Whenever Ethereum looks nervously in the rear-view mirror to see who’s catching up with them, there’s one name they see: Avalanche. Ethereum has battled, in particular, with keeping transaction speeds high and costs low as the network expands. The geniuses working at Avalanche have produced an elegant solution to this very important problem: subnets. These are like suburbs where applications can live, while occupying no space on the main network, but which connect to it indirectly, through arteries. When you build new applications on subnets, you don’t compromise anything in the fields of speed and costs, or so claims Avalanche.
Yes, it sounds extremely smart, but this can equally be said about many other aspects of the Avalanche blockchain, which facilitates quicker, cheaper and safer transactions than most other networks. Because of its wealth of special powers, the Avalanche network has attracted a large number of new applications in recent times. And if there’s one special power that app developers love in Avalanche, it’s the power to create their own custom-built blockchains, made specifically for their app.
Imagine if there was a lane on the freeway designated exclusively for Porsches, where every detail was suited to their small bodies, high speeds, and exceptional shock absorption. This is what Avalanche offers app developers, and the reason why they value it so much is that it gives them an incomparable degree of control over their apps’ functioning and security. By contrast, other networks only offer applications a place to reside within their single blockchain, which is like offering the same stretch of freeway to Porsches, Volkswagens, Jeeps, and the rest.
Join us as we unearth some of the superpowers of one of the most important new blockchains in the world, whether you’re interested in cryptocurrency trading with the AVAX token, or whether you’re simply curious about the power of blockchains.
Speed and Security
It’s true that Ethereum claim they’ll soon be able to manage 100,000 transactions per second, but we have yet to see this in the flesh. At the moment, they can only do about 12. Avalanche have said they have the capacity to do 4,500 per second, but this claim is also yet to be proven. In the final week of November 2023, for example, the Avalanche network averaged only 11.33 transactions per second. It’s also true, however, that they’ve succeeded before in facilitating as much as 75 per second, which does put Ethereum to shame.
Ethereum are relying on a process called sharding to reach their speed target, but the velocity of Avalanche is based on something different. It’s enabled by the fact that Avalanche works through three parallel blockchains, called the C-Chain (Contract Chain), the P-Chain (Platform Chain), and the X-Chain (Exchange Chain). The first is devoted to smart contracts; the second to creating new blockchains; and the third is the place where the network’s native AVAX token is traded.
This three-way splitting of the Avalanche network is what allows for potentially sky-high transaction speeds, and it’s also what lends it unique security features. Due to its one-of-a-kind structure, Avalanche boasts an exceptional level of scalability, which is the power to keep processing transactions with the same efficiency as the usership expands. The scalability is what makes it so secure.
Spruce
In 2023, big Wall Street companies like WisdomTree Inc. and Cumberland tried out Avalanche’s application for financial trading and settlement on the blockchain, called Spruce. Spruce allows firms to perform forex and interest rate swaps on the blockchain, which is an intriguing achievement, not least because it could slash both costs and risks. This is just one of the incarnations of Avalanche’s project of custom-building blockchains for institutions.
Spruce exists on Evergreen – one of Avalanche’s subnets – which is tailor-made to help firms put their finances on the blockchain. Spruce is a really exciting creation because, if the world forex market was transplanted onto the blockchain, the costs of sending remittances could be cut by four-fifths and the security of transactions could be significantly bolstered.
Summing Up
As we’ve seen, Avalanche has plenty going for it in the struggle to attract institutional interest towards the blockchain, and most prominently its talent for constructing blockchains according to specifications. This is something that promises to keep on drawing big institutional names in its direction. As to scalability, Avalanche is the king of the castle, and this certainly gives Ethereum a reason to wake up in the middle of the night in a cold sweat.
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