Investing in Avalanche

By   |   Verified by Andrew Boyd   |   Updated Sept. 13, 2023

  • Avalanche is a decentralized, non-custodial liquidity market protocol that enables users to participate as depositors or borrowers. Depositors give liquidity to the market and earn a passive income in return.
  • Borrowing can be overcollateralized (perpetually) or undercollateralized (one-block liquidity) borrowing.
  • The Protocol is entirely open source, audited, and secured.

Avalance is an open-source project that users can interact with using an API, a user interface client, or directly with smart contracts issued on the Ethereum network. Being open-source enables you to build any third-party service or application to interact with the protocol to enrich your product.

Here’s more about how it works, what the project is for, and how you can invest in its token (AVAX).

What is Avalanche?

Avalanche is an Ethereum-compatible blockchain platform consisting of three blockchains called X-Chain, C-Chain, and P-Chain.

X-Chain uses the Avalanche consensus algorithm to manage assets. The Avalanche consensus protocol is parallelizable and simple to prune, i.e. it removes non-critical or unimportant blockchain information from local storage and enables all nodes to work in parallel with each other. The algorithm repeatedly performs random checks on transaction confirmations by validators to ensure the validity of transactions.

The other two sub-blockchains of Avalanche use the Snowman consensus protocol, a chain-optimized protocol that works best for smart contracts. Unlike the Avalanche consensus protocol, it uses blocks in a linear process. While C-Chain is used for smart contract execution, P-Chain facilitates coordination between validators.

AVAX is the native token of Avalanche. It is a utility token that serves as the primary medium of exchange within the Avalanche platform. It is the only cryptocurrency you can use to perform transactions on the Avalanche network.

The token has several use cases, including fee collection in transactions and incentives. You can only bring your ERC-20 tokens to C-Chain by using the Avalanche Bridge, a cross-chain bridge that enables the conversion of ERC-20 tokens to AVAX from the Ethereum blockchain to the Avalanche blockchain.

AVAX is listed on many large crypto exchanges where it can be bought.