Avalanche (AVAX): Next Big DeFi Blockchain Explained. Can Avalanche Hit The Mark Of $150 by 2022?

What Is Avalanche (AVAX)? 

Avalanche(AVAX) is a layer one blockchain protocol. Ava Labs Launched Avalanche protocol in 2020 and climbed the top ranking of cryptocurrency in no time. At the moment, the TVL of Avalanche is $10.82b.

Avalanche uses the Avalanche consensus model. The network does make use of proof of stake, but there are a few key differences.

– Advertisement –

The network uses sub-sampled voting. As Avalanche explains, in this type of voting, small random subnets of validators are asked whether the particular transaction would be accepted or rejected. After the transaction is initially validated, “network gossip” happens in which the group of people where the participants pass the information back and forth continue to either deny or accept the transaction.

The benefit of this model is that the consensus will reach within a specific desired timeframe, contrary to the proof-of-stake and proof-of-work mechanism.

Another advantage of this model is that it is difficult to attack, unlike in Bitcoin, where you need 51% of the computers to attack the whole system and take control of the network. In Ethereum, you need 51% of all the staked tokens in order to attack the network. With Avalanche, the hackers would need to control at least 80% of the network to attack the model. 

Avalanche’s mainnet was launched in 2020, after which it started working on its own DApps and DeFi. Ethereum Projects such as TrueUSD and SushiSwap are Ethereum-based projects that have integrated with Avalanche. The platform is also continuously working on enhancing the interoperability between Ethereum and its own ecosystem by developing its bridges.

Avalanche’s Unique Infrastructure:

What makes Avalanche truly unique is its architecture. Avalanche is not a single blockchain but consists of three blockchains: X-Chain, C-Chain, and P-Chain. Each chain serves a different purpose: 

X-Chain does the creation, management and transactions of tokens on the network. It uses the Avalanche Consensus mechanisms. The tokens follow a set of standardized rules just like the ERC-20 standard on Ethereum. 

C-Chain is an exact copy of the Ethereum Virtual machine, similarly to Ethereum Virtual Machine, it allows developers to fork EVM-compatible DApps.Basically, C-Chain is for smart contracts and decentralized applications. It uses the snowman protocol. 

P-chain or Platform chain is specifically for the management of the subnet. It coordinates validators nodes and the staking mechanism. In addition, it tracks active subnets and enables the creation of new subnets.

The most significant advantage of this model is that it boosts higher throughput without compromising on decentralization.

What Are Subnets?

The working of Avalanche is pretty much similar to Ethereum 2.0 sharding.

Each subnet is a new network in the Avalanche network. Each subnet can have multiple blockchains, just like the primary network. Each blockchain in the network can have its own sets of rules; however, every subnet needs to validate its own blockchain and the Primary network chain. 

A blockchain can only be validated by one subnet however each subnet can validate several blockchains.

Each blockchain can have its own Virtual Machine, and the blockchains can either be public or private. 

Users can create subnets as per their demand and need. Once a subnet’s scaling limits are temporarily exhausted, another subnet can be launched to meet and exceed the network traffic demands and free up transactions. The creation of subnets is unlimited and can infinitely create subnets. 

The great use-case of the subnet is that any institution or government organization can get control of a blockchain without actually developing it. 

What Is The Snowman Protocol?

A chain-optimized protocol, Snowman offers high-throughput, is totally ordered, and is an excellent choice for smart contracts. The Snowman is powered by the Avalanche consensus protocol and implements both the platform and contract chains.  

ALSO READ: Following high traffic Coinbase faced stability issues

Avalanche Rush Program

TRS performance and EVM compatibility of Avalanche has made it one of the biggest names in DeFi in no time. 

Avalanche is also called Ethereum’s rival, as it has the potential to threaten the position of EThereum as the most popular blockchain for smart contracts. Where Bitcoin performs seven transactions per second with an hour finality and Ethereum, on the other hand, 15 transactions per second finality. Due to Avalanche’s unique structure, it performs 4500 transactions/sec (per subnet).

In a smart move, Avalanche launched its incentive program that aims to draw liquidity into Avalanche’s network of DeFi apps to capitalize on its increasing popularity. Avalanche Rush’s $180 million funds give its liquidity providers AVAX token incentives as a reward. 

The most extensive DeFi protocols by TVL, Curve and Aave made the Avalanche Rush successful as they have launched Avalanche markets. Sushi and Kyber Network are recently launched DeFi mammoths to get launched on Avalanche.

Avalanche Coin(AVAX)

AVAX, the Avalanche token, is the platform’s utility token and is used as a common medium of exchange. In addition, the AVAX token secures the network and also rewards stakers with more AVAX. 

The AVAX deflationary token mechanism derives the value compounded from staking. AVAX tokens that pay transaction fees are burned from the supply, which results in a permanent dip in the circulation supply of AVAX.

Now, comes the legit question: where to buy Avalanche Coin? The Avalanche Coin can be bought via different crypto exchanges. The popular crypto where you can buy Avalanche coins is Binance, OKX, dYdX, FTX, and Bitget.

Avalanche Coin (AVAX) Staking Rewards

Validators who own and stake AVAX tokens are required as collateral in all subnets, including the primary network. However, it isn’t necessary to be a validator to get a reward. To earn a percentage of the staking rewards, you can also delegate your stake to a validator. 

As of now, around 64% of AVAX are staked. While validators make 11% APY, the delegators make 9.53% staking rewards.

Pay Transaction Fees with Avalanche Coin(AVAX)

AVAX between subnets is important because it helps interoperability between subnets that otherwise use their own internal cryptocurrencies. 

The network’ default currency is AVAX. As mentioned earlier, AVAX serves as the common currency between subnets. In addition, all the transaction fees are paid using AVAX. 

Within the whole ecosystem, Avalanche is the common unit. 

Avalanche Bridge for ERC-20 Token Swaps

The Avalanche Bridge facilitates the transfer of ERC-20 tokens. The Avalanche Bridge is called a great strategy since ERC-20 makes the majority of the tokens. 

A bridge for interested users who want to try Avalanche with their existing Ethereum tokens provides Avalanche with the needed exposure to billions of dollars of token liquidity. Similar to Ethereum, Fantom, and Binance Smart Chain, Avalanche Bridge works with Metamask.

Avalanche Coin (AVAX) Price Prediction 

At the time of writing, the price of Avalanche Coin is $87.65, with a market cap of $21,499,529,016. It is up by 12.59% in the last 24 hours.

Wallet Investor predicts a long-term increase in its price while their price prognosis for 2026 year-end is $940.939. The revenue is expected to reach around +775.5%, with a 5-year investment.

Meanwhile, according to Digital Coin Price, the price of Avalanche can hit the mark of $150 by 2022 and $270 by the end of 2025.