ethereum Virtual Machine (EVM), enabling instant use of Ethereum dApps on Avalanche’s network.
- Subnet: An effective set of validators is known as a Subnet, which collaborates to achieve consensus over the chain’s state. More than one blockchain can be validated on a subnet, and a node can be a member of multiple subnets.
Advantages Of Avalanche
- Avalanche achieves transaction finality within 3 seconds and allows 4500 transactions per second (TPS) over a single subnet. Compared to other blockchains, Avalanche is significantly faster, as Bitcoin takes hours for transaction finality with a TPS of 7, and Ethereum offers 15 transactions per second with a 10-minute finality.
- Avalanche’s blockchain networks facilitate quick and high-throughput transactions, reducing price slippage and enabling instant trades. These functionalities provide a decentralized exchange experience similar to centralized exchanges. Additionally, the low transaction fee creates opportunities for small trades within the DeFi ecosystem.
- Avalanche’s blockchain provides high interoperability, allowing seamless trading and interaction with other platforms. Creating various subnets makes Avalanche highly interoperable, contributing to the improvement of the DeFi ecosystem.
Conclusion
The Avalanche network is considered secure due to its customized nature and consensus mechanism. Avalanche claims to be 51% less prone to cyber threats compared to other blockchains. However, its limitations cannot be ignored. AVAX is a risky asset, and one should carefully consider every aspect, including profit and loss, before investing in it. Avalanche is seen as a rival network to Ethereum, with smart contract-like features incubating dApps and other blockchain mechanisms.
