AVAX, the Ethereum Killer: What You Need to Know
AVAX, which is a token run on the Avalanche blockchain, is said to be the Ethereum killer. Click here to find out what you need to know.
Since cryptocurrency began back in 2011, there have been two coins that have been leading the game. Bitcoin, the first digital coin, and Ethereum, which is currently second behind Bitcoin with a price of around $1,000. Both coins have been revolutionary in their own right.
While Bitcoin kicked off the age of digital finance, Ethereum has been innovative in its move towards a more eco-friendly, sustainable blockchain with its ongoing merge into Ethereum 2.0.
But, as is typical of the cryptocurrency market, it doesn’t take long for a new kid on the block to change the state of play. In this instance, the new kid takes the form of AVAX, which is ominously being dubbed the “Ethereum killer”.
The Origin Of AVAX
AVAX, which is a token run on the Avalanche blockchain, was born in much the same way as Ethereum. Back in 2011, co-founder of Ethereum, Vitalik Buterin, decided to create a white paper for the then-called Frontier, which took Bitcoin’s concept of the blockchain and transformed it into a platform which went further. Similarly, Avalanche was launched in response to Ethereum’s own flaws, rivalling its thriving DeFi ecosystem and smart-contract blockchain with their own new platform.
Specifically, AVAX was launched in contention with Ethereum’s slow transactions and steep token fees, promising instead to combine scalability and quick confirmation times through the Avalanche Consensus Protocol. For example, the Ethereum network currently allows for a rate of 14 transactions per second. Avalanche, on the other hand, is capable of 4,500 transactions per second. The network also provides developers and users with far lower gas fees, meaning those who invest in Avalanche can mint new tokens and create projects at a far smaller cost to them.
Since it went live in September 2020, creator Emin Gun Sirer has turned Avalanche into one of the world’s largest blockchains, with an approximate market cap of $33 billion and an $11 billion total value locked in its protocol.
How Does Avalanche Operate?
For AVAX, the Avalanche Consensus Protocol combines the benefits of both Classical and Nakamoto protocols, which is part of the reason its rise has been so fast. This means that Avalanche claims to have the best of both worlds, with a range of the most positive features from each protocol. These are as follows:
- High Decentralisation
- Low Latency
- High Throughput
Avalanche’s platform is split into three separate chains. The C-chain, the X-chain and the P-chain – which stand for contract, exchange and platform. The C-chain hosts the DeFi system, where users will carry out the majority of their transactions and create smart contracts using the C-chain’s API. The X-chain allows for the creation and trading of digital smart assets, and the P-chain coordinates validators and enables the creation of Subnets.
The native token for Avalanche, the AVAX, is capped at 720 million tokens. In the same way that Ethereum uses ETH to pay for gas fees, AVAX is also needed to pay for transaction fees on the network, with its fee algorithms based on the original dynamic gas fee model. As well as this, AVAX can be staked to secure the blockchain and participate in the validation process. This is done through a POS mechanism, which is a far more eco-friendly and efficient method of validation. Users who stake at least 2,000 AVAX tokens can run validator nodes and subsequently receive token rewards, whilst those who do not own enough coins can join user pools to combine their assets together and become a single validator.
Is Avalanche Truly Killing Off Ethereum?
According to recent research, in the first quarter of 2022, Avalanche is said to have clocked 74% of Ethereum’s average transactions, with a potential to even surpass it in the second. With more Subnets (validators grouped together to achieve blockchain consensus) being created on the X-chain, it looks like Avalanche is certainly in line to nip at Ethereum’s heels, although it is unlikely that it will kill off the platform entirely.
The cryptocurrency market is largely influenced by word of mouth. Through social media and crypto communities, Ethereum has turned itself into one of the biggest and most famous crypto platforms, which is a position that will be hard for Avalanche to steal. As well as this, the price of Ethereum proves it is already one of the largest networks with a strong developer community, none of whom are likely to abandon the platform (especially with the merge into Ethereum 2.0 due to be completed in the next two years). There is also a huge amount of funding for Ethereum, which will be insurmountable for a platform as young as Avalanche.
So whilst Avalanche has certainly made its presence known in the market, it would be a steep, uphill battle to truly compete with the current blockchain leaders. It’s certainly heading in the right direction, but the amount of obstacles in its path makes it unlikely to reach the peak of Ethereum any time soon.
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