What is Avalanche ? $AVAX Explained
https://www.youtube.com/watch?v=aDULaAnCkIk
Transcript:
Hello and welcome to a new Cryptomatics episode. In this video, I will tell you about the Avalanche blockchain, how it works, and what the goals of this project are. Before that though, if you are interested in being the first to find out when we publish a new video, don’t forget to subscribe and turn on notifications.
For the latest news and reviews of the crypto space, you can also find us on our other YouTube channel CryptoRobin. What is Avalanche and how did it appear? Avalanche is a blockchain that operates using smart contracts with a focus on fast transactions, small fees, and doing everything as eco-friendly as possible.
It allows the creation of new blockchains and apps, offering scalability, interoperability, and decentralization. Proposed in 2019 by Dr. Emin Gün Sarer, AppLaunch came to be from the premise that it could manage to offer the fastest time for finishing a transaction on blockchain. The mainnet was launched in September 2020 by the Ava Labs team.
The token had the fastest sent in the ranking of most popular cryptocurrencies and in 2021 is already sitting close to the top 10. Similarly, the TVL of Avalanche grew a lot thanks to dApps as well. Basically, what Avalanche hopes to offer is an extremely scalable blockchain that doesn’t sacrifice decentralization or security.
Technical particularities of Avalanche The Avalanche network is made out of multiple blockchains and uses a proof-of-stake consensus mechanism for a high output of about 4,500 transactions per second. Avalanche differs from other blockchains as a result of the fact that The project describes itself as a platform of platforms since it consists of thousands of subnets that work together to form one secure and interoperable network.
The basis is made out of a primary network and three other separate blockchains, but they are all connected in this network. Every chain is a separate instance of a virtual machine with support for other customizable virtual machines like Ethereum Virtual Machine and WebAssembly, which allows chains to have specific functionalities.
Therefore, each of these virtual machines is implemented in a personalized blockchain known as a subnet that is made out of a dynamic set of validators working together to achieve consensus on the state of a set of blockchains. In other words, each subnet has its own stimulation mechanism set to make sure that validators remain honest.
The Avalanche Architecture Aside from primary network, Avalanche has three blockchains. X-Chain, short for Exchange Chain Its main goal is creating and transacting crypto assets, including the native token of Avalanche, AVAX. This blockchain is secured by the DAG-optimized Avalanche protocol. P-Chain, short for Platform Chain This is a blockchain that is responsible for coordinating, validating nodes and supervising all subnets.
This allows the creation of new personalized blockchains or subnets that are narrower. C-chain, short for contract chain. Its main target is creating smart contracts. The last two blockchains I’ve mentioned are secured by the Snowman protocol. A blockchain in the ecosystem can be validated by only one subnet, which, in turn, can take part in validating several blockchains.
This is also true for validating nodes that can be a part of multiple subnets. Because Avalanche has the possibility of creating this kind of scalable blockchains and offering them interoperability, one could say that the decentralization process is highly advanced, almost complete. How does validating transactions work on Avalanche? As I was saying, Avalanche uses a proof-of-stake consensus mechanism, and its specific version was selected by Ava Labs.
The protocol used for exchange chain is known as Directed Acyclic Graph and allows the parallel processing of transactions. Unlike traditional blockchain technology, this protocol doesn’t create new blocks. Instead, each new transaction validates the older ones, generating so-called verse seeds. This results in graph-type structures, not chains made out of blocks.
The protocol used for the other two blockchains is called Snowman. This one works following the traditional model, aka by creating new blocks that are added to the blockchain. During the validation process, nodes interrogate each other regarding the legitimacy of the proposed transactions until a consensus is breached.
A validating node must own at least 2,000 AVAX. The more units it has on staking, the more frequently it will be interrogated by the other nodes regarding the validity of transactions. If a node is identified as being a bad actor, it won’t lose its staked tokens, as it happens with blockchains that use the slashing procedure.
Instead, its rewards are cancelled, which leads to a higher transaction speed. If you’d like to know more about slashing, don’t forget we also have a video on it. Utility of the AVAX Token AVAX is the native token of the Avalanche blockchain, and from an economic perspective, it is placed right in the center of the ecosystem.
The total supply will go down as a result of token burning, which is why the interest over the project will always remain directly proportional to the value of AVAX. The token is mainly used for paying network fees and for staking. Generally, the token will play a role in just about any operation on the platform.
Taking this into consideration, we can see we are dealing with a deflationary model, which offers the token more stability. By the end of 2021, over 50% of the AVAX circulating supply will be staked. What else does the Avalanche system include? Pangolin, a decentralized exchange that works as an AMM.
The Avalanche Ethereum Bridge. This way, Avalanche is compatible with Ethereum, facilitating the transfer of ERC-20 tokens. Dapps Ethereum, facilitating the transfer of ERC-20 tokens. Among the best known are BZX, Prosper, JellySwap, Union, eMoney, Reef, and Frontier. What advantages and disadvantages does Avalanche have? Among the advantages of Avalanche, these are A high transaction speed.
With a rate of up to 4500 TPS, it doesn’t surpass Solana, but it is still a highly notable advantage. Decentralization It can be deducted by looking at the age of the project per number of validators. Interoperable blockchains Their number can be unlimited, which places the project in direct competition with Polkadot. Plus, Avalanche includes interoperability with the Ethereum ecosystem.
No cost of energy, thanks to the proof-of-stake consensus mechanism implemented. The disadvantages of the platform are Decentralization could be something temporary. With the AVAX price going up, it became more difficult to create a new validating node with 2,000 AVAX. Prices could go up Although initially the commission fees for transactions were very small, 2021 brought some higher costs as well.
Transaction security This was doubted in February 2021 due to speculation that there isn’t any actual guarantee for conflicting transactions. This also came to be discussed as a result of a bug that let validators accept transactions that weren’t valid, but the rest of the network turned them down, which led to the temporary blocking of the C-chain.
Conclusions Avalanche is a worthy rival for Ethereum 2.0 and Polkadot as it uses its own proof-of-stake consensus mechanism that is highly efficient and which, for now, offers scalability and decentralization. Many DeFi platforms are already looking at alternatives for Ethereum, which is why blockchains like Avalanche are attractive thanks to their compatibility with EVM and Lo-Fees.
Still, DeFi platforms already have a long list of alternatives when it comes to scalability and speed. Avalanche grew in popularity since it was released, but it has yet to prove that it could truly stand out at a higher level like blockchains such as Solana or Polygon. I hope you enjoyed today’s video and if you have other questions about Avalanche, don’t hesitate to tell us in the comment section.
So much for today, don’t forget to subscribe to the Cryptomatics channel if you want to stay up to date with the latest DeFi concepts.
What is Avalanche Network and How Does it Work?
https://www.youtube.com/watch?v=4GIsieFUXMw
Transcript:
With the growth of interest in crypto and DeFi, many new blockchain platforms launched to provide different solutions to problems faced by Ethereum 1.0. Mainly, its inability to cope with congestion of the network resulting in slow and expensive transactions. In 2020, Ava Labs presented a network called Avalanche.
Made up of three primary blockchains, the network has the capacity to complete transactions in seconds, is able to scale, and has high security guarantees. Let’s take a closer look at what exactly makes Avalanche so innovative and special. Avalanche is a proof-of-stake blockchain that uses its own consensus protocol and data structure.
Let’s take a simple example of what the avalanche consensus looks like. Imagine you are in a room full of people who need to decide what to order for lunch. People are faced with the binary choice of ordering pizza or barbecue and everyone has an initial preference. The goal is to reach consensus.
Each person goes around and asks a random subset of the people about their preferences. If more than half of the people want pizza, the person starts leaning towards pizza too. In other words, that person adopts the preference of the majority. Everyone repeats this process several times, and each time, more people lean toward pizza. And the more people choose pizza, the more likely others will start leaning toward that option. After enough rounds of polling, a consensus is reached.
Let’s move the analogy from pizza and barbecue to blockchain. This is how the Avalanche consensus protocol works. Until a node has decided on whether to include a transaction into the network, Avalanche queries 20 other nodes and asks their opinion. Those 20 nodes queried are referred to as the sample size.
If at least 14 nodes or the quorum size give the same response, that response is adopted as the new preference. For the final decision to be made, the node must receive the same quorum response 20 times in a row. This number is referred to as the decision threshold. The sample size, quorum size, and decision threshold values are constant and quite small on Avalanche.
As the network evolves, the sample size value remains unchanged, which means the algorithm varies scalable and is referred to as subsampling. The number of consensus messages sent per node will remain the same, no matter how many participants there are on the network, and a node will query 20 nodes, even if there are thousands of nodes. Let’s move on to how Avalanche stores data.
One of Avalanche’s primary blockchains, called X-Chain, uses DAGG or the Directed Acyclic Graph System common in computer science and often used in artificial intelligence. If you look at Bitcoin or Ethereum, the blocks in these networks have one parent going before and one child going after, and each block depends on its parent block. Avalanche on the other hand, stores data in such a way that one network element can have multiple parents and multiple children.
In this diagram, you can see that vertex A goes before vertex B, vertex B goes before vertex D, and vertex C goes before vertex E so we can safely say that vertex A goes before vertex E. However the ordering here is partial and it’s undefined for some elements.
For example we cannot definitely say whether vertex B is before or after vertex C. But what exactly are we talking about when we talk about vertices? Vertices on Avalanche can be compared to blocks in a linear blockchain. However, here they are one of the most important optimization tricks. Vertices contain their parents’ hashes and a list of transactions, and allow transactions to be batched and voted on in groups, rather than each one individually.
And this is where we get to another big idea of Avalanche, called Transitive Voting, that provides the network with high throughput. When a node receives a vote for a vertex, that vote counts for all transactions within that vertex and is applied transitively upwards, to all preceding vertices. Thus, each vote is effectively many votes in one.
If a vertex contains a transaction that has been rejected, then the entire vertex and all its descendants are rejected, and all valid transactions of that vertex are re-issued into a new vertex. But then, how does Avalanche support protocols written for linear chains such as Ethereum? A chain optimized consensus protocol called Snowman was developed for this purpose.
Smart contracts, ERC20 tokens, NFTs, and Dapps are supported through the Snowman protocol, which is a subset of the Avalanche protocol, but with each vertex having only one parent, giving full vertex ordering. Avalanche is considered to be one of the fastest smart contract platforms in the industry and has over 1,300 validators securing the platform and processing transactions.
