The crypto market has never experienced rapid growth as we have never seen before. Even with the current dip, the industry has now a total market cap of $1.41 trillion. The growing adoption of cryptocurrencies gave rise to lucrative investments in the market. One of these is the decentralized finance (DeFi) that has grown immensely with now a total value locked up of $54.07B according to DeFi Pulse.
Most DeFi projects are built on the Ethereum blockchain. But the finite block space and increasing volume of on-chain activity have resulted in high gas fees on the blockchain. Investors are now looking for alternatives that paved the way for the creation of other blockchain projects. Avalanche is now one of the fast-growing blockchain projects with a total market cap of $2,141,444,966 in recent data by Crypto.co. It aims to provide solution on the scaling and transaction finality challenges that remains a major concern for cryptocurrencies and DeFi markets. Before we delve more into how will Avalanche will address these concerns, let’s take a look at a brief introduction to the project.
The Genesis of Avalanche
Ava Labs was behind the creation of the Avalanche network and the AVAX, the native token of the Avalanche ecosystem. In June 2018, Ava Labs was founded by Emin Gün Sirer, a professor at the Cornell University, Kevin Sekniqi, and Maofan ‘Ted’ Yin. Both received Ph.D. in computer science at the Cornell University. Sirer’s first dip into cryptocurrencies was in 2002-2003. He contributed to a conceptual peer-to-peer virtual currency called “karma” with Vivek Vishnumurthy and Sangeeth Chandrakumar in 2003. Karma was the first cryptocurrency that uses a distributed mint based on proof-of-work.
Its release coincided with the 9/11 terrorist attack which made it difficult to get funds for the project. But his involvement in the cypherpunk movement and the cryptography mailing list made him an important figure in the crypto world. He was one of the first academics to become involved in Bitcoin and Ethereum. His research works were published on the Hacking Distributed. He is also a key member of the IC3 or the Initiative for Cryptocurrencies and Contracts, an initiative of faculty members at Cornell University, Cornell Tech, UC Berkeley, UIUC, and the Technion. His other contributions to the crypto world include:
- Provided solution to “self mining”, one of the biggest flaws in BTC (bitcoin)
- Developed security solution Bitcoin Covenants
- Created scaling solutions Bitcoin-NG
- Community research for the Ethereum community
In 2017, he founded bloXroute Labs, a blockchain distribution network (BDN) that utilizes a global network of servers optimized for network performance. The platform aims to provide a solution for blockchain scalability.
In February 2018, he presented his findings along with other academics about BTC (bitcoin) and ETH (ethereum) during the Genesis London Conference. He noted in his concluding remarks that “further research is needed to decentralise permissionless consensus protocols”. And this has set the scene for the creation of Avalanche, the blockchain platform with the biggest potential to unseat Ethereum. How? Let’s take a closer on how will Avalanche will make it possible.
The Rise of the Fastest Blockchain Network
Avalanche is referred to as ‘Blockchain 3.0’, an improved version of Blockchain 1.0 and 2.0 (referring to Bitcoin and Ethereum platforms). These cryptocurrencies use a PoW consensus mechanism that relies on miners to produce a new block. This slows down transaction speed since users need to wait for the miners to confirm transactions. Here’s what makes Avalanche stand out from these giants. Avalanche uses a heterogeneous network of many blockchains and validator sets which makes the confirmation faster than any other blockchain network. The tps for Bitcoin is 60 mins while Ethereum 2.0 is 6 mins. But with Avalanche sub is 1 second while also being able to process 4500 tps. Each transaction is immutable and completely irreversible. With this speed, Avalanche is undeniably the solution to the issue of scalability that’s been choking cryptocurrencies and the DeFi markets.
Now let’s take a look at the interoperability of the blockchain network. Most blockchains have their own specialization. Some were built for payment, smart contracts use, and IoT. But Avalanche, as a “platform of platforms” is consists of thousands of subnets creating a single interoperable network. It’s like a one-stop-shop where you can buy everything you need. Very convenient for users and developers alike.
The spike in gas fees on the Ethereum blockchain has been a major headache for investors. On May 11, the gas fee on the blockchain recorded an all-time high of more than $200 for token swap or adding and removing liquidity to a DeFi smart contract. In the Ethereum blockchain, the speed of transactions depends on the gas price set by the user. The more he pays, the faster the transaction. Transaction fees are then used to incentivize miners. But with Avalanche, as of now, the price fee is fixed and is not used as incentives for validators but is burned instead.
AVAX (Avalanche), the native token of the Avalanche ecosystem is also one of the most lucrative investments in the crypto market today. In July 2020, Avalanche raised a total of $42M during its ICO with its price at $0.5. In recent data by Crypto.co, AVAX is now at $12.33. Even with the currency dip, the price of the cryptocurrency has increased by more than 20 times its ICO price. The continued growth of the Avalanche ecosystem also increases the demand for the token. The surge in the demand will likely increase the price of the token as well. AVAX (Avalanche) is now being used as payment, staking, and utility in the platform.
According to reports, there are 150 customers and 50,000 investors that are using its issuance and compliance platform for digital securities. Currently, communities supporting the project have also grown tremendously. And to properly address the needs of their users and prospective investors, Avalanche has set up a community dedicated to a particular market. Each market has its own respective official Telegram group where they can interact with community managers using their native language which eliminates the language barrier. Here are the available communities Avalanche users can opt to join: Chinese, Dutch, Filipino, French, German, Hindi, Indonesian, Italian, Japanese, Korean, Nigerian, Portuguese, Russian, Spanish, Turkish, and Vietnam.
Partnerships have also poured in this year for the fastest blockchain network. With the rate of its growth, will it soon outclass ETH2.0? That is definitely something to watch out for.