What Is Avalanche (AVAX) and How Does it Work?

Avalanche (AVAX) is a fast-growing blockchain network that has been gaining popularity over the years. Currently, Avalanche holds over $900 million in value across its network, making it one of the leading blockchains in this space.

But what exactly is Avalanche, and why is it important? In this article, we'll break down everything you need to know about Avalanche and how it works.

What Is Avalanche (AVAX)?

Avalanche is a high-performance Layer 1 (L1) blockchain that leverages the unique Avalanche Consensus mechanism and Subnets to scale without sacrificing decentralisation or security.

As one of the fastest consensus mechanisms in the crypto market, Avalanche Consensus features low latency and achieves transaction finality in less than 2 seconds. It is compatible with the Ethereum Virtual Machine (EVM), offering developers fast decentralised application (dApp) deployment and interoperability with other EVM chains.

Powering the Avalanche ecosystem, AVAX is the project's native token that has a maximum supply cap and serves a wide range of use cases within the network.

How much is 1 AVAX in USDC?

As of today, 1 AVAX = 0.000000 USDC.

Market data last updated: Oct 9, 2024, 04:59 AM (GMT)

The History of Avalanche

Avalanche's history dates back to May 2018, when a pseudonymous group of developers called Team Rocket first shared its fundamentals on the InterPlanetary File System (IPFS).

Soon after, Emin Gün Sirer, a professor of computer science at Cornell University, and other researchers founded AVA Labs, the organisation that built and developed the Avalanche blockchain.

In September 2020, Ava Labs launched the Avalanche mainnet and rolled out the native AVAX cryptocurrency. A year later, the organisation completed a private sale round in which it raised $230 million of funds from VCs like Polychain and Three Arrows Capital.

How Does Avalanche Work?

To understand how Avalanche works, it is necessary to take a look at three key components of the ecosystem:

1. Avalanche Consensus: Avalanche Consensus is a unique algorithm that combines features of Nakamoto and classical consensus mechanisms to become scalable, robust, energy-efficient, and decentralised with high throughput and fast finality.

2. Subnets: Avalanche has a multi-chain architecture, in which Subnets form sovereign networks. Subnets can define their own rules for tokenomics and membership. They consist of a dynamic subset of Avalanche validators, who collaborate to validate blockchains within the ecosystem.

3. Primary Network: As a heterogeneous network of blockchains, Avalanche allows developers to create separate chains for different applications. The Primary Network is a special Subnet where three different blockchains operate: the Contract Chain (C-Chain) that executes EVM smart contracts, the Platform Chain (P-Chain) that coordinates validators and creates Subnets, and the Exchange Chain (X-Chain) that creates and exchanges assets.

The Primary Network and all in-production Subnets form the Avalanche Mainnet, the production-ready main network where real transactions and smart contract executions take place.

AVAX Tokenomics

AVAX is the native cryptocurrency of the Avalanche ecosystem. In what follows, we have collected the most important information about its market supply, utility, and price history.

Market Supply

AVAX initially had an initial maximum supply cap of 720 million coins, which later decreased to 715.75 million AVAX. The reason for the drop is that the network is burning all gas fees that would have otherwise been paid to validators.

As of September 10, 2024, AVAX's circulating supply stands at a little more than 405 million tokens, which increased over time from the 360 million coins minted at genesis.

Utility

AVAX is both a governance and a utility token. Its use cases range from participating in community governance and paying transaction fees to ensuring the ecosystem's security through staking.

Price History

Source: CoinMarketCap

AVAX has an all-time return on investment (ROI) of 405%. The cryptocurrency's price increased from $4.71 on September 26, 2020 to $23.79 on September 10, 2024.

However, AVAX's price took a hit in 2024. Since January, the digital asset's value jumped from $41.87 to as high as $60.69 on March 19 just to drop to $23.79 on September 10. AVAX's year-to-date (YTD) ROI is currently standing at -43.18%.

That said, as the crypto market is preparing for the next bull run, there's a chance that AVAX's price will recover a part or all of its losses by the end of the year.

Buy AVAX on VALR

Avalanche is a high-performance Layer 1 blockchain ecosystem formed by the Primary Network and sovereign Subnet networks. It ensures scalability, decentralisation, and security through the unique Avalanche Consensus mechanism.

Avalanche is powered by the native AVAX token, which you can buy on VALR with South African rands (ZAR), Bitcoin (BTC), EURC, First Digital USD (FDUSD) and USDC to gain exposure to the Layer 1 blockchain.

Stake AVAX on VALR

If you're interested in getting involved beyond just holding AVAX, why not stake it on VALR? Staking AVAX can help secure the network and earn you hourly rewards, with no lock-up periods.

Frequently Asked Questions (FAQ)

• Which companies use Avalanche?

  Companies like Lemonade, Deloitte, Dreamus, Intain, Gunzilla, Shopify, and Blocktivity utilise Avalanche for a wide range of use cases.

• Does Avalanche burn coins?

  Yes, the Avalanche network automatically burns the AVAX users spent on transaction fees, which has decreased the amount of tokens that are currently in circulation.

• At what price was AVAX launched?

  When it started trading in the crypto market, AVAX's price stood at $4.71 on September 26, 2020.

• How many Avalanche coins are there?

  Avalanche has a maximum supply of 715.75 million AVAX. Currently, a little more than 405 million AVAX is in circulation, with more tokens to enter the market over time until the maximum supply is reached.

Risk Disclosure

Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate.

VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).

Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.