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Avalanche (AVAX) Pros and Cons

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kevinnag58
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INTRODUCTION

Avalanche has been billed by many as a 'platform of platforms' as its protocol easily permits the creation of application specific blockchains in virtually any form chosen by the developer. Additionally, by availing itself with Avalanche, the newly created blockchain may share and benefit from Avalanche's unique consensus mechanism. In this subsection of the Avalanche (AVAX) Coin Guide, let's investigate the pros and cons surrounding this project to gain valuable insight into the viability of this protocol.

*PROS SURROUNDING THE AVALANCHE ECOSYSTEM

  • Both public and private blockchains can easily be created on Avalanche which are readily customizable, secure and reliable.
  • New networks with specifically designed specifications for validators may be created allowing for the construction of new assets (of any type).
  • Ultra high speed of transactions and scalability are present benefiting Decentralized Applications.
  • The Avalanche ecosystem supports a high trading volume for Decentralized Finance providing speeds of 4500 trx/sec.
  • The Avalanche Consensus mechanism is based on a hybrid Delegated Proof of Stake (DPoS), which is much faster than PoS and PoW.
  • The Consensus mechanism of random sampling of nodes is unique in determining system agreement (for a rather interesting demonstration of this system, click here). For a more technical explanation of the Avalanche Snow protocol, click here and here for further information.
  • Network validators exhibit great influence within the ecosystem in the area of deciding the validity of transactions.
  • System throughput is demonstrably high and efficient as a result of the consensus system utilized all without sacrificing decentralization.
  • Launched in February 2021, the Avalanche-Ethereum Bridge is a two way bridge allowing the transmitting of ERC-20 and ERC-721 transfers interchain.
  • Due to the consensus mechanism utilized by Avalanche, the high throughput levels make Avalanche an excellent payment platform in the cryptosphere.
  • There exists a fixed capped supply of Avalanche coins available so scarcity is built in for price appreciation.
  • Many of the ecosystem fees generated are burned thereby further reducing coin supply in the market driving price.
  • Staking rates paid on Avalanche coins are market competitive.

*CONS SURROUNDING THE AVALANCHE ECOSYSTEM

  • Transactions may be delayed if validators fail to reach agreement on transaction status.
  • When conflicting transactions are present in the consensus mechanism, a liveness guarantee is absent. "The liveness threshold is the number of malicious participants that can be tolerated before the protocol is unable to make progress". [Avalanche. Avalanche Consensus. (Accessed September 7, 2021).
  • Due to the fact that the Avalanche coin is not inflationary biased due to the capped supply, it does not meet the conditions necessary to be used as currency.
  • Theoretically, Avalanche as an alternative to Ethereum looks real good, but we will have to see how its technical prowess plays out in real world applications - in other words, Avalanche has yet to prove itself.

*CONCLUSION

A quick review of the above shows that with respect to Avalanche (AVAX), the 'pros' (in number) appear to outweigh the 'cons'. Just because the sheer number of 'pros' outweigh the number of 'cons', this fact alone in no way implies the 'cons' should be ignored or are de minimis.

As with any investment decision, you must first assess your present financial condition, your overall investment strategy, as well as your tolerance for risk. Armed with this information you should then follow a path of doing your own diligent research into the asset being considered. With all of this information assembled you are finally ready to make your ultimate investment decision.

And finally, please remember, never invest more than you can afford to lose.

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