Avalanche’s $AVAX Guide: Is it only Hype? Pros & Cons | Sol vs Avax vs ETH in 2022
Avalanche is a one-of-a-kind crypto network that allows users to establish their blockchain subnets for whatever use they see fit. Businesses, governments, and even teams may use the AVAX network and consensus method to develop public or private projects.
This will be a highly informative and entertaining post because Avalanche is such a novel technique that we will one day understand how ridiculous it was to discuss it so early. Avalanche, for example, has very little advertising material, relying instead on esoteric documentation and long whitepapers. But, fortunately for you, it is just what we are interested in…
Welcome to cryptocurrencysimple.com, where we break down everything about bitcoin in an easy-to-understand manner! In this lengthy article, we’ll explain what the Avalanche network is, how it differs from virtually every other crypto application I’ve seen, and how to unlock the secrets of the AVAX token, including how the price rose from $16 to $92 in just four weeks, and why something similar could happen again.
Let’s get started.
Table of Contents
Model of Avalanche Consensus
To comprehend the Avalanche Network, we must first learn about its proprietary consensus mechanism and economics.
First and foremost, you should be aware that the consensus model that people utilized for a long time was known as the “Practical Byzantine Fault.” This was essentially a computer science method that helped a collection of objects come to a decision based on the knowledge they had when it took off in the 1980s.
Then, in 2009 came the birth of Bitcoin, which marked the beginning of the Nakamoto age of consensus. Nakamoto invented and disseminated the Proof of Work technique, which is superior to the traditional Byzantine approach in many aspects.
Finally, Avalanche announced the introduction of its Avalanche Consensus model network in 2020. This is a challenging situation. Therefore I’ll try to offer you a high-level grasp of it without causing any problems for their engineers.
The network closely resembles proof-of-stake, but with a few notable exceptions. To begin with, the Avalanche model employs subsampled voting. This implies that many people volunteer to be part of the network and are requested to verify items at random. ‘Small, random subset of validators whether they think the transaction should be allowed or refused,’ as they put it. After it is initially believed to be genuine, a phenomenon known as ‘network gossip’ occurs, in which other participants communicate knowledge and continue to confirm or deny the transactions. One advantage is that, unlike PoW and PoS techniques, consensus will be obtained within a specific timescale no matter how many nodes are present.
Due to several technicalities, this consensus mechanism is also considerably more difficult to exploit. Unlike Bitcoin, where an assault on the network would require 51 percent of all machines… or Ethereum 1.0, where you’d also need 51% of all tokens to take down the network… You’d need to command up to 80% of the Avalanche network to launch an attack.
But first, the important stuff. Using this design, each network may support up to 4500 transactions per second per Subnet, with a finality clock of fewer than 3 seconds. We’ll go into subnetting in more detail later, but for now, know that each Subnet can handle up to 4500 transactions per second, and if you have 1000 subnets, you can handle a lot of transactions. Compared to Bitcoin, which has seven transactions per second and takes an hour to complete. Even Ethereum pales in comparison, with 15 transactions per second and a 10-minute finality.
The Main Network of AVAX
Now that we’ve learned about the Avalanche consensus model let’s see where Avalanche shines: network infrastructure.
To begin with, Avalanche only has one primary network. This core network comes with three built-in blockchains. That’s correct. Avalanche is more than one blockchain… It’s at least three. We’ll get to it in just a minute.
The X-Chain is the first ‘blockchain’ in the network. This section is dedicated to generating, administering, and transferring tokens over the network. This is built on a DAG, or consensus model in terms of technicalities.
The C-chain is dedicated to Smart Contracts alone. An identical replica of the Ethereum Virtual Machine is ready for you to copy/paste to use Ethereum dApps on the Avalanche network. They were astute in this, allowing developers to migrate their projects with minimal effort. It also makes use of the Snowman protocol, which I’ll explain in a moment.
The P-Chain, or Platform Chain, is responsible for subnet management, validator coordination, and staking processes.
You might be wondering what subnets are.
In the Avalanche ecosystem, each Subnet is a new network. Yes, this ecosystem is scalable in a variety of ways. First, allow me to explain what Subnets are.
Like the Primary Avalanche network, each Subnet can contain many blockchains. Second, each Subnet’s blockchain can have its consensus model. According to what I’ve heard, if you’re making one, you may choose between proof-of-work and proof-of-stake, depending on your needs.
Another fascinating feature is that each blockchain may have its virtual computer or VM. For example, the Ethereum VM may be copied in the same way as the Primary chain was. These subnets can either be permissionless or permissioned, which is crucial to note. They can be public or private, in other words. You’ve probably figured out what this is all about by now. If you’re a government looking for the full capabilities of a blockchain without having to build the infrastructure, you can simply add a subnet to the Avalanche ecosystem.
Perhaps you’re a government, a corporation, an organization, or some other protocol that requires the usage of these extremely powerful tools. You may even adjust the rules for each blockchain in your network to ensure that it complies with a variety of different geographical or political constraints. For example, you may mandate that every validator in your network obtain a license or complete particular tax forms… It’s all designed to produce such regulations.
One final point to remember is that you are also validating the whole network via the Primary chains by validating your local Subnet.
Protocol of the Snowman
Let’s move from the infrastructure and look at the network in more depth. The leading Primary network uses the Avalanche consensus model, but AVA Labs devised the Snowman Protocol, an even more powerful consensus model. Yes, let’s speak about the distinction between the Snowman protocol and the generalized Avalanche protocol, just to make sure you understand them.
Snowman is a linearized version of Avalanche that has been designed for smart contracts and fast throughput to meet the demands of the EVM. Avalanche is a more general scenario in which a DAG structure is used, as shown on the X-Chain. There were a lot of technical terminologies, but the bottom line is that the Avalanche engineers are pretty knowledgeable and optimize things to the best of their abilities for the scenarios they are used.
tokenomics of the AVAX
Let’s start with the tokenomics of the AVAX Coin, which runs the network before we make any price forecasts or provide you with any precious information.
To begin with, there is a 720 million coin limit. As a result, it is instantly a deflationary asset. Second, AVAX coins may be used to control the platform, which means that the more coins you own and stake, the more voting rights you’ll have on crucial future choices. The bad news is that AVA Labs pre-sold 127 million coins when they first began, and many of those coins remain locked for some time.
This indicates that many investors who purchased the coin for 50 cents or less may wish to lock in their 100x gains and sell as soon as possible. This is unfortunate news for investors. However, the good news is that they are not dumping their entire holdings at once. The following chart illustrates their unlocking schedule; if you’re contemplating investing in AVAX, keep these dates in mind, as well as how past dates have impacted the price. Approximately 20% of all coins were distributed to the squad and the ‘foundation.’
Finally, the good news regarding AVAX and why their stock price has risen so dramatically recently.
The Avalanche Foundation has unveiled a $180 million incentive campaign to encourage individuals to use the network. As a sort of advertisement, this implies they are basically giving away 180 million dollars for free. This is an occurrence in the Defi community and is not a fraud.
Curve and AAVE are expected to join their network due to this incentive campaign. Curve and AAVE have plenty of billions of dollars in liquidity tied up on Ethereum and Polygon, so getting them to switch to the AVA network was a sensible move. We watched the price of AVAX soar from $15 to about $92 in a matter of weeks when it was first established, as hungry investors began crossing their money over via the AVAX bridge.
We will never provide financial advice or make price predictions on this website for anyone for anything, but this is a highly positive indication for anyone interested in the AVAX network.
Lets do some comparision with famous blockchains like Solana & Ethereum!
We will find how Avalanche/AVAX is beating other leading blockchains and finding its place to the top! I will also let you know where its lagging and how it may effect its whole price move. So lets begin with Avalanche vs Solana.
The Difference Between Avalanche and Solana:
Avalanche has been dubbed “the Ethereum killer.” They claim to be 100 times quicker than Ethereum and the most popular blockchain for smart contracts.
Aside from being another decentralized site, their token, AVAX, may be staked for yearly payouts of roughly 12%. And if you wish to stake for a short period, the minimum is simply two weeks.
They are on a quest to provide unique blockchains to tackle the decentralization and scalability problem. As a result, Avalanch has created THREE distinct blockchains: 1) The X-Chain, 2) The C-Chain, and 3) The P-Chain. And, to address these issues, they must all communicate with one another (be interoperable).
Solana is a coin and a platform that uses hybrid consensus to run decentralized apps and give people answers. To pay for staking transaction fees and a peer-to-peer digital currency, they use their own token, which is called “SOL.” SOL tokens are available on a lot of different platforms, like Coinbase and Binance.
Solana has grown to complete tens of thousands of transactions per second while charging almost no costs. You can learn more about the costs and other details in this post.
They strive to maintain transactions as quickly as possible, reduce congestion, keep costs low, and compete with centralized organizations like VISA!
What Is The Difference Between Avalanche And Solana?
Avalanch engages with three separate blockchains; Solana just uses one.
To reach consensus, AVAX employs the (DAG) protocol, whereas SOL uses a hybrid consensus: proof of history (PoH) mixed with proof of stake (PoS) (PoS).
Avalanch’s three blockchains can share and connect; Solana is not.
FOCUS ON SPEED.
Avalanch can CONFIRM smart contracts in under a second, whereas Solana can PROCESS 50,000-65,000 per second.
What are the similarities between Avalanche and Solana?
Both are open-source platforms for the development of Dapps.
Each initiative aims to reduce congestion by introducing decentralized money to a global scale.
They are both coins and utility tokens with many applications, including network security through staking, payment of items like gas costs, governance involvement, and peer-to-peer transactions.
AVAX has a cap of 720 million, while SOL has a cap of 489 million.
That was the main comparison you all must look into; by the way, I am going to release a new separate post comparing Solana and avalanche deeply! So don’t miss out on other factors of avalanche below!
Comparision between Ethereum & Avax
For all of my fellow readers, we already have dedicated content on the comparison of ETH & AVAX! Do check this article right here and you will be good to go!
Avalanche Vs. Ethereum: How Do They Compare?(2021)
Is Avalanche’s $AVAX Worth The HYPE? (Pros & Cons)
Avalanche is one of the hottest projects in the entire crypto space. Still, it has many competitors like Solana polka dot cosmos and on and on and on, so should you invest your precious time and money in Avalanche? Well, in this sub-topic article on AVAX, I want to help you answer that question. After all of this research, I’ll share some pros and cons that I discovered and why I turned from super bullish to a little more hesitant.
Quick Overview on AVAX!
Before we get into my pros and cons, let’s start with a quick overview. This is why some people refer to them as “layer 0” projects because they can run other blockchains on top, making them similar to interoperability projects like polka dot or cosmos. Still, because they also have their apps and defi protocols, they can compete with “layer 1” projects like ethereum or Solana.
The critical difference is that the Avalanche itself consists of three different blockchains. Their x-chain manages tokens on their network, their p chain manages validators and subnets, and their c chain manages and executes smart contracts.
As you might expect, Avalanche is lightning fast, with 4500 transactions per second per subnet and most transactions completed in less than one second, thanks to their novel consensus protocols called avalanche consensus and snowman consensus. I won’t go too deep here, but basically, they use randomized subsample voting and gossip protocols to make things fast, scalable, and secure.
Their consensus protocol also supports validators, so everyone can validate, assuming they meet the other requirements. Their native token is called Avax, and it has a fixed supply, which is quite different from other proof-of-stake networks. It serves as a unit of account and is used to pay transaction fees, and you need to stake it to become a validator.
3 Pros (Architecture, Adoption, Tokenomics)
Now that you’re caught up to speed let’s turn to my pros.
1) Good Architecture
they have good architecture, and The design brings about several key benefits. such as their hub-and-spoke model between The core avalanche network. All their Subnets are super flexible and can be customized in more ways than you can. Imagine if they didn’t have to share. As a result, if the subnet fails for whatever reason, It won’t negatively affect the security of They also made their chains.
EVM compatible right out of the gate. Which I think was a smart decision. Because this lets builders port over. ethereum apps are being developed faster than in the past, cosmos or polka dots. Those two also support EVM, but, to be honest, their Implementations are rough around the, And I think a big reason why is Because they didn’t focus on it from the Avalanche’s beginning is similar to that of an avalanche.
They are also delighted as a result of their decision. You would be resilient to attacks. I require up to 80%; one of the validators reduces the stake to attack the network successfully. At the same time, 51% is commonly used for other coins. This is because avalanche nodes are queried randomly to Gossip your way to 51% attacks if you need more than 51% percent control.
To be realistic and diverse, Parameters can also be tweaked to get This safety margin can reach up to 80%. I like the number of query rounds to do. The sample size determines the acceptance threshold.
Now for the final word What I like about their architecture is that They make it enticing to be a Yes; I know that there’s a sizeable minimum stake, but assuming you have that Anyone can be a validator, it’s not capped at a certain number and a significant benefit Subnets can issue validators. As an incentive, they each have their coin, so I can see people buying Avax to farm all of those rewards in the future. Right, so those are all my thoughts about Their architecture!
2) Significant Adoption
Pro number two is their most impressive Adoption. Look at this chart of Adoption & their total number of addresses or this one of both of their total transaction count. Again, rocket ships are going up, and They’ve also burned over 16 million dollars worth of avax since launch, as you can see here in this chart.
Representing the daily fee burn, and They are currently ranked fifth overall in terms of total value locked in at more than That figure is locked in at 6.2 billion dollars, & it is rising quickly, though, with over 3.6 billion of dollars in assets are under bridge transferring from ethereum far, this is likely because of their massive defi incentive.
They’re participating in a program called “avalanche rush.” Starting with two blue-chip protocols, They have an avenue and a curve and provide many services. Avax tokens for Anyone who contributes and provide liquidity. That is why a large number of People are bridging over to get their hands on those juicy Rewards.
3) Avax Tokenomics
Last but not least, my third pro is that I like their tokenomics, unlike most other proof-of-stake chains. Avalanche has a fixed hard cap. This makes them like bitcoin in a sense, but Avalanche also burns transaction fees, so that’s a source of deflationary pressure as well. That’s why their total supply chart looks something like this.
And honestly, that makes avax more like ultrasound money than any other proof-of-stake coin I’ve seen. So if you’re a fan of complicated monetary policies like I am, then look no further than Avalanche.
2 Cons (Design, UX)
Before you run off to go buy some avax, hear me out about my three cons for this project because it’s always good to stay level-headed and evaluate both sides right.
Well, my first con has to do with some questionable design choices. For example, chains and subnets within the avalanche network are super flexible and customizable. Which can be good but also it hurts composability because if we’re not working with a more standard set of features, then it’s hard for things to plug and play with each other like in ethereum land! Of course, there are solutions around it, but it’s not as simple. Additionally, some people argue that Avalanche is less secure for two reasons.
The first is because they don’t have slashing penalties for misbehaving nodes. Instead, Avalanche requires validators to lock up their coins for a longer time and withhold their rewards until the end of that period. So the incentive to not misbehave is simply the lost opportunity cost. But if you have slashing and penalties, it would be worse for misbehaving nodes, which is why the network security would be more substantial.
And second is because they don’t enforce shared security across the whole network like Polkadot, it has one set of validators that secures all of its para chains, so they don’t need to compete for limited resources. In contrast, Avalanche has validators that only operate for certain chains. So some may have weaker security than others. Finally, the last questionable design choice has to do with their rigid staking requirements.
Just look at all of these parameters that you have to meet. They have minimum amounts for validators and delegators. There’s also a minimum time you can stake and a maximum time as well you can’t just set and forget it, nor can you withdraw more quickly even if you need. So it’s just less flexible for stakers compared to some other proof-of-stake networks.
2) UX issue
now my second con has to do with a difficult user experience. They have three separate chains (x, p, and c) that each does different things, and as a user, you often have to switch back and forth between them, and they have other address formats, and you have to use their cross-chain features each time you want to switch.
You can see how this can be confusing for newbies. It’s not as simple as Solana, where you just send Sol to your phantom wallet, and you’re good to go.
My Final Verdict!
They’re not all right now that we got my pros and cons out of the way. Is it time for the final question is Avalanche worth the hype? Well, I would say yes, but I don’t think it’s as groundbreaking as I did earlier. I’d give it maybe a 7.5 or 8 out of 10.
Avalanche is a quality project, no doubt about it, but there are a lot of trade-offs as with all those other projects. Still, honestly, their limitations don’t even matter that much because their success depends on their ability to execute and get actual Adoption consistently. If they can do that, then the market will reward Avax holders regardless of Anyone’s opinion.
I think these next two to three years will be critical for Avalanche because they have a tonne of competitors to jostle with, like polka dots, Solana layer two solutions, and even ethereum 2.0 itself. So it’s going to be an uphill battle for sure, but fortunately, they’re off to a great start, so I’m going to keep my eyes peeled for how their ecosystem matures and what they can accomplish.
By the way, what do you think about my pros and cons? Any thoughts you may have, please share them down below in the comment area, so everyone can see them. That’s all for today’s topic, and I cant wait to see you reading my other article! lol, only at cryptocurrencysimple.com