What is Avalanche? Features and prospects of the project
Numerous blockchains already exist in the cryptocurrency domain, each competing on different parameters, such as scalability, decentralization, transaction speed, and fee rates. While maintaining everything at a high level at the same time can be challenging, the Avalanche project has tried to do so.
Avalanche: What is it?
Computer scientist Emin Gün Sirer was instrumental in the 2018 launch of the Avalanche project by American company Ava Labs. Backbone network was launched in 2020, and Avalanche forge ahead with its’ development since then.
Overall, this project raised about $56 million through several ICOs, along with $248 million from various venture capital funds, with Polychain Capital and Three Arrows Capital leading the way.
Avalanche is a L1 network composed of three separate blockchains titled X-Chain, C-Chain, and P-Chain. Each of these is running on the Proof-of-Stake algorithm, but differs in the structure and function.
X-Chain – is an exchange blockchain used to receive and send cryptocurrency. With a throughput of 4,500 transactions per second, it requires a flat fee of 0.001 AVAX.
C-Chain represents an environment for smart contracts and decentralized apps. It uses a consensus protocol called Snowman and is EVM-compatible.
With P-Chain, validators are able to create new subnets and send AVAX tokens into staking.
AVAX: What is it?
AVAX stands for Avalanche's native token, utilized as a transaction fee and transferred into staking to keep the network|chain running.
The issuance of AVAX has a cap of 720 million tokens, with 44% in circulation already. Inflation is compensated to a certain extent by burning tokens spent on chain fees.
AVAX is available on most centralized exchanges, including WhiteBIT, Huobi, OKX, Binance, Coinbase, Bybit, Kucoin, and so on.
In order to connect an Avalanche network along with its AVAX token to Metamask, select Manual network connection in the settings and enter the following information:
Network name: Avalanche
RPC URL: https://api.avax.network/ext/bc/C/rpc
Chain ID: 43114
Currency symbol: AVAX
Block explorer URL: https://snowtrace.io/
Project prospects
Despite the fact that the Avalanche project's ideology & approach are quite promising, some concerns regarding the AVAX token have arisen. These include the bankruptcy of the investor “Three Arrows Capital” as well as “Luna Foundation” and “Terraform Labs”.
The thing is – just before the Luna and UST tokens crashed, both companies entered a “mutually beneficial” partnership with Ava Labs. They exchanged LUNA and UST for AVAX tokens totaling $200 million. Therefore, the company behind the development of Avalanche has almost lost that sum and the Terra Luna team could still dump the AVAX token if they sell it.Nevertheless, there is a possibility we have already seen this happen so there would be no further pressure on the market value.
Yet every cloud has a silver lining. Ava Labs' recent partnership with Amazon Web Services (AWS) would support the Avalanche network infrastructure and its ecosystem of decentralized applications. Meanwhile, Ava Labs would commit its efforts to the AWS Activate startup support program.
Thus, Avalanche is essentially an acceptable project with good prospects, but investing in its tokens seems a bit risky.
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