What is Avalanche? AVAX Coin Investment Guide 2022

What is Avalanche? Continuing the series of articles about blockchain projects, today’s article from tradafx will help you better understand the Avalanche AVAX project, what coins the Avalanche ecosystem includes, what the Avalanche token is and what outstanding advantages from the Avalanche network are worth investing in or not.

1. WHAT IS AVALANCHE?

Avalanche is an open-source platform designed for launching decentralized applications (dApps) with scalability and interoperability within a unified ecosystem. To answer the question “What is Avalanche?”, the Avalanche Network describes itself as “an open-source smart contract platform for decentralized applications.”

Avalanche is compatible with Ethereum’s Solidity programming language, allowing users to deploy customized private or public blockchains known as subnets. Essentially, an Avalanche Subnet is a group of validators that work together to reach consensus on one or multiple blockchains within the Avalanche Ecosystem.

1.1. Advantages of Avalanche

Avalanche Network is designed to address the limitations of earlier blockchain technologies. Some of its key advantages include:

• Speed: Avalanche utilizes a new consensus mechanism based on Proof of Stake (PoS), developed by a team of computer scientists from Cornell University. As a result, transactions on Avalanche Network are confirmed in under one second.
• Scalability: The Avalanche Network can process up to 4,500 transactions per second (TPS), which is significantly higher than most existing blockchains.

• Security: The Avalanche Network ensures a higher security standard compared to the 51% security threshold seen in other blockchain networks.
• Flexibility: Users can customize and launch their own public or private blockchains and decentralized applications (dApps) on Avalanche.
• Designed for Financial Applications: The Avalanche Ecosystem is described as a smart contract platform, supporting Ethereum-based tools like MetaMask, Remix, Truffle, and more. Additionally, Avalanche Network helps users easily create and trade digital assets.

The advantages of the Avalanche Network come from its unique architecture, which divides the network into three separate blockchains. This structure optimizes flexibility, transaction speed, and security. A detailed explanation of these three blockchains will be covered in the next section.

1.2. Development team and investors of Avalanche network

In May 2018, a group of software developers known as Rocket Team published a white paper on the Avalanche protocol. Following this, Emin Gün Sirer, who is now the CEO of the Avalanche Ecosystem, founded AVA Labs with the goal of developing and expanding the Avalanche blockchain.

Not only does AVA Labs have a team of top computer scientists and software engineers with experience at major tech corporations like Google, Microsoft, etc., but it is also backed by leading financial and technology companies worldwide.

In addition, the advisory board for the Avalanche Network includes Maureen O’Hara, a Professor of Finance at Cornell University, and Adam Kravetz, the Executive Director of Seven Eight Capital, ETF Market Making and Arbitrage, Citadel Securities, and Tower Research Capital.

2. WHICH COINS ARE IN THE AVAX ECOSYSTEM?

Currently, the Avalanche ecosystem consists of around 182 projects, including decentralized finance (DeFi) projects, exchanges, and the Avalanche Bridge (a cross-chain connectivity mechanism), among others.

The Avalanche Platform is integrated with three blockchains including: Exchange Chain (X-Chain) – Exchange Chain, Platform Chain (P-Chain) – Platform Chain and Contract Chain (C-Chain) – Contract Chain. All three blockchains are authenticated and secured by the Avalanche Primary Network. Primary Network (main network) is also a special subnet in which all components that make up custom subnets are also members of the Primary Network thanks to Avalanche Staking 2000 AVAX tokens.

2.1. Exchange Chain (X-Chain)

The Exchange Chain (X-Chain) functions as a decentralized platform for creating and exchanging digital assets. These assets can represent real-world financial instruments such as stocks, bonds, and securities, governed by a predefined set of rules. Transaction fees on the Avalanche network are paid in AVAX tokens.

2.2. Platform Chain (P-Chain)

The Platform Chain (P-Chain) is responsible for coordinating validators and creating subnets within the Avalanche Network. It utilizes the Snowman consensus protocol for enhanced security and efficiency.

2.3. Contract Chain (C-Chain)

The Contract Chain (C-Chain) is designed for smart contracts, leveraging the C-Chain API to deploy and execute Ethereum-compatible contracts. Like the P-Chain, it is secured by the Snowman consensus protocol, ensuring scalability and fast transaction speeds.

3. WHAT IS AVALANCHE COIN?

Similar to other decentralized protocols, Avalanche Network has its native token called AVAX.

3.1. Uses of Avalanche Token (AVAX)

Users can utilize AVAX tokens for various purposes, including:

• Payment of fees: All fees on the Avalanche Network will be paid in native token AVAX coin. So to be able to use and connect to the Avalanche network you need to have an amount of AVAX coins in your wallet. The fee structure in the Avalanche platform carries a number of distinctive features that differentiate it from other existing and upcoming platforms. You can refer to some types of fees in the Avalanche ecosystem.

• AVAX Staking: You can also earn money from AVAX coin by staking AVAX tokens. Rewards from the AVAX staking process directly on the Avalanche network can be used for quick peer-to-peer transactions, creating new blockchain subnets, decentralized storage, etc. When staking a minimum of 2000 AVAX coins, you will also become a validator in this network.

3.2. Key information about AVAX and token allocation

Through its ICO event in July 2020, the Avalanche Network successfully raised $42 million. Below are the key details about the AVAX token:

• Token Name: AVAX
• Total Supply: 720,000,000 AVAX
• Circulating Supply: 360,000,000 AVAX
• Token Type: Native, Utility
• Blockchain: Avalanche

Note: User fees in AVAX coins will not be paid to any validator. Instead, we will burn according to the coin burning mechanism, increasing the scarcity of AVAX coins.

AVAX tokens are distributed as follows:

• Avalanche Staking Rewards: 50%
• Airdrop Programs: 2.5%
• Strategic Partnerships: 5%
• Seed Sale: 2.5%
• Founding team: 19.26%
• Public Sale: 10%
• Community & Development Team: 7%
• Private Sale: 4%

Additionally, Avalanche Network has also developed the Avalanche launchpad – a fundraising platform for projects powered by the Avalanche blockchain.

3.3. What is the Avalanche Roadmap Update?

The Avalanche Testnet was announced in April 2020. By September of the same year, the Avalanche Mainnet was launched along with the release of all three Avalanche Chains. Prior to that, in August, the Everest Mainnet was the final test version, adding support for Avalanche NFT marketplaces, and the smart contract utility was also announced.

The Avalanche Roadmap 2022 has not yet been officially updated on the Avalanche Network’s homepage.

4. HOW TO BUY AVALANCHE TOKEN (AVAX)

Currently, the Avalanche AVAX token has been listed and is available on many leading cryptocurrency exchanges such as Binance, OKEx, Huobi Global, etc. To purchase it on these exchanges, you need to open a trading account and deposit funds into the exchange wallet, typically by depositing USDT.

Then, navigate to the spot trading section or search for Avalanche Coin on Binance by typing “AVAX” into the search bar. The system will display the available trading pairs, and you should select AVAX/USDT. Enter the quantity you want to purchase and click “Buy AVAX”. Once your purchase is successful, the tokens will be credited to your Spot Wallet.

Another way to buy AVAX coins is through Pangolin DEX – a decentralized exchange platform supported within the Avalanche Ecosystem. Built on Avalanche, Pangolin offers extremely low fees and fast transaction speeds thanks to the AMM (Automated Market Maker) mechanism.

4.1. Where to Store AVAX?

A secure wallet for storing AVAX is always a key concern for traders, along with questions like “What is Avalanche?” or “Should I buy AVAX tokens?”. You can store AVAX coins directly on the exchange wallet or transfer them to electronic wallets supported by the Avalanche Ecosystem, such as Metamask, Trust Wallet, etc. Additionally, you can create and use an Avalanche Wallet, or if you plan to hold AVAX long-term, consider using cold wallets for enhanced security.

To connect Metamask with Avalanche Network, follow these settings:

• Network Name: Avalanche Network
• New RPC URL: https://api.avax.network/ext/bc/C/rpc
• ChainID: 43114
• Symbol: AVAX
• Explorer: https://snowtrace.io/

4.2. Evaluating the potential of the Avalanche ecosystem

Although it has been in the blockchain industry for less than two years, the Avalanche project has experienced exceptionally rapid growth. Investors are eagerly anticipating new features on the Avalanche Network.

Not only do the well-known features of the Avalanche Ecosystem contribute to the uniqueness of this project and the AVAX token, but its strong partnerships and listings on top cryptocurrency exchanges also enhance investor confidence in this project.

5. CONCLUSION

With the insights provided in this “What is Avalanche?” article, we hope you now have a comprehensive understanding of the Avalanche Network, Avalanche Ecosystem, and how to buy AVAX tokens. As for the questions “Should I buy AVAX?” or “Is Avalanche safe?”, by now, you’ve likely found the answer for yourself.