What is Cryptocurrency Avalanche (AVAX), and how does it work

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What is Cryptocurrency Avalanche (AVAX)

The decentralized finance sector is simply booming. DeFi has become more popular in recent years. There seems to be a growing need to manage finances with more independence and integrity. 

Banks and financial institutions act as central authorities and intermediaries in the traditional financial management model. Blockchains allow people to be private with full transparency, high security, and full control of their assets.

DeFi has seen a number of new projects in the sector, with Avalanche (AVAX) being one of the more prominent ones. Avalanche allows users to launch DeFi applications and create financial assets, while the blockchain platform also accepts trading and other financial services.

What is Avalanche (AVAX)?

Avalanche is a blockchain platform that provides users with tools and features for launching DeFi decentralized apps. The platform also has tools for creating financial assets and offers to trade and develop first-class financial solutions.

Avalanche is a decentralized open-source system based on smart contract operations. Meanwhile, Avalanche is said to be the first smart contract platform to finalize transactions in under a second. 

The platform supports all tools used on the Ethereum network and includes a record number of block-creating nodes on their testnet. The network can handle over 4,500 transactions every second, making it one of the fastest blockchains on the market.

Avalanche allows users and companies to build their financial assets and DeFi applications for various uses and public and private blockchain networks. Users can use customizable blockchain networks and create their own rules to run the network. 

Avalanche creates an interoperable ecosystem where users can integrate with different networks and applications built on the network.

AVAX is the native coin of the Avalanche ecosystem and the backbone of the governance mechanism. AVAX can be bet to vote and is also used as the main payment method on the network. Users can also pay fees with AVAX.

How does Avalanche work?

Avalanche runs on smart contracts and is supported by the Ethereum Virtual Machine. The Ethereum Developer Toolkit, allows Ethereum developers to launch their Dapps on Avalanche. This is based on a system of three blockchains connected via interoperability, Exchange Chain, Contract Chain, and Platform Chain.

Avalanche divides its architecture into three parts as they are supported by three different blockchain environments. Making it easier for the network to scale and offer flexible solutions for mainstream and premium Dapps. 

This system also allows Ethereum developers to use a network with increased scalability and interoperability while being compatible with the Ethereum Virtual Machine. Each has its unique utility in using cases and support for each of the three networks on which Avalanche is built.

Who are the founders of Avalanche (AVAX)? (Avalanche history)

Avalanche was created by the business Ava Labs, which was co-founded by Emin Gün Sirer, Kevin Sekniqi, and Ted Yin. Emin Gün Sirer is a software engineer, and Ted Yin created the HotStuff protocol used in Facebook’s blockchain project, Libra. 

The team has a strong background in blockchains and aims to create a global trading market for various digital assets while providing a scalable environment for Ethereum developers.

Avalanche launched its testnet in May 2019, while the main net was launched in September 2021. The development team created the Avalanche consensus to reach a transaction speed matching Visa while simultaneously addressing. The scaling problem is found in Bitcoin and Ethereum.

What makes Avalanche unique?

Avalanche is a unique network thanks to the Avalanche consensus, which is a variation of the Proof of Stake protocol. In addition, the protocol enables scaling. So, the system allows the processing of over 4,500 transactions per second compared with Ethereum’s 14 TPS and Bitcoin’s 7 TPS.

Another feature that distinguishes Avalanche is its approach to EVM development, which provides scale and flexibility for public and enterprise-grade apps and blockchains.

How does Avalanche create value?

Avalanche derives its value from its technical capabilities, technology, use cases, and relevance in the sector of DeFi. Therefore, an avalanche’s intrinsic value can be seen as its technical value and the potential of its technology to find financial use cases. 

The intrinsic value usually does not match Avalanche’s market capitalization, which is seen through the AVAX price.

AVAX market capitalization undergoes frequent changes thanks to the volatility of the crypto market and many different elements that affect Avalanche price. The price can change quickly within a very short period, making AVAX volatile like most crypto assets.

How many Avalanche (AVAX) coins are there in circulation? 

There are currently 284,991,916 AVAX in circulation out of 720,000,000 AVAX. Avalanche has a limited supply of AVAX coins, which act as an anti-inflation mechanism. 

The Avalanche community can choose the speed at which asset value reaches through the Avalanche consensus, and the scarcity of tokens increases as transaction fees are burned.

The number of AVAX coins in circulation multiplied by the current market value of Avalanche equals AVAX market value. The market cap ranks the crypto compared to other digital assets in the market and defines its market share and dominance.

Other technical information

The Avalanche system is controlled by AVAX holders and secured through validators and subnets. Lunar networks with similar cases to Avalanche have a limited number of validators. But Avalanche has not set a limit on how many validators can run the network. 

By staking at least 2,000 AVAX coins, an AVAX holder can become a validator. Avalanche uses this system to connect other blockchain networks running on the platform, creating faster processing of thousands of transactions with half a second finality. 

Validators secure the network and are responsible for validating transactions. AVAX plays a major role in this system as holders and network users need to invest in it to become validators.

How is the Avalanche network secured? 

The Avalanche network is secured via two different protocols. The Avalanche consensus is a by-product of the Proof of Stake consensus mechanism and the Snowman protocol. The Snowman protocol secures C-Chain and P-Chain to facilitate smart contract operations with quick responses. 

The Snowman protocol is chain-optimized to secure smart contracts. While the entire network is secured by an architecture shared between three blockchains: X-Chain, C-Chain, and P-Chain.

How to use Avalanche

Avalanche is used to create and develop decentralized economic Dapps, financial assets, and blockchain networks. The network is optimized for business, enterprise, and public networks that can be built with a custom set of rules on the network. 

Avalanche supports EVM and Ethereum’s toolkit while facilitating developers’ flexible and scalable environment. In addition, users can also trade the platform’s financial assets, such as cryptocurrencies.

The AVAX token is used in the governance of the network, for voting and staking. To pay fees on the network, and as the main payment method on the platform.

Avalanche mining seller Proof of Stake

Avalanche relies on validators, and there is no maximum cap on the network’s number of validators, as long as all validators stake at least 2,000 AVAX coins.

The Avalanche network runs on a variation of Proof of Stake called Avalanche consensus. This protocol secures X-Chain, which supports the creation of new financial assets on the blockchain.


Avalanche addresses the need for a financial services blockchain environment with custom rules and applications while solving the problem of scalability. That Ethereum users face through Dapp development. 

Avalanche offers all the development tools available on the Ethereum network and is compatible with EVM, offering scalability, flexibility, and decentralized control for all users.

With the increasing popularity of DeFi, Avalanche has the potential to become one of the most highly regarded blockchain-based projects of its kind.

Take part in the crypto revolution and start your Avalanche journey today!

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