24 November 2021: One of the fastest rising projects within the emerging crypto-web3 economy is the Avalanche Network. Avalanche was designed to be the base for custom blockchains and decentralized applications (dApps). The network was built to incorporate a high degree of network speed, security, and decentralization. This article will provide a look into the Avalanche Network, its native token AVAX, and its role in the future development of DeFi.
Exploring the Avalanche Network
Avalanche is a novel, smart contract-capable blockchain platform that operates over multiple blockchains and subchains to provide extremely fast transaction processing times, a robust consensus engine, and uncompromised security and decentralization. Avalanche aims to be the key solution for institutions, enterprises, and governments looking to enter the world of DeFi.
The Avalanche Network has three distinctive use cases:
- Builidng application-specific blockchains and sub-chains for both private and public usage
- Building and hosting an array of dApps
- Building smart assets (i.e. novel financial derivatives and DeFi solutions)
To facilitate the creation, transfer, and trading of various digital assets, Avalanche has been designed to uphold the following traits:
- Highly scalable through interoperability and industry-leading transaction processing times
- Security through a combined classical & Nakamoto consensus model
- Decentralization through the participation of all network users, validators, and delegators.
- Democratic governance through the native token AVAX
The Avalanche Native Token: AVAX
Avalanche operates through its own native token known as AVAX. It serves as the network unit of account, allowing various DeFi operations to occur. Staking AVAX helps to secure the network and allows those staking the coin to participate in governance. AVAX enjoys a max supply of 720 million (currently with 224 million circlulating) with a market cap siting at $26 billion. This makes AVAX the 11th biggest by market cap.
Anyone staking AVAX is able to receive awards for securing the network. Any nodes wishing to validate a blockchain on Avalanche must becomer a staker.
These are the key points to know about staking AVAX:
- To become a validator you must stake 2,000 AVAX
- To become a delegator you must stake 25 AVAX
- Minimum stake time for validators/delegators is 2 weeks
- Maximum stake time for validators/delegators is 1 year
Presently, AVAX is 20% off its all time high ($144.96). Over the past year, AVAX has been experiencing rapid growth with gains YTD sitting at 3,400%.
Role in DeFi
The Avalanche networks is seeking to become a foundational layer of the growing DeFi space. Avalanche has no limitations on the amount of sub-chains that the network can support. This means that the network can scale substantially without compromising the ability to host dApps and other protocols. There has been a increased emphasis built into the Avalanche network to accompany for interoperability - something that is becoming integrated heavily in DeFi.
Other well-known interoperable, DeFi based blockchain networks includes projects like:
These are all networks that serve as competitors to Avalanche.
Avalanche also enjoys a very efficient network speed tested at up to 4,500 transactions per second (TPS). Presently on the mainnet, Avalanche has hit a TPS of 869. For reference, Bitcoin and Ethereum have a TPS of 7 and 14 respectively. This speed rivals that of prominent credit card companies like Visa and othe blockchains like Solana (live TPS of 2,700).
Because Avalanche can promise unique financial contracts at high speeds, the network can handle the heavy load of an fast growing financial market.
Partnership with Ampleforth
Recently, it was announced that Ampleforth will be integrated with Avalanche, serving as an on-chain trading and lending option for Avalanche users. This gives the network access to all of the robust, DeFi-friendly benefits such as:
- A durable, highly scalable unit of account
- Interoperability between major networks
- Ability to be utilized in borrowing/lending contracts for on-chain DeFi transacting
This partnership will allow both AMPL and AVAX to grow and expand within DeFi in the future.
Avalanche serves as a worthy competitor within the cryptocurrency market and specifically DeFi. Scalability is the name of the game for a network like Avalanche, something that will be of increased importance as DeFi continues to rapidly expand.
With multiple real world use cases already, AVAX should continue to grow in value over the long term. The live TPS, though lower than their whitepaper suggests, is definitely promising when compared to networks like Bitcoin, Ethereum, and Cardano. At 1,186 validators and 17,740 delegators, Avalanche still have growing to do to better secure a completely decentralized network.
AVAX could serve as a serviceable edition to your portfolio. Though slighly riskier than more solidified projects, choosing to become a validator or delegator on the Avalanche network could prove to be a very valuable investment over time.
- Read the Avalanche whitepaper here
- Check out the Avalanche block explorer
- Read more about staking here
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