What Is Avalanche (AVAX)? Is It a Threat to Ethereum?

Ethereum is not only the second most valuable cryptocurrency in the world. Its blockchain hosts countless decentralized projects and has become a favorite for DeFi and DApp developers. Although Ethereum is currently the big fish when it comes to blockchains, it has some significant competition that could one day surpass its success. One such competitor, Avalanche, has a number of attributes that make it a potential Ethereum killer.


So what is Avalanche, why is it becoming so popular and is it better than Ethereum?

What is avalanche?

Avalanche is a blockchain platform launched by Ava Labs in September 2020. Avalanche’s native coin is AVAX, and it has appreciated significantly in value over the past few years as blockchain has become more popular. There are three main characteristics of the Avalanche blockchain, which we will discuss here first, starting with the network’s transaction times.

Are Avalanche transaction times faster than Ethereum?

If you’re using the Ethereum blockchain, you may have been frustrated with transaction times. When a blockchain gains significant popularity and thus more active users, a backlog of transactions can build up that the validators have not yet processed. This is known as network latency.

Now that brings us to an important term in the crypto world: scalability. If a blockchain cannot be expanded to accommodate its growing user base, then it has what you would call scalability issues. Bitcoin’s blockchain has been struggling with scalability limitations for some time as transaction times increase and miners overflow with a backlog of unverified transactions. For example, at the time of writing, there are over 1,000 bitcoin transactions waiting to be processed, stored in the mempool.

Avalanche developers are aware of this issue and have taken scalability into account when designing the Avalanche network. Avalanche allows developers to launch their own blockchains from the original Avalanche blockchain, known as subnets, meaning a project’s transactions can be processed on a separate sub-blockchain. These subnets can be scaled indefinitely and get their own validators to process transactions.

This gives Avalanche the ability to seamlessly scale and manage transactions in a far more distributed manner. Currently, Avalanche can process a staggering 4,500 transactions per second, while Ethereum can only process between 15 and 30 per second. This big difference underscores Avalanche as the superior platform in terms of scalability and transaction times.

However, Ethereum is now taking steps to overcome its scalability limitations through blockchain sharding. We have an in-depth article on blockchain sharding if you want to delve further, but this method basically involves splitting one blockchain into several to spread the transaction load. Ethereum is expected to launch the first shard chains in 2023, so we don’t yet know what the impact of this development will be.

What are Avalanche’s transaction fees?

If there’s one thing that annoys Ethereum users more than anything else, it’s gas fees. Gas fees are charged to all Ethereum users to offset the massive amount of processing power Ethereum requires to function. Gas fees fluctuate several times a day, but they can be frustratingly high at times, meaning a large chunk of your trading profits can be taken away or you could end up paying an ugly fee if you buy more crypto.

However, Avalanche does not have this problem. While the blockchain charges fees, they are minimal. To understand Avalanche’s fees compared to Ethereum’s, we need to quickly go through gwei and nAVAX. A Gwei represents a fraction of an ETH (one billionth of an ETH to be precise) and is the unit used in gas fees.

An nAVAX, on the other hand, represents one billionth of an AVAX. Avalanche uses this unit to bill users of its blockchain(s) for gas fees. Although both blockchains charge fees this way, using the Avalanche blockchain is much cheaper.

Keep in mind that these gas charges fluctuate all the time, so there is no flat fee in this case. But we can look at Ethereum and Avalanche gas fee calculators to understand the fee difference between the two blockchains.

Avalanche currently charges a standard gas fee of 26 nAVAX (0.000000026 AVAX). On the other hand, Ethereum currently charges a standard gas fee of 41 Gwei (0.0000000547 ETH). Keep in mind that ETH is currently worth around 75x more than AVAX, so each Gwei is worth 75x more than each nAVAX. That means Ethereum’s current gas fees are exponentially higher than Avalanche’s. Even if both cryptos were worth the same, Ethereum still charges a significantly higher gas fee.

Is Avalanche environmentally friendly?

Many people don’t like cryptocurrencies because of their volatility, but because of their carbon footprint. Cryptocurrency is a very energy intensive industry and is fast becoming one of the most polluting markets. Because of this, many developers are trying to mitigate their environmental impact, including the Avalanche blockchain.

Avalanche is able to achieve its eco-friendly status for a number of reasons. First, it uses the Proof-of-Stake (PoS) consensus mechanism, which requires validators (block verifiers) to lock part of AVAX to operate. Currently, validators must lock 2,000 AVAX to validate independently. Proof of Stake is significantly more environmentally friendly than Proof of Work (PoW) simply because it is more energy efficient.

But it’s not just the use of Proof of Stake that makes Avalanche an environmental marvel in the crypto world. After all, Ethereum is ready to move to PoS (and may have by the time you’re reading this, depending on the times!). Still, there are other factors that allow Avalanche to outperform Ethereum in terms of eco-friendliness.

First, validators on the Avalanche blockchain don’t have to use high-end, power-intensive hardware. Additionally, these validators work on demand, so their hardware doesn’t have to run 24/7. When block validation needs to be performed, the validator is active. If not, your hardware can operate in standby mode. These small pieces of the Avalanche protocol secure it as an environmentally conscious option for crypto traders and DApp creators.

Considering these factors, does Avalanche outperform Ethereum?

Is Avalanche better than Ethereum?

There is no doubt that Ethereum can provide a diverse and useful platform for DeFi developers to build their projects on. Ethereum was the first smart contract enabled blockchain that acted as a major draw for the network. But its frustratingly high gas fees and scalability limitations put it in the favor of crypto enthusiasts as other blockchains like Avalanche can offer them more.

With its eco-friendly protocol, low fees, and fast transaction times, Avalanche allows its users to create projects and transact business without spending a large sum of extra money or wasting a lot of time. Additionally, those using Avalanche can have peace of mind knowing that their crypto activities don’t have nearly as big an environmental impact as those conducted on other popular blockchains. It really is a win-win-win when it comes to Avalanche!

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