What Is Avalanche (AVAX): How Does It Work?

The launch of the Avalanche main network took place on September 21, 2020, and after only 14 months, the coin entered the top 10 largest crypto coins by market cap. The secret of the platform’s success lies in the new approach to network scaling, which partially solves the problem of its main competitor, Ethereum.

Initially, the developers set out to solve the problem of synchronizing various protocols for decentralized applications and offer the cryptocurrency community a product that can compete with Ethereum. Over time, the platform has become an ecosystem with unique approaches to consensus algorithms and technologies.

Today, we have prepared a guide where you will learn what Avalanche meaning is and whether it is worth buying. Let’s get started!

AVAX Definition: What Is Avalanche?

What is Avalanche? Avalanche is an open-source platform for developing decentralized applications, which aims to address the blockchain trilemma of scalability, security, and decentralization via its unique Proof-of-Stake (PoS) mechanism. Avalanche is known for its fast transaction processing time — it can process about 4,500 transactions per second (TPS).

What is AVAX? AVAX is the 16th-ranked cryptocurrency by market cap and the project’s native token, used to pay transaction processing fees and secure the network.

The Avalanche platform consists of the primary network and unlimited additional subnets. The primary network consists of three blockchains:

- Platform Chain (P-Chain) is a blockchain for storing metadata. Also, its function is to control validators, coordinate their actions, and control subnets.

- Contract Chain (C-Chain) is a blockchain that allows the creation of Ethereum-compatible smart contracts and serves to convert existing dApps on Ethereum to the Avalanche blockchain.

- Exchange Chain (E-Chain) is a blockchain with tools for exchanging information between subnets and creating NFTs.

Avalanche subnets are similar to layer-2 (L2) solutions, which are applications and add-ons on top of the main blockchain that allow solving the scaling problem. Any user who pays a fee of 0.01 AVAX can create a subnet. In other words, subnets are additional blockchains for independent decentralized applications in which users can include any conditions — for example, requirements for validators or mandatory compliance with the KYC policy.

History of Avalanche (AVAX)

The first mention of the platform appeared in May 2018. At that time, the startup existed as a formed idea and a shell that had to be filled with technologies. In 2019, the first version of Snowflake to Avalanche, its own consensus algorithm, appeared on the platform website. The first private sale of coins took place at the beginning of 2020 — then, the developers raised $12 million. A later public offering brought $42 million to the developers. The full launch of the network took place in September 2020.

Avalanche (AVAX) Vs. Ethereum (ETH)

Avalanche is one of Ethereum’s main competitors and yet another attempt to offer a solution to the blockchain trilemma. The essence of the trilemma is that a network developer is forced to sacrifice one of the three pillars of the blockchain: scalability, decentralization, or security. In contrast to Ethereum, Avalanche implements an idea similar to L2, sidechains, and parachains.

Avalanche Vs. Ethereum

Features	Avalanche (AVAX)	Ethereum (ETH)
Launch year	2020	2015
Transaction processing speed	4,500 TPS	15 TPS
Security	1,000 validators	280K validators
Volatility	75%	50%-60%

Avalanche outperforms Ethereum in terms of theoretical parameters and is significantly inferior to it in practical use. The developers only declare many superior network features, which still need to be tested in practice. Ethereum, as an older platform, on the contrary, is slowly but surely moving forward, convincing users with practical results.

What Is Avalanche (AVAX) Used For?

So, what is Avalanche used for? Avalanche addresses three issues: scalability, transaction fees, and interoperability. With fast transaction processing, the platform has relatively low commission fees — the network itself sets a gas tariff and a cap on the gas tip. Also, the platform’s advantage is a solution with subnets and custom blockchains, combining security, speed, and compatibility.

Ethereum solutions did not always fit users’ needs, while Avalanche has several blockchain compatibility options for users to choose from. Therefore, recently, a lot of decentralized applications have switched from Ethereum and other networks to a more flexible and customizable Avalanche network.

What about the AVAX meaning? Well, AVAX acts as a native token within the platform, which serves for internal settlements between subnets and payment of a commission. In other words, AVAX is used in all applications deployed on Avalanche. How does AVAX work? Investors can use AVAX for long-term investment, staking, or short-term speculative transactions.

Avalanche (AVAX) Overview

AVAX Price	$17.88
AVAX Price Change 24h	-4.86%
AVAX Price Change 7d	-6.64%
AVAX Market Cap	$5,838,657,415
AVAX Circulating Supply	326,642,099 AVAX
AVAX Trading Volume 24h	$309,182,817
AVAX All-Time High (ATH)	$146.22
AVAX All-Time Low (ATL)	$2.7888

How Does Avalanche Work?

The platform is based on its own consensus algorithm, which includes three mechanisms: Avalanche, Snowman, and Frosty. The principle of the Avalanche algorithm is to process transactions in parallel. Validator requests are sent to each other on a selective basis without additional confirmations. Avalanche has no blocks, and the algorithm works with basic transactions, i.e., vertices. This allows validators to form groups of transactions for voting, which takes place in several stages.

So, how does Avalanche work in practice? One of the sources provides an illustrative example showing the principle of confirming or rejecting transactions. The goal is a collective choice by nodes (computers connected to the network) of yellow or blue. Nodes choose a color at their own discretion, after which they ask each other’s opinion. If a node’s decision differs from the majority’s opinion, a node changes the decision. For example, a node chooses yellow and sends a request to five other random nodes. Since most of them are blue, a node determines the correct solution as blue.

Collective selection of yellow or blue by nodes

Such a process takes place until all nodes make a single decision. There are time limits for making a decision — this allows filtering out slow nodes and speeds up a decision-making process.

Snowman is a consensus algorithm built on top of the Avalanche algorithm. The difference is that a linear mechanism with block formation is used instead of parallel transaction processing. This increases network throughput.

Avalanche Price Today

Even though the current value of AVAX is far below its ATH of $146.22, the token has already shown significant promise. Over the past month, the coin has increased by 2.21% in price. By 2026, the price of AVAX is expected to cross the $89.73 mark. Like most other cryptocurrencies, the coin is highly volatile. Still, since the founding of the Avalanche network, AVAX has shown steady growth.

Should I Buy Avalanche (AVAX)?

As mentioned before, Avalanche benefits from its unique technology for building blockchains and achieving consensus within networks. Approximately $13 billion owned by decentralized applications of the DEX and DeFi sectors are locked up on the platform. The most famous among them are Aave and Trader Joe. In November 2021, investment funds Polychain Capital, Three Arrows Capital, Dragonfly Capital, and CMS Holdings invested $200 million in Avalanche.

The willingness of investors to invest in the platform’s development speaks of the ecosystem’s prospects. Still, Avalanche has a few risks. The first is the recent transition to Ethereum 2.0 and the emergence of competitors with no less unique technologies. The dApps platform segment remains popular amid the explosive growth in the number of applications in the GameFi, DeFi, and NFT sectors that developers are fighting for. And whether Avalanche can withstand tough competition is still under question. The second risk is a stagnation of the entire market, which AVAX automatically follows. For this reason, a coin can lose 50%-75% of its value.

Where to Buy Avalanche (AVAX): Switchere Exchange

If you’re wondering where to buy Avalanche tokens, you should definitely think about buying them at Switchere. On our platform, you have an opportunity to buy AVAX in the fastest and most convenient ways. Moreover, we offer some surprising bonuses! Users of our platform enjoy a 0% service fee for the first order.

At Switchere, you can buy crypto for fiat money or swap crypto for crypto. In addition to traditional purchases with a bank card, you can use alternative payment methods available (SEPA, SOFORT, Apple Pay, Google Pay, and local Asian banks)

Here is an easy step-by-step guide on buying AVAX at Switchere!

- Visit our website and log in to your account.

- Choose the currency pair for exchange as well as a payment method and enter the amount. Don’t forget to check the transaction details by clicking on ‘Details.’ Once you’ve done, click the ‘Buy’ button.

- Specify your Avalanche wallet address and click on the ‘Buy’ button.

- Enter your card details and click on the ‘Pay Now’ button. Please take into account that you have a limited amount of time to send your funds. Elsewise, the transaction will be canceled automatically.

- Once you send the funds and your transaction receives the required number of blockchain confirmations, the amount of purchased AVAX will be sent to your provided wallet address accordingly.

- Congratulations! The transaction is completed, and now you can check your Avalanche wallet.

Usually, Switchere transactions take 5-30 minutes. If you have any issues with the exchange process, let us know at [email protected].

Conclusion

Avalanche is a promising startup, provided its team further develops the ecosystem’s unique technology. Its advantage is a non-standard approach to the Avalanche consensus algorithm and marketing policy. The fact that the platform attracted large investors and dozens of dApp developers speaks of trust.

Still, investing in cryptocurrencies is always associated with high risks. Avalanche is a very volatile asset, so you need to be careful when investing in it. Set aside in advance the amount of money you afford to lose. Buy several AVAX coins to analyze their price behavior and market performance. This will allow you to thoroughly understand whether investing in this cryptocurrency aligns with your investment goals.

We hope our detailed guide to Avalanche (AVAX) has helped you understand what the AVAX definition and Avalanche definition are all about and how this cryptocurrency works.