Avalanche is a newer blockchain network that competes with the likes of Ethereum and Solana. Its supporters hail it as fast, cheap, environmentally friendly, and able to support smart contracts. Avalanche’s native token, AVAX, was one of the strongest and most volatile performers in 2021, rising to a market cap of $30 billion in November—before crashing to $5 billion in June 2022.
As is the case with other would-be “Ethereum killers,” the appeal of Avalanche for many is its ability to process many transactions cheaply and efficiently while also being able to handle smart contracts—a tool that lets anyone run programs on the blockchain.
Transaction fees, paid in AVAX, are generally under a dollar, and take only a few seconds to go through. This is much faster and cheaper than Ethereum, though the latter remains far more popular.
The Avalanche network is composed of three chains: the X-Chain, for creating and exchanging assets; the P-Chain, for coordinating validators, and the C-Chain, on which developers create smart contracts.
Avalanche’s founding team, led by Cornell computer science professor Emin Gün Sirer, hoped that splitting the network across three chains would help it grow without slowing down. Avalanche is compatible with the Ethereum Virtual Machine, making it attractive with developers who want to relaunch their Ethereum DeFi projects on Avalanche with little extra effort.
As a result, many familiar protocols from Ethereum, such as Aave and Curve, are also available on Avalanche. The network has its own protocols, too, such as decentralized exchange Trader Joe and yield aggregator Yield Yak.
A company called Ava Labs is the primary architect of Avalanche. In September 2021, Ava Labs raised around $320 million in funding, with the majority of that—around $230 million—coming from the failed hedge fund Three Arrows Capital.
Avalanche relies on a proof-of-stake consensus protocol, Snowman, that powers the C-Chain and the P-Chain. The network’s largest DeFi protocol is now lending project Aave. In May 2023, Avalanche’s market cap was around $5 billion.
Go deeper:
Avalanche’s white papers
See also:
What Is Solana?
What is DeFi?
What are bridges?
Try it:
Avalanche Wallet—Avalanche’s official crypto wallet
Trader Joe—a popular decentralized exchange on Avalanche