What is Avalanche (AVAX)?


Avalanche is a blockchain platform that uses a unique proof-of-stake (PoS) mechanism to address the scalability, security, and decentralization challenges often referred to as the blockchain trilemma. Avalanche supports smart contracts and decentralized applications (dApps), and its smart contracts are written in the same language (Solidity) as Ethereum. This allows it to integrate with a number of decentralized finance (DeFi) ecosystems.

Key Takeaways

  • Avalanche is an open-source blockchain platform that aims to enhance scalability and performance of existing blockchain networks.
  • The Avalanche network comprises of three distinct chains, the Exchange Chain (X-Chain), the Platform Chain (P-Chain) and the Contract Chain (C-Chain).
  • The X-Chain is utilized for sending and receiving funds, P-Chain is used for validator activities and staking while C-Chain is used for decentralized finance (DeFi) and smart contract execution.
  • The Avalanche token (AVAX) is the primary token of the Avalanche platform and it is used to pay for transaction fees, staking and serves as a unit of account between subnets on the network.

How does Avalanche work?

Avalanche’s design is what sets it apart from other blockchains. The main elements are its consensus mechanism, the incorporation of subnetworks, and the use of multiple built-in blockchains.

Avalanche Consensus

Avalanche’s consensus mechanism is based on proof-of-stake (PoS) and includes some additional features. When a user initiates a transaction, it is received by a validator node that checks for agreement with a randomly selected, small group of other validators. This sampling process repeats multiple times, with the validators “gossiping” with each other to ultimately reach consensus.

This consensus mechanism works by passing one validator’s message on to other validators. They then sample additional validators and continue the process until the entire system reaches consensus on an outcome. This process is similar to how a single snowflake can turn into a snowball or how a single transaction can become an “avalanche” through the repeated sampling and consensus-seeking process, hence the platform’s name.

In Avalanche’s consensus protocols, validator rewards are based on the length of time a node has staked its tokens (called Proof of Uptime) and the node’s history of following the software’s rules (called Proof of Correctness).


AVAX allows users to launch specialized chains that can have their own sets of rules. This system is similar to other blockchain scaling solutions, such as Polkadot’s parachains and Ethereum 2.0’s shards.

Consensus on these chains is reached by subnetworks (or subnets). They are groups of nodes that validate a specific set of blockchains. All subnet validators also require to validate the Avalanche Primary Network.

Multiple Chain Design

AVAX uses three different blockchains in its design to address the trade-offs inherent in the blockchain trilemma (scalability, security, and decentralization). Digital assets can transfer across these chains to perform different functions within the Avalanche ecosystem.

The Avalanche network consists of three different blockchains: the Exchange Chain (X-Chain), the Contract Chain (C-Chain), and the Platform Chain (P-Chain).

Exchange Chain (X-Chain)

The X-Chain is where users send and receive funds. It uses directed acyclic graph (DAG) technology. Transaction fees on the X-Chain stay fixed at 0.001 AVAX, and it offers faster speeds compared to the C-Chain.

Platform Chain (P-Chain)

The P-Chain is for staking AVAX and facilitating validator activities. Users can become a validator or delegate their staking to one in order to collect their rewards on the P-Chain.

Contract Chain (C-Chain)

The C-Chain is the chain used for decentralized finance (DeFi) and smart contracts on the Avalanche network. It hosts most of the AVAX dApps and users can access them using MetaMask.

AVAX Token

AVAX is the native token, with a max supply capped at 720 million. It has several different use cases that are fundamental to the network’s functionality.

To begin with, AVAX pays transaction fees on the network. Unlike Ethereum, where validators get a part of the gas fee, and the network burns the rest, Avalanche burns the entire fee.

Secondly, the network uses AVAX for staking. This is the process of pledging AVAX to participate in the validation process and help secure the blockchain. In proof-of-work networks like Bitcoin, validators use powerful computers called mining rigs to secure the network. In contrast, proof-of-stake networks like AVAX rely on users staking their crypto assets in order to be eligible to validate transactions.

Users who stake at least 2,000 AVAX can run their own validator nodes and earn AVAX rewards. Those with less AVAX can join staking pools in order to pool their assets together and become a single validator.

The third use of AVAX is more technical and is primarily of interest to developers. The multiple subnets deployed on Avalanche use it as a basic unit of account. A subnet is a group of validators working together to achieve consensus.

Avalanche Development

Ava Labs, a team of researchers led by Emin Gün Sirer, a computer scientist and blockchain expert at Cornell University, created the Avalanche blockchain network. A white paper shared on the InterPlanetary File System in 2018 under the pseudonym “Team Rocket” first described AVAX.

In February 2019, AVAX tokens sold through a seed sale, followed by a private sale in May 2020 and an ICO in July later that year. The network officially launched by Ava Labs on September 21, 2021.

Avalanche FAQ

Frequently asked questions about AVAX.

Who created AVAX?

Avalanche was developed by Ava Labs, a company founded by Emin Gün Sirer, a professor at Cornell University and an expert in cryptographic research. Gün Sirer was involved in the design of a conceptual peer-to-peer virtual currency six years prior to the release of the Bitcoin whitepaper. He has also contributed to research on Bitcoin scaling solutions and Ethereum.

Alongside Gün Sirer, Ava Labs founders were Kevin Sekniqi and Maofan “Ted” Yin, both computer science PhDs from Cornell University. The idea for Avalanche arose from research conducted by Gün Sirer and his team, later documented in a whitepaper. It led to the establishment of Ava Labs in 2018.

What makes AVAX unique?

The main feature that distinguishes Avalanche (AVAX) is the use of three separate blockchains that handle different tasks. This enables the network to process over 4,500 transactions per second and finalize transactions in just under two seconds.

Additionally, the network allows users to create their own blockchains on it and supports the transfer of tokens from Ethereum to Avalanche through the Avalanche Bridge.

How do I use AVAX?

To access the Avalanche network and explore its decentralized finance (DeFi) protocols, you will first need to acquire AVAX on a centralized cryptocurrency exchange like Binance or Kraken. Market cap and circulating supply is what determines the Avalanche price. Once you have obtained AVAX, you will need to withdraw it from the exchange and transfer it to a DeFi wallet such as MetaMask.

It is important to ensure that you select the C-chain during this process. Funds that transfer to the wrong chain may be permanently lost. The user interface on Avalanche is similar to Ethereum, as the C-chain runs on the Ethereum Virtual Machine (EVM).

Therefore, if you have previous experience using Ethereum, your Ethereum public cryptocurrency wallet address that starts with 0x will also serve as your Avalanche address.

Final Thoughts

Avalanche’s unique blockchain implementation as a Layer 1 network places it amongst the top competitors of crypto. With a diverse host of projects nourishing its ecosystem, Avalanche is a leading platform. It also happens to be the home network of DUA – our upcoming token that will bring Web3 to the dua ecosystem. Learn about DUA here and stay updated by following us on Twitter.

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