Project Research | Public Chain Avalanche (Avalanche Protocol) Research Report


Editor | Bowen@Web3CN.Pro

Table of contents

1. Project Introduction

2. Project vision

3. Features and advantages

4. Development history

5. Team Background

6. Financing Information

VII. Development Achievements

8. Economic Model

9. Industry Analysis

10. Risks and opportunities

1. Project Introduction

If you want to count the most explosive public chains in the past two years, Avalanche must be on the list.

Avalanche (Avalanche Protocol) is designed by the Ava Labs team. It is a Layer1 public chain serving DeFi applications. It is committed to improving scalability without affecting speed or decentralization, creating a highly scalable, modular and multi-chain Interoperable public chain system.

Its core platform has three blockchains: transaction chain (X chain), contract chain (C chain) and platform chain (P chain). The X chain is used to create and trade assets, the C chain is used to create smart contracts, and the P chain is used to coordinate validators and subnets.


• Transaction Chain (X-Chain):

The blockchain that adopts the Avalanche consensus protocol is an instance of AVM (Avalanche Virtual Machine). It is mainly responsible for processing assets such as creation and transaction of assets. Whether it is user remittance, exchange withdrawal, etc., it is all handled by this chain.

• Platform Chain (P-Chain):

Also known as the governance chain, it adopts the Snowman consensus protocol and is mainly responsible for staking, coordinating verifiers and establishing subnets. It is not only a major contributor to Avalanche's horizontal expansion, but also one of the main development directions of Avalanche in the future.

• Contract Chain (C-Chain):

Adopting the Snowman consensus protocol, it is mainly responsible for handling behaviors related to smart contracts, and it is compatible with EVM (Ethereum Virtual Machine), so smart contracts that can work on Ethereum can still run on C-Chain.

2. Project Vision

Through the self-created underlying infrastructure, build a distributed system that takes into account security, decentralization, high efficiency, and horizontal scalability, bringing traditional finance to the blockchain world and becoming the Wall Street of the blockchain world.

3. Features and advantages

• Innovative consensus mechanism:

The consensus mechanism combines Byzantine and proof-of-work mechanisms, learns from each other, and can achieve the characteristics of high throughput, low latency, high scalability, and high security, and the TPS can reach 6000.

• Compatible EVM:

Supporting EVM smart contracts facilitates the migration of various applications in the existing Ethereum ecosystem to the Avalanche network, which is more friendly to users and developers.

• Repeated sampling mechanism:

The consensus protocol establishes consensus through repeated sampling operations. After the event is created and sent to the verification node, each node will randomly select a fixed number of adjacent nodes to ask. If most nodes describe the event the same, then the judgment is true. If most nodes give different answers, If the content of the event is switched, repeated sampling will be performed multiple times until confirmation is reached, and this process will be very fast. This mechanism enables the entire network to involve many nodes in the verification process, resulting in a higher degree of decentralization.

• Unique triple chain structure:

In terms of structure, Avalanche adopts a three-chain structure of X-chain, C-chain and P-chain. The X chain is a transaction chain, which mainly handles point-to-point asset creation and transaction between individuals; the C chain is an EVM-compatible smart contract chain, and DeFi projects are built on the C chain, and the P chain is a platform chain, which is mainly responsible for token pledges and coordinating network validators and creating custom subnets etc. The three chains perform their duties but complement each other, further liberating the network performance of Avalanche. Performance advantage means better user experience.

• High efficiency and low cost:

For developers and ordinary users, there is no high chain operation cost on Avalanche, and there is no slow transaction confirmation time. The cost and time of deploying or using DeFi applications will be greatly reduced.

4. Development history

In 2018, Ava Labs was established.

In 2019, Ava Labs received $6 million in financing.

2019.10.16 Avalanche designed by Ava Labs releases the test subnetwork.

2020.06.26 Ava Labs completed a $12 million private placement of AVAX tokens.

2020.07.16 Avalanche completed the public offering, raising a total of US$46.2 million.

2020.09.21 The Avalanche mainnet is launched.

2020.11.10 Avalanche launched a technical forum.

2021.02.09 Avalanche announced the official launch of the Avalanche-Ethereum cross-chain bridge AEB.

2021.07.29 The new generation of Avalanche cross-chain bridge (AB) was officially launched.

2021.08.18 The Avalanche Avalanche Protocol launched the Avalanche Rush reward program.

2021.09.16 The Avalanche Foundation completed a $230 million private placement financing led by Polychain and Three Arrows Capital.

2021.11.30 Avalanche Ecosystem Accelerator Colony completed financing of US$18.5 million, led by the Avalanche Foundation.

2022.03.08 The Avalanche Foundation launched the $290 million "Avalanche Multiverse" plan.

2022.10.12 OpenSea integrated NFT on the Avalanche chain.

2022.10.19 The Avalanche mainnet activates the Banff upgrade, allowing subnet validators to use subnet tokens for staking.

2023.03.24 Avalanche plans to upgrade Cortina and migrate X-Chain to run the Snowman++ consensus.

2023.05.04 Alibaba Cloud is cooperating with Avalanche to provide customized solutions for the enterprise metaverse.

5. Team background

The Avalanche team is composed of people from different backgrounds, computer science, economics, law, development background, project managers, and some even philosophy majors or music majors. As long as they have a strong motivation to create an open and transparent financial product to make the world a better place, Avalanche welcomes them to join. Ava Labs official website shows that there are currently 47 team members.


Emin Gün Sirer: CE0, computer scientist and associate professor at Cornell University. Sirer developed the Avalanche consensus protocol underlying the Avalanche blockchain platform and is currently the CEO and co-founder of Ava Labs.

He was an associate professor of computer science at Cornell University and the former co-director of the Initiative on Cryptocurrencies and Smart Contracts (IC3). He is known for his contributions to peer-to-peer systems, operating systems, and computer networks.

Sirer worked at AT&T Bell Laboratories at Plan 9, DEC SRC, and NEC prior to his appointment as a professor at Cornell University. Sirer is known for his contributions to the research of operating systems, distributed systems, and fundamental cryptocurrencies. He co-developed SPIN (The Operating System), where the operating system's implementation and interfaces can be modified at runtime through type-safe extension code. He also led the Nexus OS effort, where he developed new techniques for proving and reasoning about semantic properties of remote programs.


Kevin Sekniqi: Co-founder and COO, Ph.D. from Cornell University, and chief protocol architect of Ava Labs. He is credited with developing the Avalanche blockchain platform and has worked on growing Ava Labs while researching improvements to the Avalanche protocol.


Maofan Ted Yin: Co-founder and Chief Protocol System Architect of Avalanche. Founded Ava Labs in 2018 together with Emin Gün Sirer and Kevin Sekniqi. Linkedin shows that he is currently working at Ava Labs, but his avatar and name do not appear on the Ava Labs official website.


John Wu: President, with more than 20 years of experience as a fintech executive, as CEO of SharesPost Digital Assets Group and technology investor in companies such as Tiger Management, Kingdon Capital and Sureview Capital (backed by Blackstone Group). It once created the software service platform Investery, which was later acquired by Avalanche.

6. Financing Information

In 2019, Ava Labs completed $6 million in financing, with investors including Andreessen Horowitz (a16z) and Polychain.

In June 2020, Ava Labs completed a $12 million private placement of AVAX tokens. Galaxy Digital, Bitmain, Initialized Capital, NGC Ventures, and Dragonfly Capital led the investment, and Fundamental Labs, Continue Capital and other institutions and individuals participated in the investment.

In September 2021, the Avalanche Foundation completed a $230 million private placement financing, led by Polychain and Three Arrows Capital, with participation from R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency, Lvna Capital, and some angel investors and family offices invest.

On April 14, 2022, according to people familiar with the matter, Avalanche developer Ava Labs is conducting a new round of financing, with a valuation expected to exceed $5 billion. One of the people familiar with the matter said that the company will raise funds at a valuation of $5.25 billion. $350 million.

VII. Development Achievements

According to Avalanche Explorer, Avalanche currently has 58 subnets, 44 blocks, 1293 verification nodes and 255,360,724 pledged AVAX.

Avalanche currently has 83,139 daily active addresses, which has picked up compared to the previous few months, and Gas consumption has also shown an upward trend in the past year.



Avalanche has two outstanding features. One is that its C chain is an EVM compatible chain that can accommodate most applications, and the other is that the entire ecosystem includes multiple subnets with high performance.

C-Chain is famous for DeFi, with a TVL of $12 billion at its peak. At the same time, some well-known and innovative projects are developed on it.

Avalanche Explorer shows that there are currently 373 projects, including 222 DeFi projects.


Compared with other public chains, Avalanche supports a wide range of ecological hotspots. In addition to DeFi, NFT and other tracks, Avalanche also focuses on enterprise-level applications and Web3 applications. The increase in the number of projects in these tracks can further strengthen the Avalanche ecosystem recognition.

On May 5, 2023, Avalanche announced its business cooperation with Alibaba Cloud. Due to the influence brought by inter-enterprise cooperation, Avalanche has superior resources in enterprise-level cooperation. It is expected that more non-blockchain-native enterprise-level institutions will adopt the AVAX subnet as the blockchain development network. This direction may become the narrative of Avalanche focus.


8. Economic Model

AVAX is the native token of the Avalanche blockchain. To do anything on Avalanche, AVAX is required.

A special feature of AVAX is that all fees paid on the network are burned and deflationary, allowing AVAX to become even rarer. Those who own AVAX tokens can join as validators and earn compensation.

The specific information is:

• Total issuance: 720 million
• Initial issue: 360 million
• Purpose: node pledge, decentralized governance, transaction fees
• Allocation: Team and founder 10% (unlocked in 4 years); foundation 9.26% (unlocked in 10 years); mining reward 50%; seed round 2.5%; private round 3.46%; public round 10%; airdrop 2.5%; Test reward 0.28%; community 7%; strategic partner 5%


According to official regulations, as long as anyone holds AVAX and becomes a validator, or pledges AVAX tokens through a validator, they can get mining rewards. To become a validator, 2,000 AVAX must be pledged.

9. Industry Analysis

Avalanche's cross-chain bridge, Avalanche Bridge (AB), provides secure and high-performance cross-chain asset transfer services. Currently, Ethereum's cross-chain confirmation time is about 5 minutes, while Avalanche's is within 10 seconds. Moreover, the Gas fee of Avalanche is one tenth of that of Ethereum, and the transaction verification speed is much faster than that of Ethereum.

Various advantages have enabled Avalanche to grow rapidly within two years, and the DeFi business is particularly eye-catching. There are a total of more than 200 developing DeFi projects on Avalanche, including transactions, pledges, wallets, lending, NFT trading platforms, etc., with a diverse ecosystem.

In terms of enterprise cooperation, Avalanche is far ahead and has market advantages.

In 2023, Alibaba Cloud will cooperate with Avalanche to provide enterprise metaverse customization solutions. Alibaba Cloud will provide a launchpad called Cloudverse, which aims to help enterprises customize, launch and maintain their own metaverse on Avalanche's blockchain. cosmic space.

Prior to this, Avalanche has also done many customized services for enterprises. In 2021, Avalanche's development team, Ava Labs, will establish a partnership with the four major accounting firms, Deloitte. Deloitte announced on November 17, 2021 that with the help of the Avalanche The avalanche protocol of the block chain has developed a brand new Close As You Go (CAYG) disaster recovery platform, which helps state and local governments in the United States to apply for relief funds efficiently with an easy-to-use page, avoiding complicated procedures.

All of the above shows that in the field of DeFi and enterprise services, Avalanche has great market advantages.

10. Risks and opportunities

Chance

Avalanche has been incubating projects and individual creators.

On March 30th, according to the official blog, the Avalanche Foundation launched the NFT program Avaissance, which aims to support emerging digital artists and promote the growth of the Avalanche NFT ecosystem.

Avaissance has two components: an artist-in-residence program (AIR) for more than 50 artists, and the Mona Lisa Initiative (MLI), a digital art curatorial collaboration. Applications for the AIR program closed on April 28, and the first batch of 50 candidates will be announced in May. AIR will offer accepted artists the opportunity to work on individual creative projects for six months, while receiving funding, one-on-one mentoring, virtual workshop opportunities, and support from the Avalanche ecosystem.

Prior to this, Avalanche has launched project incubation plans such as Avalanche Rush and Avalanche Multiverse, investing hundreds of millions of dollars. This also makes the number of high-quality projects on the Avalanche chain increase in a short period of time.

After several waves of market shocks, Avalanche's recent development has gradually improved. Enterprises or projects that want to participate in the Avalanche ecosystem can always pay attention to its dynamics.

Risk

Avalanche had a systemic problem that brought the network to a standstill, potentially causing a crisis of confidence.

Avalanche experienced a systemic issue on February 12, 2022 that brought the Avalanche network to a standstill. In a statement issued by the Avalanche team, it was pointed out that this was caused by an error code in the communication between the Ethereum Virtual Machine and Avalanche, emphasizing that the error was due to high demand and high usage. Avalanche encountered such system problems at the beginning of its development, which may lead to a crisis of trust.

In addition, compared with other chains, Avalanche obviously does not have a strong market share in NFT and other markets. Although Avalanche has worked hard to develop relevant primary and secondary sales platforms and mechanisms, its impact is insufficient. Whether Avalanche will have a breakthrough in this area in the future is still unknown.