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What is Avalanche?

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  • Author: Gunavarshini
  • Reading time: 12 minutes

Avalanche (AVAX) is a digital currency and blockchain platform that competes with Ethereum.

AVAX is the native token of the Avalanche blockchain, which also relies on smart contracts to facilitate a range of blockchain initiatives.

The Avalanche blockchain boasts near-instant confirmation of transactions, and AVAX serves as a means of paying transaction processing fees.

The token ensures the security of the Avalanche network, and functions as a fundamental unit of measurement for blockchains within the Avalanche network.

Quick Facts

  • Avalanche is a blockchain platform with its own digital currency called AVAX.

  • The platform is designed to be a competitor to Ethereum, with a focus on scalability and fast transaction processing.

  • AVAX is the native token of the Avalanche network and is used for securing the blockchain and paying for transaction fees across the network.

How does Avalanche work?

While Avalanche's platform may be intricate, there are three main features that set it apart from other blockchain projects: its unique consensus mechanism, its integration of subnetworks, and its utilization of three blockchains model.

Avalanche consensus

For a blockchain network to validate transactions and maintain its security, it must have a consensus protocol in place that allows all its nodes to reach an agreement.

When it comes to cryptocurrencies, there are two leading consensus methods: Proof of Work (PoW) and Proof of Stake (PoS).

Avalanche takes a unique approach to consensus by building on the PoS foundation.

Here's how it works: when a user initiates a transaction, a validator node receives it and then samples a small, random set of other validators to check for agreement.

The validators then repeat this sampling process, sharing information with one another until they reach a consensus.

Think of it like a snowball effect: just as a single snowflake can become an avalanche, a single transaction can ultimately lead to consensus across the whole system.

What's cool about Avalanche is that validator rewards are tied to two factors: the amount of time a node has staked its tokens (Proof of Uptime) and whether the node has historically followed the network's rules (Proof of Correctness).

This helps to incentivize honest behavior and maintain the network's integrity over time.


Avalanche provides its users with the ability to launch specialized chains that can operate using their own set of rules. This system is similar to other blockchain scaling solutions such as Polkadot's parachains and Ethereum 2.0's shards.

To achieve consensus on these specialized chains, Avalanche uses subnetworks (or subnets) which are groups of nodes that work together to validate a designated set of blockchains. It's worth noting that all subnet validators must also validate Avalanche's Primary Network.

Think of it like a neighborhood watch program: each subnet is responsible for keeping an eye on a specific area and reporting any suspicious activity. By working together, they help to ensure that the entire network remains secure and functional.

The 3 Blockchain Model

Avalanche is designed using three distinct blockchains to address the limitations of the blockchain trilemma. Each of these blockchains serves a different purpose within the ecosystem and can be used to move digital assets around.

The Exchange Chain (X-Chain) is the primary blockchain used for asset creation and exchange, including Avalanche's native token, AVAX.

The Contract Chain (C-Chain) is designed to allow for the creation and execution of smart contracts. This chain is based on the Ethereum Virtual Machine, which allows Avalanche's smart contracts to be compatible with other blockchains.

Finally, the Platform Chain (P-Chain) coordinates validators and enables the creation and management of subnets. Think of the P-Chain as the backbone that holds everything together and makes sure that the entire Avalanche network operates smoothly.

What is AVAX used for?

If you're curious about the ins and outs of the Avalanche ecosystem, you'll want to learn about AVAX, the utility token at the heart of it all.

Not only is AVAX the standard currency within Avalanche, but it also serves a crucial role in securing the network and rewarding stakes.

When you stake AVAX, you contribute to the security of the entire ecosystem, and in return, you earn more AVAX.

Plus, thanks to the deflationary mechanism built into the token, the more people use AVAX to pay transaction fees, the lower the overall supply becomes. It's a win-win for everyone involved.

If you're not interested in becoming a validator, don't worry. You can still earn staking rewards by delegating your stake to a validator.

With over 64% of AVAX tokens currently staked, it's clear that many people are taking advantage of this opportunity.

But AVAX isn't just a means of earning more tokens. It's also the primary currency used for transaction fees and cross-subnet interoperability. That means if you're using Avalanche, you'll want to have some AVAX on hand to cover those fees.

Plus, AVAX payments are required for creating custom tokens, launching smart contracts, and generating subnets.

With so much potential for growth and innovation within the Avalanche ecosystem, AVAX is a smart investment for anyone looking to participate in this exciting new world of blockchain technology.

Who Founded Avalanche?

The innovative Avalanche platform was brought to life by Ava Labs, a company co-founded by three trailblazers in the blockchain industry: Emin Gün Sirer, Kevin Sekniqi, and Ted Yin.

Sirer is a brilliant software engineer, while Yin is the mastermind behind Facebook's Libra blockchain project's HotStuff Protocol. With their combined expertise, the team strives to create a global trading market for various digital assets while offering a scalable environment for Ethereum developers.

In May 2019, Avalanche hit the ground running with its testnet, followed by the much-anticipated mainnet launch in September 2021.

The dev team created the Avalanche consensus algorithm with one goal in mind: to rival Visa's transaction speed while solving the scaling issues that have plagued Bitcoin and Ethereum.

With Avalanche, the future of digital asset trading is bright, promising lightning-fast transaction speeds and a seamless user experience.

What Influences AVAX’s Price?

As with any cryptocurrency, there are several factors that can influence the price of AVAX. Here are some of the main ones to consider:

  1. Market demand

One of the most significant factors that affect AVAX's price is market demand. If more people are interested in buying AVAX, the price is likely to increase. Similarly, if there are more sellers than buyers, the price may drop.

  1. Network usage

Another factor that can impact AVAX's price is how much the network is being used. As more people use the network, the demand for AVAX may increase, which could drive up the price.

  1. Staking rewards

As mentioned earlier, staking AVAX can earn rewards in the form of more AVAX tokens. If the rewards for staking are high, more people may be interested in buying and holding AVAX, which could increase the price.

  1. Market sentiment

The overall sentiment of the cryptocurrency market can also influence AVAX's price. If investors are feeling optimistic about the market, they may be more likely to buy AVAX, driving up the price. Conversely, if there is negative news or sentiment in the market, AVAX's price may drop.

  1. Development updates

Any updates or news related to the development of the Avalanche ecosystem can also impact AVAX's price. Positive updates, such as new partnerships or features, may drive up the price, while negative news could lead to a drop in price.

Ethereum vs Avalanche : Who Shall Come On Top?

Some people consider Avalanche to be a rival to Ethereum, and they might be onto something. Although they have many similarities, Avalanche does some things better than Ethereum, while still being compatible with Ethereum's virtual machine.

However, it's worth noting that no one is actively trying to replace Ethereum, except for maybe Ethereum itself with the upcoming Ethereum 2.0 update.

One of the most significant differences between Avalanche and Ethereum is the consensus mechanism they use.

While Ethereum used to rely on energy-intensive Proof of Work (PoW), Avalanche has always used the more energy-efficient and faster Proof of Stake (PoS) consensus.

This makes Avalanche more eco-friendly and efficient overall. Although Ethereum has now switched to PoS, this used to be their biggest difference.

Another difference is scalability. Avalanche can handle up to 4,500 transactions per second (TPS), while Ethereum is limited to just 15 TPS. AVAX, the token used in the Avalanche network, also provides smoother value transfers and is more affordable than ETH.

Additionally, Avalanche has lower gas fees than Ethereum.

However, when it comes to DeFi and non-fungible tokens (NFTs), Ethereum still has the edge. This is because Ethereum has been around longer and has a larger network.

Most new projects are still launched on Ethereum because it's the status quo and many developers are more familiar with Ethereum than Avalanche.

How To Buy AVAX?

To buy AVAX , you will need to:

  1. Set up a wallet that supports the storage of AVAX. Some options for AVAX wallets include BlockWallet, Ellipal Titan, and Ledger Nano.

  2. Find a cryptocurrency exchange that supports the purchase of AVAX. Some popular exchanges that offer AVAX include Binance, Bitfinex, and Kraken.

  3. Create an account on the exchange of your choice and complete the necessary identity verification processes.

  4. Deposit funds into your account using a payment method supported by the exchange.

  5. Search for AVAX on the exchange and place an order to buy it using the funds in your account.

  6. Once the order is complete, AVAX will be credited to your account on the exchange. Make sure to transfer it to your wallet for safekeeping.

It is important to note that the process for buying AVAX may vary slightly depending on the exchange you are using. Be sure to carefully read and follow the instructions provided by the exchange to ensure a smooth and secure transaction.

Final Thoughts on Avalanche

The future success of the Avalanche project hinges on two factors: the progress of its development team and its adoption in the industry. To achieve its long-term goals, the team must work hard to meet its roadmap milestones.

Additionally, industry adoption is crucial for the project's growth and value.

Luckily, Ava Labs has already secured partnerships with several major players such as Mastercard, Deloitte, and BitGo.

Furthermore, the platform has over 200 dApps and 200,000 active monthly users within its ecosystem. As the network continues to expand and thrive, Avalanche is undoubtedly one of the most exciting and promising cryptocurrency projects to watch for in the years to come.

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