Exploring Avalanche Bridge’s Role & Capabilities in Crypto Space

With the evolution of the crypto ecosystem, various blockchains emerged. As the usage escalated, users needed to transact digital assets across different networks. Blockchain changed the way transactions work. It brought forth decentralization and made things more transparent, efficient, and secure. However, the new technology came with specific requirements, especially when it comes to things like scalability and interoperability. 

The presence of multiple blockchains has necessitated the need for cross-chain solutions. Using cross-chain bridges, crypto users can use the same coin on various blockchains. This particular function wraps the tokens before sending them to the destination wallet. 

Avalanche Bridge is one of those bridges that do this job perfectly. This open-source, decentralized network is quite like Ethereum. The former is written in the Solidity language and supports decentralized applications. By design, it is EVM-compatible and paves the way for greater interoperability. 

Moreover, Avalanche comes with many additional features. Over the years, it has implemented many upgrades to improve its functionality. Thus, crypto users need to learn about it before investing in any Avalanche-based products.

The Functionality & Possibilities Of Avalanche 

Avalanche is a layer-1 blockchain and is designed to achieve throughput. Also, it delivers robust security and faster transactions in decentralized networks. The USP of this consensus protocol is its Directed Acyclic Graph (DAG). It records transactions in a pile-like manner, keeping one above another. 

Every transaction is connected with a previous one, making the whole system faster. The algorithm does not create new blocks and expedites the transactions while levying lower fees. DAGs have proven to be very efficient and fast. Avalanche deploys three distinct chains which are P-chain, X-chain, and C-chain. 

The chains serve diverse functionalities in the Avalanche ecosystem. The C-chain becomes the hub for smart contracts while being compatible with MetaMask. The X-chain facilitates the transfer of funds while being a transactional chain. The P-chain, on the other hand, allows users to act as validators while staking AVAX tokens. 

The team of Avalanche created it to address the limitations of existing blockchain networks. They observed that Bitcoin and Ethereum were revolutionary, but they weren’t scalable for real-world usage. To achieve efficacy, they often compromise with the decentralization factors. So they designed a blockchain that offered a scalable environment for the dApps and custom blockchains to grow. 

Since its launch, Avalanche has gained attention from people belonging to decentralized finance. It emerged as the go-to ecosystem that allowed easy creation of digital assets, decentralized apps, and other programs. Besides facilitating high functionality, it also made transactions faster and cheaper. 

Adoption, Support & Upgrades

Many Ethereum applications have switched to Avalanche due to these reasons. Some of them are Celer Network, GMX, Synapse, Trader Joe, Aave V3, and Stargate. According to the Avalanche Explorer, the AVAX network has consolidated a massive amount of resources. Its stake amount is 249,970,960 AVAX and it has 1300 validators too. 

The AVAX team launched the Avalanche-Ethereum Bridge (AEB) in early 2021. It enables a seamless transfer of Ethereum tokens into Avalanche and vice-versa. AEB worked as a bi-directional token bridge and facilitated transfers of different ETH protocols. Before AEB, Ethereum rolled out a similar solution named WETH (wrapped ETH). WETH brought more scalability, but it had its limitations and challenges. In terms of speed and security, it still had to do a lot more. Then at the right time, the Avalanche Bridge was launched which was 5x cheaper than the wrapped ETH. The former deployed the SGX Enclave technology, which made the operations way safer and more efficient. Furthermore, Avalanche continued to upgrade its technology to serve the users better.

In March 2022, Ava Labs announced that it would roll out an all-new wallet. The team named it Core and revealed that it would replace the Avalanche Bridge. Besides delivering features of a regular wallet, Core would also enable users to bridge and swap digital assets. Users can bridge their assets easily to another chain and execute a cross-chain swap as well.

When it comes to bearing the cost of network and operations, Avalanche Bridge charges a fee. It applies to the transactions happening on AEB. The platform charges $3 for moving Bitcoin or Ethereum to Avalanche. But when it’s the other way around, the fee is decided on the expected Ethereum transaction fee. In most cases, the fee has been approximately $20 on top of the fee. 

Upshot

Interoperability and scalability have been the biggest issues in the blockchain space. Thus, solutions like Avalanche Bridge have plenty of scope. They can be instrumental in enhancing the growth and adoption of cryptocurrency. The developers must keep exploring various networks and methods to achieve that feat. Hopefully, there will be many similar solutions that will make blockchain mainstream.

Amanda Shinoy is one of the few women in the space invested knee-deep in crypto. An advocate for increasing the presence of women in crypto, she is known for her accurate technical analysis and price prediction of cryptocurrencies. Readers are often waiting for her opinion about the next rally. She is a finance expert with an MBA in finance. Quitting a corporate job at a leading financial institution, she now engages herself full-time into financial education for the general public.