Difference between revisions of "Avalanche (AVAX)"

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* [[Whitepaper]] can be [https://arxiv.org/pdf/1906.08936.pdf read here]. The whitepaper on their [[native token]] can be read [https://files.avalabs.org/papers/ava-token.pdf here] (25-6-2020).
* [[Whitepaper]] can be [https://arxiv.org/pdf/1906.08936.pdf read here]. The whitepaper on their [[native token]] can be read [https://files.avalabs.org/papers/ava-token.pdf here] (25-6-2020).
* Code can be viewed [https://github.com/ava-labs/gecko here].*Consensus mechanism: [[Proof-of-Stake (PoS)|PoS]]
* Code can be viewed [https://github.com/ava-labs/gecko here]. According to [[Electric Capital]]'s Developer report, full-time developers dropped from ~132 to ~83 (-37% YoY).
*Consensus mechanism: [[Proof-of-Stake (PoS)|PoS]]
*Algorithm: Avalanche and Snowman consensus
*Algorithm: Avalanche and Snowman consensus
*[[Virtual Machine (VM)|Virtual Machine]]: Avalanche VM and [[Ethereum Virtual Machine (EVM)|EVM]] compatible  
*[[Virtual Machine (VM)|Virtual Machine]]: Avalanche VM and [[Ethereum Virtual Machine (EVM)|EVM]] compatible  
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== Subnets/Blockchains ==
== Subnets/Blockchains ==


* From a commissioned [[Messari]] [https://messari.io/report/state-of-avalanche-q4-2022 report] (29-1-2022):
* A new [https://messari.io/report/state-of-avalanche-q1-2023 report] added 3 more (2-5-2023):
 
# ''XPLUS''
# ''DOS''
# ''SHRAPNEL''
*From a commissioned [[Messari]] [https://messari.io/report/state-of-avalanche-q4-2022 report] (29-1-2022):


''"Has seven Avalanche Subnets including:''
''"Has seven Avalanche Subnets including:''
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# ''Platform Features & Performance''
# ''Platform Features & Performance''
# ''Liquidity & Ecosystem Growth"''
# ''Liquidity & Ecosystem Growth"''
== Revenue==
* [[Token Terminal]] gave Q1 of 2023 for AVAX around $1.8M in revenue. Revenue in AVAX (total transaction fees paid in AVAX) increased by 10.8% QoQ (up 25.9% in USD terms). The increase in revenue was largely due to an 18.2% increase in transaction fees QoQ, much of which came from the network experiencing moments of instability in March.


== Usage ==
== Usage ==

Revision as of 13:11, 22 May 2023

Proof-of-Stake blockchain using the Avalanche consensus mechanism. "A way to design public (and private) distributed ledgers for asset creation"

Avalanche
Total supply720.000.000

Basics

  • Based in: Brooklyn, N.Y.
  • Started in: 2018
  • Mainnet launch: 21-9-2020
  • AVA network’s token is not to be confused with Travala.com’s proprietary token, AVA. Backed by the world’s largest cryptocurrency exchange, Binance, Travala.com is a blockchain-based travel booking platform that features payments and loyalty rewards in its native crypto, AVA token.
  • An open-source platform and a layer 1 protocol for launching DeFi, applications and enterprise blockchain solutions. 

History

  • Private testnet was launched on 16-5-2019.
  • Should launch (22-11-2019) in December 2019. "“[Ava] is almost feature-complete with [its own] codebase. We’re hoping to go public with a testnet soon, within the next month and mainnet sometime between December and February,” said Sirer." Update (20-3-2020): "AVA’s mainnet launch is only months away!"
  • Public testnet on 17-4-2020. The AVA mainnet launch is expected (22-4-2020) in July, until then, the enthusiasts can “start actively staking” on the testnet.
  • The ticker was first called AVA but got changed (24-6-2020) into AVAX, possible due to Travala's AVA token.

Audits & Exploits

"Halborn Gives Avalanche Wallet Stamp of Approval After Extensive Security Testing: Halborn, a cybersecurity team focused on blockchains, completed an extensive security audit and penetration testing of the Avalanche Wallet. Testing spanned just over 3 weeks, and the Avalanche Wallet is officially approved for its security. We funded Halborn’s aggressive, thorough attempts to crack the Avalanche Wallet through the Avalanche-X grants program–our accelerator for developers building decentralized finance applications."

"@avalancheavax has never gone down. Avalanche is also impressively distributed. With over 3000 nodes validating and some 3500 nodes archiving, Avalanche is the second most decentralized that we’ve come across (in terms of node count). Nonetheless, users should be mindful that over 50% of the validators run on AWS and geographically over 75% are situated in either the United States or Germany. This hampers their decentralization efforts and presents risk.

One area in relation to their nodes that needs immediate attention is the plurality of node implementations. This chain is held together by one node software: AvalancheGo. If a bug is exploited, the entire network could grind to a halt and billions in TVL will be at risk.

This Achilles heel is inflamed by Avalanche’s irrelevant bug bounty offering. At just $10,000, the best brains in crypto are not being attracted to the network. Fortunately, Ava Labs are increasing this bug bounty. At an average of 153 days of discussion before each update is pushed (and perfect relevant software function docs), GoAvalanche’s development is clearly methodical. We’re aware that Avalanche has audited its node software thanks to our discussion with the lovely @luigidemeo. This remains private."

Bugs/Exploits

  • From Blockthreat (14-9-2022):

"Avalanche patched a critical DoS vulnerability in its node software thanks yo a responsible disclosure by Péter Szilágyi.

Avalanche deprecated Native Asset Calls after Statemind, Abracadabra and Sushi teams reported a function access control vulnerability."

"The Avalanche Web Web Wallet, the official wallet for the AVAX cryptocurrency, experienced an outage yesterday that left customers without control of their tokens for six hours. According to official reports taken from status.avax.network, the page that monitors the state of every component of the Avalanche network, the outage started at 18:05 UTC, when web wallet nodes started experiencing a sharp uptick in API traffic. The issue is believed to have been caused by an airdrop carried out by Avalaunch, a launchpad for tokens in the Avalanche network that would deliver XAVA (its official token) to validators and delegators staking AVAX.

In another cryptocurrency environment, the failure of a single wallet is not a cause for concern, since there is a myriad of options for uses to manage their funds at any given time. However, the Avalanche blockchain relies only on this web wallet to serve the totality of its users, and while some other wallets have been proposed, there are still no usable alternatives at the moment.

  • Messari reported (31-3-2021) even an offline time of 24 hours and said that the high trafic of Pangolin's launch triggered an error in Avalanche that led to an invalid mint and C-chain nodes to panic.
  • From CoinDesk (12-2-2021):

"The Avalanche network has come to a near halt after “a bug in the cross-chain functionality” code that enables the Avalanche protocol and the Ethereum Virtual Machine (EVM) to speak with each other failed under high loads, according to the Avalanche developer team on Reddit. The release of Avalanche‘s newest decentralized finance (DeFi) product, money market Pangolin, snowballed into “insane load” for the network, which further “triggered a very low probability bug that produced a bad state in the network,” the team said on Reddit. The ability to send transactions has crawled to a halt with some users reporting wait times of up to four hours for finalizing a transaction. Funds are safe, however."

Governance

  • A first major decision was made through a survey poll (4-12-2020):

"Going forwards we need to poll based on a more sophisticated process that takes into account both stake and stake duration of a voter. Core devs have this feature on the backlog."

"Governance is planned to be added to the P-chain for specified parameters, such as the minimum staking amount. During the initial planning of how the network would function, we felt that general on-chain governance was going to result in too vague of a network description. We wanted validators and partners to feel comfortable running our software. This is also why our team has been vocally against slashing. As for who could propose upgrading the protocol, anyone can either propose a PR to the AvalancheGo repo, fork the AvalancheGo repo, or write a new implementation from the ground up. At the end of the day, what matters is what the code running on the validators says to do. Not what the ava-labs/avalanchego repo says."

  • From their Token Whitepaper (26-6-2020), AVAX will have governance, but limited to certain parameters:

"Avalanche can use its consensus mechanism to build a system that allows anyone to propose special transactions that are, in essence, system-wide polls. Any participating node may issue such proposals.

  1. Reward rate is an important parameter that affects any currency, whether digital or fiat. Unfortunately, cryptocurrencies that fix this parameter might face various issues, including deflation or hyper-inflation. To that end, the reward rate will be subject to governance, within pre-established boundaries. This will allow token holders to choose the rate at which $AVAX reaches its capped supply.
  2. Transaction fees, denoted by the set F, will also be eventually be governed. F is effectively a tuple which describes the fees associated with the various instructions and transactions supported in future releases. 
  3. Finally, staking times and amounts will also be governable.

Ultimately, we note that governance in $AVAX has hysteresis, meaning that changes to parameters are highly dependent on their recent changes. There are two limits associated with each governable parameter: time and range. Once a parameter is changed using a governance transaction, it becomes very difficult to change it again immediately and by a large amount. These difficulty and value constraints relax as more time passes since the last 70 change. These restrictions are in keeping with the design philosophy of predictability: the system must never change drastically over a short period of time, allowing users to safely predict system parameters in the short term, while having strong control and flexibility for the long term."

"$AVAX will be a governance token. For staking the requirements are to lock up at least 2000 $AVAX for between 2–52 weeks."

  • According to this podcast (1-5-2020), governance will decide about the minting rate (how many coins will be created, how fast, but not the total amount, that is fixed on 720M) and the staking rate, among other things. This process will be 'formalized'.

DAO

Treasury

Token

ICO

  • From their blog (25-6-2020):

"The team behind Avalanche has announced that Galaxy Digital, Bitmain, Initialized Capital, NGC Ventures, Dragonfly Capital, and dozens of other individuals have participated in a $12M private sale of its tokens as of June 24th."

  • From their blog (22-7-2020): "Avalanche raised $42M in 4.5 hours for Its Public Sale." Two days before it also tried, but got spammed and DDOS'ed.

Token allocation

"There is a capped-supply of 720,000,000 (720M) $AVA tokens, and the genesis block will have 360M of those tokens. How are the 360M $AVA tokens in the genesis block distributed? From what I've read, 18M tokens (2.5% of the 720M cap) are rewarded to the VCs and 72M tokens (10% of 720M) are rewarded to AVA Labs. How are the remaining 270M genesis tokens distributed?

Great question, and the simple answer is this: long term multi-pronged approach. We are distributing extensively to both developers (ava-x grants) and non-devs (ava-hub). We will be doing airdops, are doing distributions through validators, and have lots of neat distributions mechanism planned out such as distributing a small portion of tokens to those that do some PoW minting for a short period of time. The reality is that distribution is a very complex process, and there simply isn't a silver-bullet. However, extremely wide distribution of tokens is single-handedly the most effective way to build a strong project, and we'll certainly try our best to push that."

  • An allocation with percentages can be found here (28-6-2020). But the most important allocations are:

50% staking rewards

19.29% Foundation

10% Team

5% Strategic partners

2.5% Airdrop

"Is planning to distribute 2 million tokens in its final testnet before the project’s full launch in summer.

The so-called “Denali Testnet” will serve as the final stage of the AVA network testing before AVA’s mainnet launch. The new testnet will allow each validator to earn up to 2,000 AVA network’s native tokens, AVA Labs announced on May 29."

Utility

"Suppose the reasons to build on a subnet as described by game developers like Pulsar were valid. In that case, the value accrual is that of growing the validator set, as each subnet stakes 2,000 AVAX and validates on the Primary Network."

  • AVAX transaction fees are burned, increasing scarcity of AVAX. However, from their Discord (28-7-2020);

"The reward calculation will take into account the current circulating supply and ensure that the hard cap is never reached. However, since tx fees get burned on the network, this will always decrease the total circulating supply making more room for staking rewards without exceeding the cap."

"While Bitcoin only has BTC, validators of Ava enjoy a rich array of other sources of value accumulation besides just purely Ava. Yes, Ava aims to be the universal unit of account, and hopefully one day a globally accepted currency, which makes it valuable, but applications that are built on Ava might have their own tokens, and those tokens will pay fees in their native currency to Ava validators as well."

  • From their FAQ (8-5-2020):

"In short, the AVA token is crucial for securing the network, paying for expensive operations in the network, and enabling atomic swaps of assets (between subnetworks). The AVA token has similar functionality to “gas” in Ethereum, although it has additional utility."

Token Details

Stablecoin 

Coin Distribution

Tech

"Q: How will you integrate blockchain software designed in very different software languages into the Avalanche / AVAX network?
A: We currently have the ability to run VMs in separate processes over a gRPC server. This enables multiple languages to be used when implementing VMs."

  • From their FAQ (8-5-2020): "For now, full EVM support, and thus all Ethereum smart contracts. We hope to also support WASM soon."
  • AvalancheGo. From an AMA (4-12-2020):

"Go has been great and we’re very comfortable with using it. We do use some other languages and will continue to bring Avalanche tooling to more development environments. Gün would probably love for us to make our own language but for now, we’re going to stick with battle-tested ones!"

"The Avalanche team also released its second SDK for building Avalanche Virtual Machines (AVM), the Rust SDK. Developers can leverage the SDK to launch blockchains utilizing the Rust language on an Avalanche subnet. This update introduces more flexibility when developing a subnet."

Transaction Details

  • Capacity (TPS): Avalanche can support 4500+ tps (22-12-2021).
  • "It achieves latencies on the order of one second or so. And it achieves throughput on the order of tens of thousands of transactions per second. The current testnet with all the instrumentation and lack of optimization is achieving about 6,500 transactions per second." (1-5-2020)
  • Latency: "I keep (1-5-2020) advertising about a second. The actual number we're seeing on the network right now is 90 milliseconds. So it's less than a 10th of a second at the moment. Now, of course, that's not going to stay there. You know, as the network grows the latencies are going to increase a little bit. You should see how fast this thing is. And once you see AVA in action, there is no going back. Everything else looks archaic in comparison. I try to use MetaMask these days and it's just those latencies of having to wait for the transaction to confirm and so on are insanely, insanely long. And a single confirmation of course is insecure. We haven't seen anybody get hit by that yet, but we will. But even assuming one conf is good, the time it takes on MetaMask with Ethereum today is 15 seconds."

"[Nodes get rewarded] by special minting transactions. A node earns the right to mint by first putting up a stake and then participating actively in the consensus process. Specifically, node rewards are directly linked to their uptime and response latency. Every node maintains local information about the liveness and behavior of each other node with which it interacted. Whenever a node v is sampled by u, the latter maintains a local tuple of (response bit, timestamp). The first entry is a single bit representing whether v responded within the timeout, and the second represents the timestamp of the response. In other words, minting in Avalanche is done via proof-of-uptime and proof-of-responsiveness."

How it works

"Ava plans to use a heterogeneous system design in which there are two major subsystems:

  1. Avalanche -- for pure payment (like a super fast Bitcoin)
  2. Snowman -- for other operations that need be fully ordered (this supports Aethereum/other chain mechanism, etc.)

So in 1, there is really no such notion of "forks" because it is a partially ordered DAG which is merely used to accelerate voting. The consensus, however, does not depend much on such structural info of the DAG itself, but statistical info gathered from votes. In this sense, there is no "fork".

For 2, as we're growing a chain, there could be some ephemeral little "forks" which are not marked as decided. In some sense, to end users, the only thing that matters is the decided chain that only grows consistently without flipping back and forth (with only negligible probability).

To summarize, Avalanche is both replicated and naturally shared because it doesn't require total-ordered decisions. Snowman resembles those quorum-based protocols where the consensus is reached one after another."

"Ava Labs also claims to have made another “breakthrough” like that Sirer says is just as revolutionary as Avalanche, but hasn’t been revealed until today.

It boils down to this: in all blockchains launched thus far, all the nodes have to agree on certain criteria. All nodes utilize the same “scripting language” for smart contracts, for example.

Ava, by contrast, offers a “heterogeneous network,” allowing nodes across the system to have different properties. Essentially allowing different groups in the network to “plug-and-play” different features.

“This is a different type of a universe,” Sirer said, comparing Ava to other popular public blockchains like EOS and ethereum. “Ava has an interoperable framework, but then you have smaller and smaller universes of your own that have minimum properties.”"

"Ava will be comprised of multiple different “subnetworks” able to be uniquely coded to support different types of decentralized applications (dapps).

“Part of the interesting aspect of the Ava platform is that it gives you a very modular infrastructure for developing any kind of functionality you want,” said Kevin Sekniqi, chief protocol architect at Ava Labs. “When you launch a chain on Ava, you get this blank state where you can import any additional functionality like the ethereum virtual machine."

As Sirer suggests, these independent blockchain worlds can be coded to host unique privacy guarantees, be compliant with regional laws, or fulfill specific data storage requirements. Such flexibility is what differentiates the platform from other blockchains that have come before it.

While affirming that proof-of-stake was the superior consensus protocol, Sirer added that Ava is in a class of its own. “All of these PoS protocols that have been proposed today rely on the same foundation and that foundation has been poorly specified. It has many shortcomings compared to what PoW gives you out of the box,” said Sirer."

"In Avalanche is we do a probabilistic cover of the entire space. What does that mean? I poll. I pick a few people and I say, "Hey, do we agree that Alice paid Bob?" I asked this to three people, maybe five people, but not more than 10 people, a small number of people. I might have tens of millions of people out there, but I'm only checking with three to five or to 10. But no more than that. The magic is, and this is the magic in that initial paper from team Rocket, the magic is I don't need to do this all that many times for me to have assurance that covers the entirety of the set. So I ask a small number of people and I get okay from them. You ask a small number of people and you get an okay from them. And together we cover the entirety of the space. And of course there's much more to it than a lot of subtle math.

The reason for why this is correct is really the most difficult part of the equation here, but it's all laid out in the initial paper and it yields a system where, you know, after a modest number of rounds, you get you get consensus. Now, modest number of rounds translates to about a second or so in terms of latency. Everybody talks about TPS, transactions per second. That's a sucker's game. All of my graduate students in their first two years, they're all focused on transactions per second. There are a billion games one can play to lie about transactions per second to fake boost those numbers. We're seeing this play out with new coins coming out this year. There are lots of people claiming millions of transactions per second. And then when you look under the covers, they're barely doing a few dozen. So TPS is not where the action is. The action is with latency. Ask anybody who has tried to build something real on a blockchain. In Web3, they will tell you that they want latency."

"Avalanche supports application-specific-sharding, empowering developers to launch applications that conform to their own specific needs.

Avalanche supports not just application-level-programmability but also network-level-programmability. This enables developers to not only control the execution of their decentralized apps but also securely manage private data.

Avalanche fully supports non-fungible tokens (NFTs), with plans to create a registry so you can discover and explore the entire universe of NFTs on Avalanche."

Fees

"The fee structure in the Avalanche platform carries several differentiating features that distinguish it from other existing and upcoming platforms.

Staker Fees. Unlike other protocols that pay all fees to the elected leader, such as in Bitcoin, in Avalanche fees are simply burned. Therefore, payment is global and for the good of the entire ecosystem. Fee burning increases scarcity of tokens in the system. The minting process offsets the transaction fee burning, therefore there is no danger of the system grinding to a long term halt due to gradual destruction of coins.

Transaction Costs. In Avalanche, transaction fees differ depending on the type of transaction. Instantiations of new subnetworks carry the heaviest fees. In contrast, other types of transactions, such as simple payments of $AVAX, carry little cost. For other subnets, transactions pay fees in that subnet’s native token, as well as some amount in the $AVAX token. A transaction native to a subnetwork may specify its own transaction fee structure, and it is up to the creator of the subnet to choose a fee structure that incentivizes validation for open, permissionless subnetworks.

Sliding Cost Function. Transaction fees carry a sliding-cost function. The fee is not set by the issuer of the transaction, but rather by a globally verifiable fee-function. As the congestion in the network increases, fees increase. At the end of some specific period of time, the function is recalculated to accommodate natural increases in transaction volume in the network.

Transaction Tiers. Unlike in a model such as Ethereum’s, where every transaction invocation must pay some gas, Avalanche adopts a different model that incorporates two types of transaction processing mechanisms. All keys with positive account balances will be able to immediately interact with the platform, where the fees will be based on an allotment mechanism, functionally similar to a tiered payments model adopted in cloud computing platforms. Every transaction will name a sender address (i.e. the invoker), which will be checked for current invocation allotment. If the address still has free invocations left, the transaction does not have to carry any fees attached by the sender. Past a certain amount of calls, the sender will need to attach some fees based on the resources used to compute the transaction. Additionally, users may opt instead pay for their transactions using computation. To that end, future releases will support free frequency-limited transactions, which do not require fees in coins but require some pre-computation. Whenever a new transaction is generated, the user will compute and attach a valid PoW on the transaction, which can be checked by all other parties."

Upgrades

"On October 18, 2022,  the Banff upgrades and Elastic Validation went live. Elastic Subnets allows creators to activate Proof-of-Stake validation and uptime-based rewards using their native subnet token. As a result, anyone can become a subnet validator by staking the subnet’s token on the Avalanche P-Chain. This opens up a multitude of incentives and security benefits.

The Avalanche team also released its second SDK for building Avalanche Virtual Machines (AVM), the Rust SDK. Developers can leverage the SDK to launch blockchains utilizing the Rust language on an Avalanche subnet. This update introduces more flexibility when developing a subnet.

Finally, Avalanche Warp Messaging (AWM) went live. Before the launch of AWM, projects that wanted to transfer assets or data between subnets had to deploy and manage their own bridges. AWM allows subnets to communicate with each other by producing a BLS Multi-Signature. The mechanism verifies the validity of an arbitrary message, such as a transfer or contract data, which any other subnet can then prove. Cross-subnet communication should theoretically catalyze network effects."

"The Apricot Phase Three network upgrade goes into effect tomorrow, lowering C-Chain fees by as much as 66%."

Primary Network

"The Primary Network validates Avalanche's built-in-blockchains: Platform Chain, Exchange Chain, and Contracts Chain. All members of all Subnets must also be a member of the Primary Network. In order to become a member of the Primary Network, one must stake some AVAX tokens."

Subnets

"A Subnet, or Subnetwork, is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains. Each blockchain is validated by exactly one Subnet. A Subnet can validate arbitrarily many blockchains. A node may be a member of arbitrarily many Subnets.

A Subnet manages its own membership and it may require that its constituent validators have certain properties. This is very useful and we explore its ramifications in more depth below.

There is a special Subnet called the Primary Network, which validates Avalanche's built-in blockchains. All members of all Subnets must also be a member of the Primary Network. In order to become a member of the Primary Network, one must stake some Avalanche tokens. The upshot of the preceding two points is that all validators of all blockchains must also validate Avalanche's built-in blockchains and must have staked Avalanche tokens."

 "Currently subnets are totally isolated. In the future, it could be possible for them to communicate through the primary network but currently they provide complete segmentation of chains."

  • From their website (8-5-2020): "Subnets manage their own assets. The asset registry is a way of publishing a subnet’s asset to the AVA platform." 
  • "AVA Labs Announces Athereum. Athereum is a “spoon”, or friendly fork, of Ethereum, which benefits from the Avalanche consensus protocol and applications in the Ethereum ecosystem"
  • "We want (11-2019) Athereum will be the first major subnet deployment on the Ava platform! Indeed we are hoping the greater Ethereum community takes this as an opportunity to test and improving the infrastructure. There have actually already been some conversations sparked from Athereum about performance improvements in the EVM!"
  • From an in depth interview by The Defiant (1-5-2020):

"What AVA does, is it allows the asset issuer to designate a certain class of participants so that you can say, this is Camila Coin and it represents fractionalized real estate in New York City. And the nodes that validate Camila transactions are say, purple nodes. Now you get to designate who becomes purple. You can say things like, well, to become a Camila validator, you have to be in the US and therefore under OFAC regulation. Or you can say you can be anywhere you like, but you have to sign an agreement that you will enforce OFAC and anything else you might want.

You can express things with AVA about the network that you could not express in EVM byte code. Legal agreements top the list of things that people want to express but cannot in code and there are other things as well. There are resource requirements. Look at the way Bitcoin splits up. Look at the whole the blockchain debate. The blockchain debate is all about people saying, Hey, all these nodes have enough resources for a bigger block, and there's people saying no they don't, and there's an unsurpassable fight that caused the fork.

The greater AVA network has a very low common denominator. But the Camila Coin can say, look, to participate in my network, you have to have a 64 gigabytes of Ram. And suddenly you can say, and smart contracts on Camila Coin that relate to Camila's fractionalized real estate, they can be much bigger than normal.

CR: So the issuer is able to decide what validators or nodes can process its token and also decide on the resources required to transact with them.

ES: Yes, exactly. So this opens up a brand new world of possibilities. So for this real estate example, you could say things like all the purple nodes, they have to sign an agreement and put up a bond that says that they will keep archival records for the next 20 years. It's real estate. You gotta do that.

CR: Are these nodes known entities? Because if they're taking this kind of liability and if they have to check whether the token holders are meeting these requirements, it is actual work. Is it something that can just be automatically handed over to thousands of nodes in a network or are they, are they supposed to be known entities doing this work?

ES: That's a great question. I don't think they should be known entities. AVA the network is very similar to Bitcoin, Ethereum, and so forth. We're talking about assets built on top of AVA issued by third parties and those nodes are determined by the third party issuer of the asset. You're issuing Camila Coin, you're going to determine who gets to be purple. It's entirely up to you what you demand of them. What I think we will see is that there will be some common large sub networks. So there might be an American sub network, there might be a GDPR sub network for the European union and there might be other smaller ones.

And of course once you have the capability then we're going to see people get really creative with this because there's going to be a market for paying people for archival, for privacy, for security, for extra resources and so on. And then people will come up with cool ways of discovering these nodes without necessarily having to know who's behind them by name."

Staking

  • Staking in Avalanche comes with quite some limitations. From their docs (8-10-2021):
  1. "The minimum amount that a validator must stake is 2,000 AVAX
  2. The minimum amount that a delegator must delegate is 25 AVAX
  3. The minimum amount of time one can stake funds for validation is 2 weeks
  4. The maximum amount of time one can stake funds for validation is 1 year
  5. The minimum delegation fee rate is 2%

Note that once you issue the transaction to add a node as a validator, there is no way to change the parameters. You can’t remove your stake early or change the stake amount, node ID, or reward address."

"Q: If the fees are going to be burnt, which will be the incentive to the miners once all AVAX have been mined?
A: At some point, the Avalanche Network will have to be sustained by fees IMO (though it will take quite a few years before this becomes an issue). Burning fees and reintroducing them via minting, in some ways is equivalent to rewarding fees to stakers."

  • From a blog (30-5-2021):

"With Avalanche, all the chains including in the primary network are secured by the full staked value of the network. All securing the network and participating in consensus for every transaction."

  • From their docs (8-10-2021):

"Avalanche doesn't have slashing. If a node doesn't behave well while validating, such as giving incorrect responses or perhaps not responding at all, its stake is still returned in whole, but with no reward."

Validator Stats

"The average engaged stake stayed stable at ~62% and grew slightly (~2%) QoQ and YoY. Total stake also gradually increased while offline stake (unresponsive stake) declined."

  • 1028 active validators, with 15457 delegators (13-9-2021).
  • Has 999 validators (20-7-2021).
  • Avalanche hit 600 full, block-producing validators (29-10-2020). Has 900 as of 27-3-2021.

 Liquidity Mining

Scaling

Different Implementations

Interoperability

  • The team wants to be as interoperable with Ethereum as possible. Creating Athereum as a side chain, to which all Ethereum DeFi can be duplicated. It also (28-6-2020) has a "Public integration with Chainlink [which] brings leading oracles onto Avalanche and expands parity with Ethereum’s DeFi tooling".

And further:

"Avalanche features complete support for the Ethereum Virtual Machine, and thus, Ethereum tooling works out of the box. Truffle Suite, Remix, MetaMask, MEW, and all your other favorite Ethereum tools."

"The C-Chain is an instance of the Ethereum Virtual Machine powered by Avalanche. One can create smart contracts on the C-Chain and do anything else they would do on Ethereum by using the C-Chain’s API."

Other Details

Messages between Subnets
  • From their blog (22-12-2022):

"AWM enables Subnet Validators to collectively produce a BLS Multi-Signature that attests to the validity of an arbitrary message (e.g., transfer, contract data, etc.) that can be verified by any other Subnet. Because all Subnet Validators must validate the Primary Network via the P-Chain, they can access the stake weights and registered BLS public keys of any other Subnet at any time. This means that Subnets communicating with each other don’t need to periodically send each other information about changes in their respective validator sets to continue verifying messages, making any-to-any messaging practical."

Oracle Method

"We are open to integrating anything and everything. Our teams are very close with Chainlink, and therefore, they were the first oracles project that we engaged."

They also say "Chainlink is on the final stretch for mainnet integration." So not completely integrated yet.

Privacy Method

  • On it's roadmap it is said (8-5-2020) they want to have their own 'Privacy VM', there is no date attached.
  • From their AMA after the ICO (27-7-2020):

"We will be focusing more on privacy features after we get mainnet out. Our multi-chain model will let us try a variety of approaches, for example on the X-chain we could easily support CoinJoin-style privacy protocols while also experimenting with ZK proof-based privacy schemes on a new chains. I’m also looking forward to playing with SNARKs and protocols like Tornado on the Ethereum-compatible C-Chain."

"Privacy subnets are possible, currently planned for the long-term roadmap, but not being worked on right now."

Compliance

Subnets/Blockchains

  • A new report added 3 more (2-5-2023):
  1. XPLUS
  2. DOS
  3. SHRAPNEL

"Has seven Avalanche Subnets including:

  1. DFK (launched Q1 2022)
  2. Swimmer (launched Q2 2022)
  3. WRAPTAG (launched Q2 2022)
  4. STEPNETWORK (launched Q3 2022)
  5. Numbers (launched Q4 2022)
  6. XANACHAIN (launched Q4 2022)
  7. DEXALOT (app coming Q1 2023)"

C-Chain (The Contract Chain)

"The C-Chain is an instance of the Ethereum Virtual Machine powered by Avalanche. One can create smart contracts on the C-Chain and do anything else they would do on Ethereum by using the C-Chain’s API."

"Over 1M Transactions have been executed on Avalanche's Contract-Chain"

P-Chain

"Collaboration among Avalanche, Aave Companies, Golden Tree Asset Management, Wintermute, Jump Crypto, Valkyrie, Securitize, and others to build the first horizontally-integrated blockchain specifically engineered for Institutional DeFi with native KYC functionality."

"Currently, the default subnet is the only permissionless subnet on the Avalanche platform. It is possible to create your own permissioned subnets on the Avalanche platform by registering on the P-chain."

X-Chain

"We built NFTs directly into the transaction format of our AVM (X-Chain) itself. It’s actually closer to EIP-1155 (Collectible NFTs) than ERC 721 in design. EIP-1155 is a generalization over ERC721 from a design standpoint anyway."

DFK Chain & Crystalvale

"Powered by @avalancheavax DFK Chain will be the home of the previously announced Crystalvale expansion!"

Evergreen Subnets

"Avalanche has developed Evergreen Subnets to offer institutions a blockchain deployment solution that offers the essential permissions and controls associated with private blockchains while enabling the liquidity benefits of interoperability.

By leveraging Avalanche’s Evergreen Subnets solution, institutions can account for company-specific and regulatory requirements. Built-in features include user and validator permissioning based on KYC/KYB standards and geofencing for jurisdictional requirements. This is all possible while leveraging AWM for interoperability. This means communication is enabled without the need to rely on third-party bridges, enabling liquidity to flow between Subnets.

The initial cohort of institutional partners includes T. Rowe Price Associates, WisdomTree, Wellington Management, and Cumberland. These participating institutions will be leveraging the Spruce testnet to assess the benefits of onchain trade execution and settlement across a variety of applications. Such transactions will include foreign exchange (FX) and interest rate swaps, with other areas in active research and development. "

GameFi Subnets

"Looking ahead, the pipeline for subnets is filled with high-profile gaming projects — with Castle Crush and Highrise Worlds standing out in particular. Castle Crush, currently in testnet, and community-owned metaverse Highrise World are well-established Web2 games. The games both have around 200,000 daily active users (DAU) and 1–2 million monthly active users (MAU). Castle Crush’s developer, Wildlife Studios, also happens to be the largest gaming company in Latin America with 1300 employees and 2 billion downloads across its 60+ titles.

Other highly anticipated gaming subnets include first-person shooter Shrapnel, fantasy action RPG Heroes Chained, open-world RPG Ascenders, intergalactic metaverse Imperium Empires, and Pokemon-style MMORPG DeFimons."

KYC Subnet

"The single most salient development here came with Ava Labs’ announcement that it will collaborate with Aave, GoldenTree Asset Management, Wintermute, Jump Crypto, Valkyrie, and Securitize to build a permissioned subnet with native KYC functionality.

Their Other Projects

AvaLaunch

Initial Litigation Offering (ILO)

  • From their blog (14-12-2020):

"Avalanche, Roche Cyrulnik Freedman LLP, and Republic Advisory Services are bringing the $10B asset class of litigation financing to the Avalanche blockchain through the creation of a first of its kind token, the Initial Litigation Offering (“ILO”), a blockchain-enabled litigation financing product open to all investors.

Litigation funding, also known as legal financing and third-party litigation funding, provides individuals who otherwise lack the necessary resources the funds needed to litigate or arbitrate a civil claim. ILOs raise the funding required to pursue litigation in these cases and tokenize an economic right in such claims. Each token indirectly represents a legal claim to a portion of the potential financial recovery which has been converted to a digital asset."

Roadmap

  • The roadmap can be found here (17-6-2021).
  • The old roadmap can be found here (8-5-2020).
  • Post mainnet they plan: Post Quantum VM, Pruning, database upgrades, AVA Network Monitoring, an explorer, Frosty Consensus, a privacy VM.
  • From Cointelegraph (30-5-2020):

"While testnet registration starts immediately on May 29, the first phase of the testnet launch will start on June 1. At that time, participants are expected to set up live nodes, an AVA Labs representative explained. The Denali testnet consists of three core challenges, which run until June 15. While AVA Labs expects to move to its mainnet in summer 2020, there is no specific date for the full launch of the project, an AVA Labs’ spokesperson said.

The Denali testnet follows AVA’s first successful testnet known as “Cascade.” Launched in mid-April 2020, AVA’s Cascade testnet amassed 300 developers setting up and running validator nodes."

  • First upgrade is called Apricot and is scheduled (4-12-2020) for December 2020. It will probably include lowering the staking and delegation requirements:

"The Apricot upgrade will include a number of important features. First, we’re adding epochs to the X-Chain to support future network upgrades. Epochs provide a linear ordering of what vertices have been accepted in a given time period. This enables better support for governance parameters and cool new features, such as freezable assets (which will also be included in the Apricot release).

On the C-Chain, we’re adding new calls to support using native Avalanche assets within the EVM. These changes will enable users to wrap native Avalanche assets into ARC-20s, so that any dApp that uses ERC-20s will be interoperable with native Avalanche assets."

  • Got rescheduled (26-3-2021) plus got divided into phases, the first happening on 31-3-2021 .
  • From their blog (17-6-2021):

"Through the end of 2021, the Avalanche community will see upgrades to:

  1. User Experience
  2. Platform Features & Performance
  3. Liquidity & Ecosystem Growth"

Revenue

  • Token Terminal gave Q1 of 2023 for AVAX around $1.8M in revenue. Revenue in AVAX (total transaction fees paid in AVAX) increased by 10.8% QoQ (up 25.9% in USD terms). The increase in revenue was largely due to an 18.2% increase in transaction fees QoQ, much of which came from the network experiencing moments of instability in March.

Usage 

"Like daily active addresses, average daily transactions were relatively flat QoQ on the C-Chain. Overall, the C-Chain’s decrease in average daily transactions was dramatically offset by the transaction activity on subnets. Since Avalanche burns 100% of transaction fees [on the C-Chain], the reduction in transaction fees also puts downward pressure on the burn rate of AVAX. Just over 2 million AVAX had been burned as of December 31, 2022."

"Avalanche’s daily transactions lowered significantly after the redirection of GameFi transactions and the effect of the UST de-pegging event. From then on, Avalanche’s transaction count was stable at around 200-300k, except for a peak close to 500k on Jun 13, 2022. Notably, most of the transactions on that date came from Trader Joe, a popular DEX on Avalanche. First Mover LPs are the highest proportion of Smart Money on Avalanche, followed by Airdrop Pro and First Mover Staking. This changed considerably from the last quarter, where there were higher proportions of NFT-related Smart Money categories."

"Over 200 projects call the Avalanche network home. These projects can be broadly categorized as either native or non-native. Thanks to the C-Chain’s EVM-compatibility and the robust bridging ecosystem around the Avalanche network, many live projects are non-native, meaning cross-chain (e.g., Aave, Curve, etc.). However, a subset of projects are native, meaning they only live on Avalanche, were started on Avalanche, or have the vast majority of their activity on Avalanche.

Another distinction between projects is where they’re deployed on the network. While the overwhelming majority of projects are still on the C-Chain, the first projects began to deploy their own subnets through the P-Chain starting in April. These custom, application-specific blockchain networks prevent projects from clogging up the network by splitting up traffic and isolating performance. In turn, the projects benefit from better performance and customizability in terms of fees, the validator set, the virtual machine, and more.

Avalanche has had its first two custom subnets go live along with the roll out of a number of testnet subnets."

  • TVL has just peaked ATH at $2.6b since the parabolic run-up when Avalanche Rush was announced (16-9-2021).
  • Has reached 15.000 contracts deployed on the C-Chain (13-9-2021).
  • Since August 1st 2021, TVL exploded from $163M up to $1.5B (25-8-2021), which translates to 823% growth in less than a month.
  • Has a total of 5.8M tx with 134k AVAX burned (20-7-2021).
  • From Our Network (15-5-2021):

"Despite a 50% reduction in fees in a March network upgrade, Avalanche is the 4th Highest Layer-1 in fees (note: fees in on Avalanche are burned). In the six weeks since the Apricot Phase 1 Upgrade, Avalanche users burned more fees on smart contract transactions than in the first six months of Mainnet. The Avalanche-Ethereum Bridge launch on February 8th unlocked DeFi to grow on Avalanche. In the time since, users have executed over 2.1M transactions, created 95,000 unique wallet addresses, and transferred more than $180M in assets to Avalanche from Ethereum."

"Over 1M Transactions have been executed on Avalanche's Contract-Chain"

It reached 2M in June (1-7-2021). With over $180M migrated from Ethereum.

Projects that use or built on it

"So far, we have confirmed integrations with crypto projects like BiLira, Chainlink, and Torus–with more to come."

Pros and Cons

Pros

  • Claims huge TPS.
  • Has a well known and experienced team.

Cons

  • Ava Labs got into a scandal after Cryptoleaks posted a blog and videos (8-2022) with a lawyer who, in a secretly recorded meeting, bragged about suing competitors, owning 1% of the AVAX supply and using less than ethical tactics to attack opponents. The lawyer in question, Kyle Roche, wrote a half hearted statement saying his comments in the video were taken out of context. Emin Gun Sirer then followed up with a statement claiming the video was nothing but lies and Kyle's services were in the past.
  • Vlad Zamfir had a Twitter discussion with Sirer, outing his criticisms and saying Avalanche was not 'revolutionary'.
  • Has no self funding mechanism (22-9-2020).
  • Has chosen to have multiple limitations within its staking mechanism. Requiring a minimum for delegation, a maximum for how long you want to stake, setting a minimum delegation fee and not letting stakers unstake earlier than they decide up front.

Competition

"Architecturally, Avalanche is quite similar to Cosmos with multiple domains (subnets instead of zones) interoperating with each other. Just like Cosmos zones, subnets are sovereign networks that bring their own security. This architecture enables a smoother way for dApps start off as smart contracts, build a community, and once mature enough, become a subnet for further customizability. As smart contracts migrate to subnets, they also offload congestion on the primary network, which reduces fees. We saw an example of this with P2E game DeFi Kingdoms’ launching of their own subnet."

  • To see how Polygon's Supernets differ from Avalanche's Subnets, check TheTIE's comparison here (15-7-2022).
  • According to an AMA they set themselves apart with the following 4 characteristics (4-12-2020):

"A. Instead of being a single blockchain and a single set of validators/miners, Avalanche is a heterogeneous network of many different blockchains and validator sets.

B. On Avalanche, you launch your Dapp as a Virtual Machine instead of a smart-contract. Technically speaking a Virtual Machine is a State Machine. This includes your blockchain state, a state transition function, transactions, and an API through which users can interact with your blockchain. More generally speaking, a Virtual Machine is the application-level-logic of your blockchain. We don’t put many restrictions on what you can do with your Virtual Machines. A blockchain is an instance of a virtual machine. Another way to say it is that a blockchain runs a virtual machine.

C. Blockchains on Avalanche are validated by subnets. A subnet is a dynamic set of validators working together to come to a consensus on the state of a set of blockchains. 1 blockchain is validated by exactly 1 subnet. 1 subnet can validate many different blockchains, including many instances of the same virtual machine. 1 validator can belong to many different subnets, public and private, validating many different blockchains, including many instances of the same virtual machine.

D. Avalanche consensus is a paradigm shift in the field of consensus. It’s highly scalable and decentralized, has high throughput and fast finality is green and quiescent, and performs well in adversarial conditions."

Team, Funding, Partners

Partners

"Got integrations with GREE, OpenSea, Shopify, and Alibaba."

"Thrilled to reveal the blossoming collaboration between @avalancheavax and Terra will also be further solidified with a $100 million Treasury Swap between TFL and the Avalanche Foundation of $LUNA. The @LFG_org’s OTC deal to add $100 million of $AVAX to the $UST Reserve makes AVAX the first major crypto-asset besides $BTC to be added to the UST Reserve, marking the beginning of a diversified and non-correlated asset pool supporting the $UST peg."

Funding

"Some Avalanche-focused capital allocators are the Avalanche Foundation, Ava Labs, AVentures DAO, Avatar Ventures, and projects such as Trader Joe and Avascan.

The most active member is the Avalanche Foundation, earmarking tens of millions of AVAX over the past year to fund the development and growth of the Avalanche ecosystem. In addition to individual financing rounds, its four wide-ranging initiatives to date have been Avalanche Rush, the Blizzard Fund, Multiverse, and the Culture Catalyst Initiative.

The other sources of funding for Avalanche-based projects have been the general public, angel investors, and investment firms.

Retail participants on Avalanche have had the opportunity to fund some noteworthy projects (e.g., Crabada and Platypus Finance) through launchpads such as Avalaunch and Rocket Joe and community-driven accelerator Colony Labs.

The most active “general” investment firms for early-stage Avalanche-native protocols, by deal count, have been Muhabbit Capital (MC) Ventures, GBV Capital, Shima Capital, Three Arrows Capital, and ZBS Capital."

  • Announced a $100M 'Culture Catalyst Initiative' for NFT projects (26-3-2022).
  • Launched a $290M incentive fund intended to accelerate the growth of “subnets” within its network on March 8, 2022.
  • Polychain and Three Arrows lead $230m investment in Avalanche (17-9-2021).

AVA Labs

Team

  • Team of over 40 people (6-5-2020). "More than 110 people now work within Ava Labs, with almost half dedicated solely to technical research and development." (17-6-2021).
  • Emin Gun Sirer; CEO and founder of AVA Labs, has said that almost everybody on his team has an ETH background.
  • John Wu; President of AVA Labs
  • Kevin Sekniqi; COO; chief protocol architect and co-founder at AVA Labs
  • Stephen Buttolph (/u/StephenTechSupport )
  • Maofan “Ted” Yin; a student of Sirer, who was the lead author of Libra's consensus mechanism, but "these classical protocols, they aren't going anywhere. This is not where the action is. I want to work on Avalanche. And he's been working on the Avalanche protocol as a protocol architect." Ted Yin (/u/Tederminant)
  • Collin Cusce (/u/ccusce)
  • More info on their team can be read in this blog post (5-5-2020)
  • Gabriel Cardona; Ava Labs ('Developer Evangelist' 29-10-2020)

Funding

"Ava Labs is seeking to raise $350 million in funding. The new round will put the New York-based company’s valuation at a whopping $5.25 billion, according to a Bloomberg report citing people familiar with the matter. To date, Ava Labs has raised a total of $290 million in funding over seven rounds, according to Crunchbase. The company’s latest financing round was in September 2021, when it scooped $230 million through a private token sale led by Polychain Capital and Three Arrows Capital."

Partners

"The single most salient development here came with Ava Labs’ announcement that it will collaborate with Aave, GoldenTree Asset Management, Wintermute, Jump Crypto, Valkyrie, and Securitize to build a permissioned subnet with native KYC functionality. Ava Labs worked with Deloitte to create the Close As You Go platform to improve the process around Federal Emergency Management Agency (FEMA) reimbursements. The Lemonade Crypto Climate Coalition is building an application on Avalanche to provide weather insurance to subsistence farmers."

AVA X

  • The venture arm of AVA
  • Has (24-4-2020) a grants program that "will provide financing of up to $250,000 to selected projects building with its technology." According to Kevin Sekniqi "half of AVA Labs' allocation of mainnet tokens – with a value "in the many millions of dollars" – would also be available to selected projects as grants"
  • Lydia Chiu; VP, Business Development

(:

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