As everyone interested in cryptocurrencies is well aware, the more popular this area became, the more new projects appeared in it. We were overwhelmed with a whole avalanche of virtual coins, oracles, decentralized applications... Whether the Avalanche (AVAX) developers thought about this simple pun when they called their brainchild is unknown. However, their project has managed to attract attention.
Avalanche was released in 2020. Of course, it raised decent funding: $18 million from big investors like Andreessen Horowitz, and $42 million via an ICO. The Ava Labs' project is positioned as an "Internet of Finance" or a "platform of platforms" — that is, an environment where developers can create a variety of projects. If we still talk about the name, then it immediately evokes associations with the well-known concept of the "Internet of Things", a network of digital interaction between physical objects. As will become clear below, some similarities do exist.
The head of Ava Labs, professor and crypto veteran Emin Gün Sirer, does not hesitate to compare the significance of his brainchild with the emergence of cryptocurrencies as such. According to the developers, the Avalanche consensus protocol combines the advantages of the "classical approach" to distributed systems with the "Nakamoto approach", due to which the classic "virtues" of cryptocurrency are achieved: security, transaction speed, and low fees, energy efficiency, and so on. Quite an ambitious statement!
The main Avalanche network consists of three blockchains (eXchange-chain, Platform-chain, Contract-chain) with different functions, validated by the original subnet, which the developers describe as a “dynamic set of validators”. These validators operate by the Snow protocol, i.e. they randomly select a set of validators with a certain stake, confirming the integrity of a particular transaction. Users can create their own subnets on which virtual machines such as EVM and WASM could be run.
Thus, each application created in the Avalanche De-Fi environment runs on its own blockchain, relating to a particular subnet. Different developers set the rules for these blockchains themselves — will they be public or private, what functions they will perform, etc. These blockchains can interact with each other, like tokens on the Ethereum protocol. Avalanche consensus algorithm is Proof of Stake. And of course, the project supports smart contracts, and its source code is open to everyone.
All this is combined with high throughput and transaction speed, which reaches 4500 transactions per second and less than three seconds to finalize the transaction, respectively. The native AVAX token (the maximum number is 720 million, 360 of which were issued during the initial launch of the network) is used quite traditionally: for staking, securing transactions, and managing the network.
However, in practice, innovative mechanisms often fail. This happened with Avalanche — in February 2021, shortly after the creation of the "bridge" with Ethereum. Due to the excessive load, the system began to transmit erroneous information to the validators. As a result, the transaction speed dropped... to four hours. The error was fixed quickly enough, but the bad experience remained. Of course, the incident affected the price. At the time of this writing, the cost of one AVAX is $26.16 which is a fairly noticeable decline after the $55 peak. It should be noted that the general correction of the crypto market also played a role.
This is not to say that Ava Labs offers a product that is truly unique in its functions. After all, there are Cosmos and Polkadot, aimed at solving similar problems. But in a super-saturated crypto market, even a small advantage can lead to very serious growth, especially if the project offers serious technical innovations that can attract the attention of not only traders but also companies interested in innovations.
It seems that the professor at Cornell University did manage to create something similar. Most importantly, he did it on time, amid the arrival of institutional investors and the painfully long birth of Ethereum 2.0. This means that there is a high probability that we will hear more about Avalanche in the future.