Avalanche Network and AVAX Token Overview

Jul 4, 2024

Avalanche Network and AVAX Token

Overview

  • New Protocol: Avalanche is a relatively new protocol with minimal promotional material, mostly documentation and white papers.
  • Channel: Whiteboard Crypto - Focused on explaining cryptocurrency topics using analogies, stories, and examples.
  • Objective: Explain what the Avalanche network is, its unique aspects, and the secrets of the AVAX token, including its price spike.

Consensus Models: Evolution

  • 1980s - Practical Byzantine Fault: Early consensus model in computer science.
  • 2009 - Nakamoto Era: Introduction of Bitcoin, proof of work mechanism.
  • 2020 - Avalanche Consensus Model: New and unique proof of stake with differences:
    • Sub-sampled voting: Random validators check transactions.
    • Network gossip: Validators exchange information repeatedly.
    • Difficulty to attack: Requires 80% control to attack (vs. 51% in Bitcoin/Ethereum 2.0).
    • Transaction speed: 4,500 transactions per second per subnet, finality in less than 3 seconds.

Network Infrastructure

  • Three Built-in Blockchains:
    • X Chain: For creation, management, and transactions of tokens. Based on DAG.
    • C Chain: For smart contracts. Exact copy of the Ethereum Virtual Machine. Uses Snowman protocol.
    • P Chain: For management of subnets, validates nodes, and staking mechanisms.
  • Subnets:
    • Scalable networks within Avalanche.
    • Each subnet can have multiple blockchains and unique consensus models (proof of work or proof of stake).
    • Can be public (permissionless) or private (permissioned).
    • Customizable rules, geographic/political compliance.
    • Validators contribute to the primary network validation.

Snowman Protocol

  • Snowman vs. Avalanche Protocol:
    • Snowman: Linearized version of Avalanche; optimized for EVM and smart contracts.
    • Avalanche: General use case, implemented using DAG structure.

AVAX Tokenomics

  • Max Supply: 720 million AVAX coins, deflationary asset.
  • Governance: More coins staked equals more voting rights.
  • Pre-sale: 127 million pre-sold coins; many are locked and will be unlocked over time.
  • Team/Foundation Coins: ~20% allocated to team and foundation.
  • Investor Caution: Be aware of unlocking periods affecting price.

Recent Price Spike

  • Incentive Program: $180 million announced by Avalanche Foundation to attract users.
    • Targeting Curve Finance and Aave: Major DeFi players with substantial liquidity.
  • Price Impact: AVAX price spiked from $15 to $55 due to the incentive program and bridging of funds.

Conclusion

  • Content Goal: Educate viewers on the Avalanche network and AVAX token.
  • No Financial Advice: Be mindful of dates and market conditions.
  • Support: Encouragement to like and subscribe for more educational content.