What is Avalanche?

Who created Avalanche?

Avalanche is built on a new consensus mechanismConsensus mechanismThe rules that let thousands of computers agree on a single version of a blockchain without trusting any one party. that a group using the pseudonym Team Rocket presented in a paper in May 2018. The same year, Emin Gün Sirer, a computer science professor at Cornell University, founded the company Ava Labs with Kevin Sekniqi and Maofan Yin. Ava Labs developed the network, which went live on 21 September 2020.

The software is open sourceOpen sourceSoftware whose source code is open to everyone, so anyone may read it, use it, change it and share it., and anyone can run a NodeNodeA computer that runs a crypto network's software, keeps a copy of the blockchain and checks that new transactions and blocks follow the rules. on the network.

What is Avalanche used for?

• DeFi. The C-Chain runs DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman. apps where people swap cryptocurrencies, lend and borrow. The C-Chain uses the same virtual machine as Ethereum (the EVM), so developers can move Ethereum apps there with few changes.
• Payments. In July 2025 Visa added Avalanche to the networks it uses to settle payments in stablecoinsStablecoinA cryptocurrency designed to keep a steady price, usually by tracking the US dollar or another currency., alongside Ethereum and Solana.
• Tokenisation. Avalanche is used to tokeniseTokenisation (RWA)When an asset outside the blockchain, such as a government bond, gold or property, is issued as a token that can be held and sent on a blockchain. financial assets. In 2022, for example, the company Securitize offered tokenised exposure to a healthcare fund from the investment firm KKR on Avalanche.
• Custom chains. Companies and game studios launch their own chains on Avalanche. In May 2025 FIFA announced that it would build its own blockchain as an Avalanche L1, for digital collectibles (NFTsNFT (non-fungible token)A unique token on a blockchain that records who owns a specific item, such as a piece of digital art, a ticket or an item in a game.) and fan engagement.

How does Avalanche work?

Consensus like an avalanche

Avalanche uses proof of stakeProof of stakeA consensus method where crypto is locked up as a stake for the right to create blocks, and anyone who cheats can lose part of that stake., but the consensus method itself is unusual. Each ValidatorValidatorA participant on a proof-of-stake network who locks up their own crypto as a stake to create and check blocks in return for rewards. asks a small, random group of other validators what they think is correct. If enough of them agree, it adopts that view and asks again, until the same answer has come back enough times in a row. Validators with more stake are asked more often.

The name fits. A handful of questions spreads across the network like an avalanche, and soon everyone has reached the same conclusion. According to Avalanche, transactions become final in about a second or less, and they can't be reversed after that.

Three chains on the main network

Avalanche's main network (the Primary Network) is made up of three chains with different roles:

• The C-Chain (Contract Chain) runs smart contracts and is compatible with Ethereum.
• The X-Chain (Exchange Chain) is used to send AVAX and other tokens issued on Avalanche.
• The P-Chain (Platform Chain) keeps track of validators and Avalanche L1s.

AVAX can sit on any of these three chains, and the addresses look different. On the C-Chain they start with 0x, as on Ethereum. That is why it matters to know which chain the recipient is using.

Avalanche L1s

Anyone can launch their own blockchain connected to Avalanche, known as an Avalanche L1. These used to be called subnets. Each L1 has its own rules and its own validators, so companies can tailor the chain to their needs.

For a long time, validators of these networks had to stake 2,000 AVAX and validate the main network too. Since the Etna upgrade took effect on 16 December 2024, they instead pay a small, continuous fee in AVAX, initially expected to be about 1.3 AVAX a month. According to Avalanche, this cut the upfront cost by more than 99.9%.

Fees and AVAX supply

All network feesNetwork feeA fee paid to a crypto network, not to a bank or company, for including your transaction in a block. on the main network are paid in AVAX, and they are burned rather than paid to validators. Validators are rewarded with new AVAX instead.

There will never be more than 720 million AVAX. That is AVAX's maximum supplyMaximum supplyThe largest number of units of a cryptocurrency that can ever exist under its rules, such as 21 million for bitcoin., and half of it, 360 million, was created at launch. The rest is added gradually as staking rewards. Because fees are burned, the actual supply will always stay below the cap.

Staking

Running a validator on the main network takes a stake of at least 2,000 AVAX. People with less can delegate 25 AVAX or more to a validator and receive a share of the rewards.

Avalanche doesn't use SlashingSlashingA penalty on proof-of-stake networks. A validator that breaks the rules loses part of its stake and is removed from the network.: the network doesn't take part of the stake as a penalty. A validator that isn't online often enough simply earns no reward for that period.

What are the risks?

• Competition. Avalanche competes with Ethereum, layer 2 networksLayer 2A system built on top of a blockchain such as Ethereum or Bitcoin to make transactions faster and cheaper than on the base network itself. and other layer 1s, many of which also offer custom chains. Avalanche L1s need to attract users to succeed.
• Outages. In February 2024, block production on the main network stopped for several hours because of a bug, until validators had installed a fix.
• Issuance. According to Avalanche, the supply of AVAX is still growing, because more is issued as rewards than is burned in fees.
• Price swings. The price of AVAX swings a lot, like that of other cryptocurrencies. See VolatilityVolatilityHow much and how quickly the price of an asset moves up and down..

AVAX on Myntkaup

On Myntkaup you can buy, sell and hold AVAX. You can also deposit and withdraw AVAX on-chain, on the Avalanche network.

When AVAX is sent, the recipient must use the same network. Crypto sent on the wrong networkBlockchain networkThe blockchain a cryptocurrency or token is recorded and sent on, such as the Bitcoin network or the Ethereum network. can be lost, as the article How to send crypto to another wallet explains. You can see the price of AVAX on the AVAX price page.

Closing thoughts

Avalanche is a layer 1 that stands out in two ways: its consensus method makes transactions final in about a second, and companies can launch their own chains on the network. AVAX is used to pay for the network and to secure it through staking, and every network fee on the main network is burned.

The network competes with many others for users, and the price of AVAX swings a lot. Learn about the risks before you buy.