Developed by Ava Labs, Avalanche is a proof-of-stake (POS) blockchain designed to provide a scalable and decentralized environment for digital assets and DeFi apps.
Key takeaways
- Avalanche is composed of three core blockchains: X-Chain, C-Chain, and P-Chain, each serving distinct purposes within the network.
- The AVAX token is central to Avalanche, used for transaction fees, staking, and governance.
- Avalanche's unique subnet architecture enables the creation of custom blockchains, enhancing flexibility and scalability across the network.
- Today, Avalanche is the eighth-largest DeFi network per its +$843 million in total value locked (TVL).
What is Avalanche?
Avalanche is a multichain Layer 1 (L1) blockchain compatible with the Ethereum Virtual Machine (EVM), making it easy to create Avalanche smart contracts using Ethereum's popular Solidity programming language.
The network's development was started by a team of computer scientists and researchers led by Dr. Emin Gün Sirer, a prominent academic and computer scientist in the cryptocurrency space.
Avalanche's mainnet launch was in September 2020 following a successful public token sale, which raised $42 million. Since then, the network has attracted an ecosystem that is now home to 100s of protocols, 1000s of developers, and a global user base.
How does Avalanche work?
Avalanche operates through three primary blockchains, each with its specific role:
- ❎ X-Chain: Responsible for creating and managing digital assets, the X-Chain uses the Avalanche consensus protocol to achieve high throughput and low-latency transaction processing.
- 🌐 C-Chain: Fully compatible with the Ethereum Virtual Machine (EVM), the C-Chain is the hub for smart contract execution, making it a critical component for DeFi applications, decentralized exchanges, and NFTs.
- 🧱 P-Chain: The P-Chain manages the network’s validators, staking, and the creation of custom subnets—specialized blockchains that can operate independently or in coordination with the Avalanche mainnet.
Why Avalanche?
Among Avalanche's most notable features are its subnets, as they enable the creation of custom, application-specific blockchains within the Avalanche ecosystem.
As such, subnets allow developers to tailor blockchains to specific use cases, providing a level of flexibility and scalability that sets Avalanche apart from other more singular L1 blockchains. Their key features include:
- 🎨 Customization: Subnets allow developers to define their own rules and parameters, such as choosing the consensus mechanism, setting transaction fees, and deciding on governance structures. This flexibility makes subnets ideal for a range of applications.
- 💨 Scalability: By enabling multiple subnets to operate simultaneously, Avalanche can scale horizontally. This means that as the network grows, new subnets can be created to handle increased demand, ensuring that the overall performance of the Avalanche network remains robust.
- ⛓️ Interoperability: While subnets operate independently, they are not isolated. Subnets can communicate with each other and the Avalanche mainnet, facilitating a high degree of interoperability. This interconnectedness allows assets and data to move seamlessly across different subnets.
- ⚔️ Security: Validators on a subnet are also required to validate the Avalanche mainnet (Primary Network), which ensures that subnets benefit from the security of the broader Avalanche network. This dual-role of validators provides a strong security foundation for both the mainnet and its subnets.
How to invest in AVAX?
AVAX is the native utility token of the Avalanche network, used for transaction fees, staking, and participating in onchain governance. AVAX also serves as a key asset for trading pairs on Avalanche-based decentralized exchanges and within its broader DeFi ecosystem.
At the time of this guide's update, AVAX was trading around $22.65 per token with a market capitalization of approximately $8.95 billion, making it the 14th-largest cryptocurrency in the market.
Top Avalanche projects
The Avalanche app ecosystem is among the largest in the cryptoeconomy, boasting over 400 projects today. Some of the top apps to explore here include:
- 👻 Aave – a popular DeFi borrowing and lending protocol
- 🪙 GMX – a decentralized spot and perpetual exchange
- 🛒 Joepegs – an Avalanche NFT marketplace and launchpad
- 🌾 Trader Joe – a leading decentralized exchange on Avalanche