Blog Crypto Avalanche Coin (AVAX): Crypto’s New Speed King?

Avalanche Coin (AVAX): Crypto’s New Speed King?

date May 20, 2022 time 5 min read 568 views

One of the key challenges of crypto is the speed of transactions. Most are simply too slow to be used on a daily basis. Bitcoin, for example, takes several minutes to complete a transaction. So when avalanche coin comes along and promises instant finality – the crypto world stands up and takes notice.

Avalanche coin review

Avalanche token (avax) is the native cryptocurrency and utility token of the Avalanche blockchain. It’s a hard-capped and scarce asset used to pay transaction processing fees, secure the network and reward participants in its staking program, and provide a basic unit of account among the blockchains in the Avalanche network.

Unlike a real avalanche, the namesake coin seeks to resolve a fragmented financial world.
Unlike a real avalanche, the namesake coin seeks to resolve a fragmented financial world. (Source: Unsplash)

Similar to Ethereum, the Avalanche network is a decentralized and open-source smart contracts platform for launching interoperable decentralized applications and enterprise blockchain deployments in one ecosystem. It touts itself as the fastest smart contracts platform in the blockchain industry, providing near-instant transaction finality. 

Anyone can create tailor-made, application-specific blockchains known as subnets on the network and benefit from its recent breakthrough in distributed systems: the revolutionary avalanche consensus.

The smart contract platform is fuelled by its aim of unifying the fragmented global financial markets. It wants to enable an easy way to create and trade digital assets in a compliant manner legally.

In setting out to create a global financial network for issuing and trading all digital goods, Avalanche has morphed into a fast, flexible, and secure network with a custom plug-and-play infrastructure built to serve decentralized applications, asset issuers, and financial marketplaces.

Avalanche coin usage

The avalanche coin has three core functions on the network.

  • Pay transaction fees

As the basic unit of account among the various blockchains or subnetworks (subnets) within the Avalanche network, avalanche coin is the default currency used to pay all transaction fees.

One crucial feature worth mentioning is avalanche coin’s deflationary token mechanism. Avalanche coins used to pay transaction fees are burned from the supply; this permanently lowers the amount of avax in circulation.

Deflationary practices help increase the coin’s value by increasing its scarcity and heightening its demand over time.

  • Create tokens and subnets

As you know by now, Avalanche’s core service is to enable developers to deploy NFTs, decentralized finance (DeFi) protocols, games, and more on its platform by creating custom tokens and blockchain networks. 

Some of these services are subscription-based and require recurring avalanche coin payments.

  • Earn staking rewards by securing the network

All networks on the Avalanche ecosystem require validators who own and stake avalanche coins as collateral to validate transactions and earn staking rewards. 

Those who don’t meet the minimum stake of 2,000 avax for validators can delegate their stakes to a validator and earn a percentage of the staking rewards. Avalanche coin staking offers rates of around 9.32%.

Outside its utility on the network, holders of avalanche coins can also trade them like any other cryptocurrency in the market. Investors use it as a store of value, and traders profit based on the difference between the buying and selling prices.

Avalanche coin price history

After raising $42 million with its initial coin offering (ICO), which sold at $0.50 in 2020, avalanche coins started trading at $4.1 in September 2020. It maintained a steady movement just below $5 until it hit its all-time low of $2.79 in December.

The May 2022 crash is clearly visible in this chart.
The May 2022 crash is clearly visible in this chart. (CoinMarketCap)

Things got exciting for investors when the coin’s price surged over 800% to hit $55.3 in February 2021. This growth was driven by investor optimism over the launch of an Avalanche-Ethereum bridge that allowed DeFi users to pursue yield opportunities with the same assets across these two complementary ecosystems.

In November 2021, avalanche hit its all-time high of $146.22 after Deloitte decided to use the Avalanche blockchain for building a disaster relief platform. 

Today, avalanche coin price is around $30 – with the May crash bringing it down. With a 24-hour trading volume of $756.6 million on Coinmarketcap and a market cap of $8.9 billion, avalanche currently ranks 12 among the most prominent cryptocurrencies ranking by market cap.

Where to buy avalanche coin

Avalanche coin (avax) is available on major exchanges like Binance or Kraken. In addition, investors can also refer to exchanges such as Coinbase, Gate.io, Huobi Global.

Ensure you carefully consider multiple exchanges and look out for one that offers a simple interface, low fees, and is generally trusted by others in the crypto community. This consideration is essential if you plan to store your digital assets in an online exchange.

Founded in June 2018 by Turkish-American computer scientist and Cornell University professor Emin Gun Sirer, Avalanche’s most attention-grabbing offering is its near-instant transaction finality. Let’s take a look at that, shall we?

Finality explained

Finality is reached when your transaction becomes final and irreversible. Different blockchains have buffer times between when your transactions are submitted and when it actually ‘goes through.’

The speed of finality could be Avalanche's trump card in pursuit of success.
The speed of finality could be Avalanche’s trump card in pursuit of success. (Source: Unsplash)

A familiar example to help you grasp the concept of finality is international money transfer. You may have been debited when you send money overseas, but your transaction isn’t final until the recipient gets the money. Think of it as the space of time between your transaction pending and approved. 

Although finality happens on a much faster scale on the blockchain, it is an essential factor to consider when choosing a platform where you want to transact or build your network.

The most remarkable development in cryptocurrency since Bitcoin

Avalanche achieves finality by deploying three interconnected blockchains performing different tasks simultaneously – the exchange, platform, and contract chains. This technique makes the network fast without sacrificing security and scalability.

Here’s a quick comparison between Avalanche and its competitors:

  • Bitcoin’s finality: 60 minutes.
  • Ethereum’s finality: 6 minutes.
  • Polkadot’s finality: 60 seconds.
  • Avalanche’s finality: -1 second.

While transactions on the blockchain are generally considered to be safe, to an extent, there are risks. Avalanche’s near-instant transaction finality gives you peace of mind, knowing that you don’t have to worry about anything going wrong. Especially when dealing with your investments.

What sets Avalanche apart from its competitors is how its avalanche consensus combines the benefits of Nakamoto consensus (robustness, scale, decentralization) and all the benefits of Classical consensus (speed, quick finality, and energy efficiency) without the disadvantages.

Avalanche’s success with finality could prove to be a game-changer. The speed transactions are currently a crypto weak spot – any moves to improve this is promising. The future looks bright for the Avalanche Network.

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