AVAX Crypto Explained: Unleashing the Power of the Avalanche

Pedro Veiga, Kassandra DAO

Is Avalanche the new king of blockchain? Discover how it's outperforming Ethereum and unlocking exciting opportunities on Kassandra's Avalanche Social Index.


As most people in the industry already know, the Ethereum blockchain has some issues that make it hard for users to use it. The fees for very expensive and it can't handle many transactions per second (TPS) compared to other chains. Because of these problems, other blockchains have entered the scene, aiming to beat Ethereum by being faster and more scalable. These competing blockchains have earned the nickname "Ethereum Killers."

While it's unclear if one blockchain will completely take over the market, the term "Ethereum Killers" is used to describe any blockchain that focuses on scalability to outperform Ethereum in this area. These blockchains aim to offer faster transactions, lower fees, and better overall performance to address the limitations of Ethereum.

In this article, we'll explore the Avalanche blockchain—a promising contender in the search for a faster, more scalable, and user-friendly blockchain platform.


Source: Etherscan

What is Avalanche?

Avalanche stands as an open-source platform, offering an interconnected, decentralized, and remarkably scalable environment for building decentralized applications. Powered by a unique consensus mechanism, Avalanche has been specifically engineered to meet the demands of global finance, boasting near-instant transaction finality.

Avalanche is incredibly fast, processing transactions in less than 2 seconds with rapid finality. It's built for scalability, allowing developers to create application-specific blockchains or work on existing Subnets. It also boasts advanced security, scaling to thousands of validators without performance loss. Additionally, it offers flexibility in customization, allowing for permissionless and permissioned custom blockchains tailored to meet legal and jurisdictional requirements. 

How does Avalanche Work?

The Avalanche blockchain might seem complicated, but there are three main parts that make it stand out from other blockchains: its consensus mechanism, subnetworks, and the primary network.

Avalanche Consensus

To validate transactions and keep the network safe, blockchain needs a way for its nodes to agree on things, called consensus. Most blockchains use either Proof of Work (PoW) or Proof of Stake (PoS) for this.

Avalanche uses a unique consensus mechanism that builds on PoS. When someone starts a transaction, a validator node checks with a small, random group of other validators to agree on it. They keep doing this, talking with each other, until they all agree on the outcome. As a snowball grows from a single snowflake, a transaction can turn into an avalanche of agreements.

Source: Avalanche Documentation


Avalanche allows users to make their own specialized chains with their own rules. This is similar to how other blockchains scale, like Polkadot through Parachains and Comos with its Zones.

Subnetworks have groups of nodes that validate a set of specific blockchains. All subnet validators must also validate the main Avalanche network.


Source: Avalanche Documentation

Primary Network

Avalanche's Primary Network is a unique Subnet that operates three essential blockchains, each designed to address the limitations of the blockchain trilemma. This innovative design allows digital assets to flow seamlessly between these chains, serving various functions within the ecosystem.

  • The Exchange Chain (X-Chain): This is the default blockchain where assets, including Avalanche's native token AVAX, are created and traded.
  • The Contract Chain (C-Chain): Built on the Ethereum Virtual Machine (EVM), the Contract Chain facilitates the creation and execution of smart contracts. This compatibility with other blockchains enables Avalanche's smart contracts to interact with different networks through cross-chain interoperability.
  • The Platform Chain (P-Chain): The Platform Chain coordinates validators and offers the necessary infrastructure for creating and managing subnets, thereby enhancing the network's flexibility and adaptability.

Tokenomics - AVAX

AVAX is the native utility token of the Avalanche blockchain. It has a limited supply, making it a scarce asset used for various purposes within the ecosystem. AVAX serves as a means of payment for transaction fees, plays a crucial role in securing the network through staking, and acts as a fundamental unit of account across the multiple Subnets created on Avalanche.

At the beginning of the Avalanche blockchain, a fixed amount of 360 million AVAX tokens was set. However, a small number of AVAX tokens are continually minted as rewards for validators who demonstrate good behavior during their staking period. This minting process helps balance out the AVAX tokens burned through transaction fees. As of now, AVAX is still far from reaching its supply cap, so it will typically remain an inflationary asset.

It's worth noting that Avalanche does not penalize validators by taking away any portion of their already staked tokens, which is commonly referred to as "slashing”, even if they exhibit negligent or malicious staking behavior. However, validators attempting to harm the network are discouraged since they would expend their node's computing resources without receiving any rewards in return.

AVAX Token Distribution

A maximum of 720 million AVAX tokens have been set as the cap for the total supply. In the beginning, the initial supply was 360 million tokens. The distribution of these tokens is as follows:


Source: Avalanche Documentation

Final Message

Kassandra chose the Avalanche blockchain as the first platform to establish its presence. On Kassandra, users can gain exposure to the scalability and interoperability narrative through our Avalanche Social Index (aHYPE) or other community pools like Best of Avalanche pool. This pool tracks the most socially active tokens within the Avalanche blockchain, including AVAX.

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