Cold Name, Hot Chain: What Is the Avalanche Blockchain? 

In terms of longevity, developer activity, and market cap, Ethereum (ETH) is undoubtedly the leading blockchain for building decentralized applications (dApps). However, as scalability challenges continue to hamper Ethereum's processing power, plenty of newer crypto competitors now offer a similar software experience with unique features, faster speeds, and cheaper fees. 

For example, Avalanche (AVAX) is a layer 1 blockchain project offering many opportunities introduced on Ethereum but with a distinct decentralized architecture. Learn what distinguishes Avalanche from other blockchains and why many crypto traders closely monitor the Avalanche coin price.

Avalanche’s history

In 2018, a pseudonymous group of cryptographers known as "Team Rocket" published an idea for a fast and secure blockchain on the InterPlanetary File System (IPFS), which eventually became the basis for the Avalanche project. Intrigued by these early crypto concepts, computer scientist Dr. Emin Gün Sirer and a few Cornell doctoral students founded the startup company AVA Labs to bring these theories into practice.  

By 2020, AVA Labs celebrated the launch of the Avalanche mainnet and initial coin offering (ICO) for the native AVAX cryptocurrency. Today, AVA Labs continues development on the Avalanche blockchain alongside the non-profit Avalanche Foundation. 

How does Avalanche work?

At its core, Avalanche is a Proof-of-Stake (PoS) blockchain that supports automated commands called "smart contracts." Similar to Ethereum, computers (aka nodes) on Avalanche lock (or "stake") the native cryptocurrency (AVAX) onchain to participate in transaction validation and receive crypto rewards when they contribute a new block of data. 

Smart contracts are blockchain-based programs that third-party developers use to create dApps in Avalanche's ecosystem. Since smart contracts automatically fulfill preprogrammed tasks, they allow for web-based experiences without relying on centralized servers or intermediaries. 

A key feature separating Avalanche's model from other smart contract blockchains is its triple-chain structure. Instead of using a single chain to process and record every crypto transaction, Avalanche has three layers, each with a unique role in its ecosystem.

• X-Chain: This foundational "Exchange Chain" handles the transfer of AVAX coins throughout the protocol. 

• C-Chain: On the "Contract Chain," developers write the code for the smart contracts on their Avalanche-based dApps. 

• P-Chain: Also known as the "Platform Chain," the P-Chain is where nodes stake their AVAX to validate transfers and earn rewards. 

In addition to this triple-layer structure, Avalanche introduced other unique features to increase scalability and versatility. For example, on the P-Chain, developers can create sovereign "subnets" in the Avalanche ecosystem, which function similarly to standalone blockchains. 

Avalanche also relies on a Directed Acyclic Graph (DAG) model to arrange transaction history on its distributed payment ledger. Unlike linear blockchain structures, DAGs arrange transactions spread out on a graph and let nodes vote on the validity of each transfer as it posts. These distinguishing technologies allow Avalanche to offer reliably low fees, fast transaction throughput, and greater flexibility for third-party developers.  

Avalanche FAQs 

What is the AVAX coin? 

Avalanche's native cryptocurrency, AVAX is primarily used to pay for transaction fees, incentivize nodes, and secure the blockchain through staking. The Avalanche price is divisible and has a 1:1 market value, which traders view on real-time Avalanche price charts. 

Can anyone stake AVAX coins? 

Avalanche is open-source and welcomes all nodes interested in joining its blockchain, but validators must stake at least 2,000 AVAX. If crypto traders still want to participate in transaction validation, they can delegate 25 or more AVAX to a validator node and receive partial crypto rewards.

How do traders store the AVAX cryptocurrency? 

As Avalanche gains popularity, more mainstream crypto wallets—including MetaMask and Trust Wallet—support the AVAX cryptocurrency. It’s important to always double-check the supported coins on a software or hardware wallet to see if they work with the Avalanche ecosystem before downloading them. 

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