Finding solutions to the blockchain trilemma, which entails achieving invulnerability, high throughput, and decentralization, may prove elusive. Nevertheless, in the pursuit of these goals, viable compromise solutions can emerge, serving as the foundation for innovative projects. Among these solutions is the Avalanche (AVAX) blockchain platform, which leverages a variation of the Proof of Stake (PoS) consensus mechanism.
Avalanche supports smart contracts for managing decentralized applications (DApps) on its network, just like Ethereum. Avalanche smart contracts written in the Solidity language, which is used for the same purpose in the Ethereum ecosystem. This technical feature increases blockchain interoperability through integration with multiple decentralized finance (DeFi) ecosystems.
The ecosystem uses AVAX, the internal token of the Avalanche platform, to conduct transactions. The token acts as a means of distributing rewards, is used to participate in the management of the system and pay commissions for transactions on the network. If you are already using the services of a centralized exchange, you do not need to specifically exchange USDT (ETC20) to USDT (TRC20) to buy AVAX.
How does the Avalanche blockchain work?
Consensus in Avalanche
To ensure security and confirmation of transactions, the Avalanche blockchain network uses an innovative consensus mechanism based on PoS. When a user initiates a transaction, the validator of a randomly selected node sends a message to other nodes. They also involve further validators in the process until consensus is reached in the system. This process is similar to the avalanche effect, where one transaction triggers many other processes.
The validator’s reward depends on the length of time a node holds its tokens staked (Proof of Uptime) and how accurately the node has followed program rules in the past (Proof of Correctness).
Subnets
Avalanche users can create specialized chains with their own rules, similar to parachains in the Polkadot network and shards in Ethereum 2.0, which ensures scalability of the blockchain.
Consensus in these chains is achieved by subnets – groups of nodes that validate a specific set of blockchains. All validators on the subnet must also validate their transactions on the Avalanche mainnet.
Embedded blockchains
The Avalanche network consists of three blockchains that address the issues of scalability, security and decentralization:
- Exchange Chain (X-Chain): The main blockchain for the creation and exchange of assets, including the AVAX token.
- Contract Chain (C-Chain): Allows the creation and execution of smart contracts, providing cross-chain compatibility with the Ethereum Virtual Machine.
- Platform Chain (P-Chain): Coordinates validators, manages the creation and management of subnets.
Benefits of Avalanche
- Avalanche confirms transactions in less than a second. With a throughput of 4,500 TPS, the platform is among the fastest blockchains.
- Transaction fees on the network are competitive and significantly lower than other blockchains such as Ethereum.
- Avalanche seamlessly interacts with Dapps on the Ethereum, COSMOS and Polkadot blockchains, providing outstanding compatibility.
- Avalanche will consume much less energy than many competitors. It is considered the greenest blockchain, along with Polkadot (DOT) and Cardano (ADA). Avalanche is optimized to run the processor efficiently and enter sleep mode in a low power state.
Avalanche (AVAX) price prediction
According to some analysts, Avalanche is one of the most amazing cryptocurrencies. Long-term forecasts for 2023 suggested a likely significant price increase in the second half of the year with a target of around $22.69. The coin has not yet reached the target level, but over the past months it has already significantly increased in price.
The forecast for the coming years also sounds quite optimistic. Behind the project is a reputable and experienced development team that is constantly improving its brainchild and thereby maintaining the interest of investors and users. It is expected that the coin will gradually rise in price, but it is now extremely difficult to predict the growth rate. Presumably by 2025, AVAX will be trading at a price close to $50 per coin. Since the AVAX to ETH exchange rate will also change dynamically over such a long period, working with this trading pair can also bring good profits.
Since mass adoption of cryptocurrencies is expected in the near future, this will also play an important role in the development of the industry. It is very likely that by the end of the decade the price of AVAX will break the three-digit barrier.
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