Avalanche’s blockchain network is a smart contracts platform that seeks to solve the problem of scalability in the blockchain space. Its native token, AVAX, hit an all-time high recently and it’s currently the 12th most valuable cryptocurrency by market value.
What is Avalanche?
Avalanche is a blockchain network that allows anybody to easily create their own cross-functional blockchains and decentralized applications (Dapps). Avalanche blockchain launched in September 2020 by the Ava labs team as a platform for deploying smart contracts, creating decentralized applications and building customized blockchains or subnets.
These Subnets are effective, durable and secure private or public blockchains built as offshoots of Avalanche’s mainnet. Due to this unique feature, Avalanche claims to be the fastest smart contract platform in the blockchain in terms of time-to-finality.
Avalanche Use Case: Creating and Paying For Assets
The Avalanche X-Chain network focuses on the creation and exchange of Avalanche assets. Some of the popular assets on X-Chain are Avalanche’s native token, AVAX, JOE and PNG, which are both decentralized exchange tokens.
Transactions on the X-Chain attract some gas fees which are paid in AVAX. This is similar to how gas fees on Ethereum are paid in ETH. Hence, even if you are buying or selling JOE tokens, the fees are always paid in AVAX. Avalanche has other chains to launch smart contracts and facilitate DApp development.
Avalanche Use Case: Scalability
Older Blockchains have been unable to balance scalability and decentralization effectively. A network which has a lot of users and high activity finds it difficult to achieve consensus on valid transactions quickly. The Bitcoin (BTC) network is a good example of this, where transactions could take up to several hours to complete.
Some blockchain platforms attempt to solve this challenge by making the network more centralized, allowing a few nodes the right to validate network activity. This is done to reduce block confirmation time. However, this has deviated from decentralization which is an important feature of blockchain technology. A new blockchain like Avalanche has attempted to solve this problem with its technological advancements.
Avalanche Use Case: Reduced Fees and Burning Mechanism
Another common limitation in older blockchains is their high gas fees. This is often due to high traffic and an increase in the number of users on the network. Many users are discouraged due to the high fees but don’t seem to find a better alternative to use.
For instance, Ethereum’s popularity and a lack of alternatives have led many users to settle for the high fees. Avalanche network aims to solve this with its cheap transaction fees that cost a few cents. AVAX tokens are burned whenever fees are paid, creating a deflationary effect designed to help prevent the coin from losing value over time.
Avalanche is Building Web 3.0
Avalanche network provides a platform for developers to create and launch new, customizable blockchains with smart features. This puts them in the best position to make Web 3.0 a reality.
As more Decentralized Finance (DeFi) platforms continue to seek better platforms to deploy their Dapps on, a blockchain like Avalanche is a great option due to their EVM compatibility and low fees. As more features are introduced into the platform, more users will be able to use the platform for their specific needs. This could have a positive effect on the price of AVAX, its native token.
Even though Avalanche has a lot of potential growth, whether or not it will be able to compete effectively against other blockchains like Solana or Polygon is uncertain at the moment.