As mentioned, Avalanche is a blockchain that focuses on smart contracts, and the platform supports both decentralized applications (dApps) and autonomous blockchains. Primarily, there are four aspects that distinguish Avalanche from other blockchain projects:
Three blockchains for optimizing the network
Avalanche is built around a system of three interoperable blockchains: Exchange Chain (X-Chain), Contract Chain (C-Chain) and Platform Chain (P-Chain). This is to optimize the network and minimize the limitations that the blockchain trilemma brings with it. Digital assets can be moved between these three chains to perform different functions in the ecosystem.
- X-Chain is the standard blockchain on which tokens, such as AVAX, are created and exchanged.
- C-Chain makes it possible to create smart contracts. This is based on the Ethereum Virtual Machine (EVM), which allows smart contracts on Avalanche to benefit from cross-blockchain interoperability.
- P-Chain coordinates validators and makes it possible to create and manage what they call Subnets. We will return to this.
Ava Labs itself says that by dividing the architecture on three different chains, Avalanche can optimize flexibility, speed and security without the three coming at the expense of each other. This makes the platform attractive to both individuals and companies, as developers have great flexibility in the types of applications they can build.
Avalanche Consensus Protocol: The consensus mechanism
If you have read a bit about blockchain and cryptocurrency, you already know that the vast majority either use the Proof-of-Work or Proof-of-Stake consensus mechanism. X-Chain on Avalanche uses a new consensus mechanism based on Proof-of-Stake, but they call it the Avalanche Consensus Protocol. When a transaction is initiated by a user, it is received by a validator node that queries the state of the blockchain from a random set of other validators. The validators perform this sampling procedure repeatedly and they "gossip" with each other to eventually reach consensus.
In this way, a validator's message is sent to other validators, who gossip with more validators, who gossip with even more validators. This is done repeatedly until the entire system agrees on an outcome, and the more AVAX tokens a validator stakes, the more likely it is that other validators will believe the gossip. In the same way that a single snowflake can turn into a snowball, a single transaction can eventually turn into an avalanche.
This structure makes Avalanche highly resistant to 51% attacks and potential hackers would have to destroy 80% of the network validators to succeed, making it expensive to implement.
C-Chain and P-Chain use what they call the Snowman Consensus Protocol. This is a modified version of the Avalanche Consensus Protocol that is chain optimized and thus better suited for smart contracts. The Snowman Consensus Protocol is powered by the Avalanche Consensus Protocol.
Subnets allow individual projects to build on Avalanche
As previously mentioned, P-Chain makes it possible to create and manage so-called subnets, or sub-networks. Subnets allow individual projects built on Avalanche to remain connected to the Avalanche network via individual chains, without taking up space on the mainnet. By redistributing traffic in this way, subnets allow Avalanche to avoid transaction speed issues and high fees as it scales up in size. Consensus on these chains is achieved by subnetworks, which are groups of nodes that participate in validating a designated set of blockchains. All subnet validators must also validate Avalanche's primary network.
In March 2022, the Avalanche Foundation announced a $290 million incentive program to get Web3 developers to build their own subnets using the technology. Among the first beneficiaries of this program was the popular Play-to-Earn game Defi Kingdoms originally built on the Harmony network. Their project "Crystalvale" runs on the "DFK Chain" subnet built on P-Chain.
What Avalanche wants to achieve with subnets is of course scalability and that the system can be compared with other scaling solutions such as Polkadots Parachains and Ethereum 2.0's shards. Which solution is ultimately left as the winner, or whether they will live happily side by side, remains to be seen.
The speed of Avalanche is high compared to Bitcoin and Ethereum
Speed is the last point that separates the Avalanche from many of its competitors. Ava Labs itself says that the platform can handle around 4,500 transactions per second - compared to around seven per second for Bitcoin and 15 per second for Ethereum. The network is also capable of achieving "transaction finality" (finality) in less than three seconds. This makes Avalanche well suited for massive scaling of decentralized applications, which is a bottleneck for many of its competitors.
