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A Beginner’s Guide to AVAX
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Published on: Nov 20, 2023
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In Brief
Learn about AVAX: Key to Avalanche's blockchain, enabling secure transactions and dApps in an evolving digital ecosystem.
AVAX is the native token of Avalanche and is central in helping the Avalanche network deliver on its goal of supporting the implementation of blockchain services and building decentralized applications (dApps).
Launched in 2020, AVAX is used to secure the Avalanche blockchain through staking, pay transaction processing fees, and function as a primary unit of account between protocols in the Avalanche ecosystem. The Avalanche crypto has a limited supply of 720 million tokens with a current total supply of over 430 million AVAX tokens as of the time of writing.
Before You Get Started
Before we take a closer look at Avalanche’s coin, remember that you can buy, sell, manage AVAX using Trust Wallet. The wallet can be downloaded as a mobile app, or you can install the Trust Wallet Extension for your desktop browser. For this guide, we'll focus on creating a new wallet using the Trust Wallet mobile app.
Get the most updated version of Trust Wallet
Below you’ll see the steps to create a new wallet, but you could just as easily import an existing Web3 wallet to Trust Wallet, if that’s your preference.
To create a new wallet:
Download, install and then open Trust Wallet
Choose “Create a new wallet”.
Choose your backup option, or you can optionally postpone the backup process by choosing “Skip”.
Start using Trust Wallet.
How to Buy Avalanche (AVAX) with Trust Wallet
Search for “AVAX” or “Avalanche” from the search bar on the wallet’s Home screen.
Select AVAX.
Select “Buy”.
Enter the amount of AVAX you want to purchase.
Select the third party provider & payment method you’d like to use.
Select “Buy AVAX”, and then follow the steps to complete the purchase.
See AlsoStake AVAX — Ankr
AVAX Coin: The Basics
As the native token of the Avalanche blockchain, AVAX is used to power the Avalanche network. The AVAX coin supply is capped at 720 million tokens, while the rate of new supply of AVAX tokens is governed by its users. AVAX users have a say in how fast new tokens are minted.
They do this by voting to modify the amount of Avalanche crypto paid as a reward to network validators for adding a new block on the Avalanche network. To vote in the Avalanche blockchain, you will need to own AVAX tokens, which enable you to participate in governance, which is one of the use cases for the Avalanche crypto.
In addition, AVAX is used to secure the Avalanche blockchain through staking. The Avalanche network uses the Proof-of-Stake (PoS) consensus mechanism to verify transactions.
In the Avalanche network, validators act as the active nodes that confirm the transactions on the network. To verify transactions on Avalanche, you can either become a validator or delegator.
To become a validator, you’ll have to stake 2,000 AVAX tokens for at least two weeks but no longer than a year. As a validator, the rewards you earn are based on the number of AVAX staked. Alternatively, you can also become a delegator. Delegators are required to stake 25 AVAX tokens and choose another node to handle the validation responsibilities.
The AVAX token is also used to pay gas fees in the Avalanche blockchain. The network's deflationary mechanism permanently burns the AVAX tokens used for transaction fees, thereby reducing their circulating supply.
Apart from the transaction fees, AVAX is also used to pay for Subnet subscriptions that improve interoperability in the Avalanche ecosystem and to interact with smart contracts.
Exploring the Avalanche Blockchain
The Avalanche blockchain was created by Ava Labs after an initial coin offering (ICO) that saw the company raise $42 million in July 2020. Ava Labs was co-created by Emin Gün Sirer, Kevin Sekniqi, and Ted Yin. The funds raised from the ICO were used to build Avalanche, which was launched in September of the same year.
The founders built Avalanche to reAVAXve the well-known blockchain trilemma of decentralization, scalability, and security. However, the Avalanche architecture is different than that of most blockchains. It’s composed of three primary interoperable blockchains that make it unique:
X-Chain
C-Chain
P-Chain
The X-Chain, aka the Exchange Chain, is a blockchain network that’s used to produce and exchange AVAX coins and other digital assets. Transaction fees on the Exchange Chain are paid using AVAX, and the blockchain utilizes the Avalanche Consensus protocol. The Avalanche Consensus is a unique consensus protocol that builds upon the PoS mechanism.
This unique consensus mechanism uses an optimized consensus mechanism known as a direct acyclic graph (DAG). To establish if a transaction is accurate, validators of the Avalanche network poll a random, select number of validators until consensus is reached. A transaction can’t be invalidated after a particular amount of subsampling has been done thus, transactions are finalized immediately without needing additional confirmations.
The second blockchain, the Contract Chain (C-Chain), is used by developers to create and execute smart contracts for their dApps. This chain enacts the Ethereum Virtual Machine (EVM) and enables EVM-compatible apps. The C-Chain network uses Snowman, an improved version of the Avalanche Consensus protocol, that linearly orders transactions.
The Platform Chain (P-Chain) is Avalanche’s third blockchain, and similar to C-Chain, it also uses Snowman. P-Chain is used to track active Subnets and harmonize network validators. It also permits the creation and management of new Subnets on Avalanche.
Beyond its architecture, the Avalanche blockchain has also had significant achievements that have helped shape its growth. Avalanche’s cross-chain capabilities, DeFi applications, and NFT marketplace have contributed to its growth.
Its EVM compatibility makes it an attractive option for developers launching dApps, as it is faster and more cost-effective compared to other blockchains.
In addition, its partnership with Amazon Web Services (AWS) to help boost blockchain adoption across various governments, enterprises, and institutions has also helped its growth.
Conclusion
The AVAX cryptocurrency plays a critical role in the Avalanche ecosystem as it helps the blockchain to deliver efficiency and speed, all while lowering transaction costs and fostering decentralization.
The AVAX token has also established itself as one of the largest cryptocurrencies by market capitalization, thanks to the success of the Avalanche ecosystem. If you are looking to explore the Avalanche blockchain, start by buying AVAX tokens that you’ll use to pay transaction fees as you explore Avalanche dApps.
You can buy, manage, and store your AVAX tokens alongside 10+ million digital assets in Trust Wallet. Additionally, Trust Wallet allows you to stake Avalanche crypto and securely explore dApps, enhanced by the Trust Wallet Security Scanner.
Frequently Asked Questions
What is AVAX and its primary use in the Avalanche network?
AVAX is the native cryptocurrency token of the Avalanche network. Its main uses include securing the Avalanche blockchain through staking, paying for transaction fees, and serving as the fundamental unit of account within the Avalanche ecosystem. AVAX plays a crucial role in the operation and governance of the Avalanche network.
How does the supply mechanism of AVAX work, and what is its maximum limit?
The total supply of AVAX is capped at 720 million tokens, with over 430 million currently in circulation. The rate of new AVAX token creation is controlled by the network's users through a democratic voting process. This process determines the speed at which new tokens are minted and the rewards paid to network validators.
How is the Avalanche network secured, and what are the roles of validators and delegators?
The Avalanche network uses a Proof-of-Stake (PoS) consensus mechanism for security and transaction verification. Validators, who must stake at least 2,000 AVAX, are responsible for actively confirming transactions on the network. Delegators, on the other hand, support the network by staking a minimum of 25 AVAX and choosing a validator to delegate their transaction validation responsibilities. Both validators and delegators contribute to the network's security and earn rewards for their participation.
How can I check the AVAX price?
You can easily check the Avalanche (AVAX) price using Trust Wallet. To check the AVAX price in the Trust Wallet app, simply open it and view the price from the main wallet page. Alternatively, you can also select the AVAX asset and tap on the chart symbol to view more detailed information on the AVAX price.
What are some of Avalanche's key features that distinguish it from other blockchain platforms?
Avalanche stands out due to its unique architecture, consisting of three interoperable blockchains (X-Chain, C-Chain, and P-Chain), each serving a different function. Additionally, its integration with the Ethereum Virtual Machine (EVM) makes it compatible with EVM-based applications, providing advantages in speed and cost-effectiveness. The platform's significant developments in areas like decentralized finance (DeFi), non-fungible tokens (NFTs), and cross-chain interoperability also contribute to its distinctiveness in the blockchain space.
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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.
