Avalanche is a decentralised blockchain network that supports smart contracts, and it is open-source. Enterprises can use Avalanche to launch decentralised applications (Dapps) plus other blockchain-based products simply and rapidly.
To avoid any potential roadblocks, Avalanche has three different but interlocking blockchains. By running independently yet together, the network is able to run smoothly and quickly.
The Avalanche network relies on three merged blockchains known as the Exchange Chain (X-Chain), Platform Chain (P-Chain), and Contract Chain (C-Chain). While each blockchain provides different benefits, they all work together to create the Primary Network.
Avalanche’s network structure is only one example of how the company innovates. They also use a cutting-edge consensus protocol to improve efficiency. The Avalanche Consensus Protocol is an improved version of the Ethereum’s Proof of Stake (PoS) consensus mechanism. Because it is more efficient, it can process Transactions Per Second (TPS) faster — about 4500 TPS currently. For comparison, Bitcoin supports seven TPS and Ethereum support 14 TPS. Not to mention, faster transactions decrease energy consumption and lower network fees overall.”
A ‘consensus’ in blockchain technology is when a majority of the nodes on the network agree about something (such as validating a transaction). The first consensus mechanism that was created is called Proof of Work (PoW) and it is used by Bitcoin. With PoW, miners have to solve a computational puzzle before they can validate a transaction (for example: buying Bitcoins).
The PoW, or Proof of Work, consensus mechanism is energy intensive. This caused the development of the more efficient Proof of Stake consensus mechanism, which Ethereum now uses. In PoS, validators stake crypto coins to get the chance to validate a transaction instead of using their time and energy to solve a cryptic hash.
The Avalanche PoS mechanism is akin to a snowball rolling downhill. One node queries another set of nodes for their decision on a particular matter and checks if the majority agrees with one choice. If so, that is then considered the collective decision. The process repeats itself until there is a consensus among the nodes.
The Avalanche Consensus Mechanism can process transactions faster because, unlike other mechanisms, it allows transactions to be batched and voted on in groups instead of one at a time.
The Avalanche PoS also finalizes blocks differently than other protocols. In others, a block can be added and then removed if necessary (such as when two miners solve the computational puzzle at the same time in PoW). This often results in a waiting period before transactions are considered settled, which can last up to an hour.
Low probability of false blocks on the Avalanche network ensures that settlement of transactions is final and irreversible, occurring in seconds.
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