Avalanche Foundation of Ava Labs Raises $42 Million Dollars
Avalanche is an open-source platform that supports interoperable blockchain, custom blockchain development, non-fungible tokens, and the creation and trading of ‘smart’ digital assets (assets that are a digital representation of real-life items which can be governed by rules). Some key characteristics of Avalanche include the fact that it has high transactional throughput, low transactional finality, and has a high safety threshold. On July 22nd, Ava Labs announced that Avalanche’s native token, the Avalanche Token (AVAX), raised $42 million in 4.5 hours by selling 72M AVAX tokens to participants from 100 different countries. Upon launch of the mainnet, AVAX’s supply will sit at 360 million, although there will be a total supply of 720 million tokens. AVAX will be used as the base unit for the network and will also provide a wide array of utility services some of which include staking rewards and transaction fees.
The key element of Avalanche that distinguishes itself from other layer one smart contract platforms is its novel ‘Avalanche’ consensus algorithm. A pseudonymous group that goes by the name Team Rocket, released a paper in 2018 that outlined this new family of consensus protocols; protocols in this family now include Snowflake, Snowball, and Avalanche. The Avalanche protocol attempts to address the problems with Classical and Nakamoto consensus, of low throughput, and high latency by implementing sub-sample voting and metastability. In the case of Avalanche, a node picks a sample of five to ten people out of a large group of users and asks them to pick either red or blue. The small group will most likely tip to one side (either red or blue) and depending on the end result the node can make a generalized statement. The node then puts their weight behind the winning side by changing to the color with more support, and then the process will continue throughout the larger group, and as time progresses the split will start to become more skewed. The Avalanche protocol also allows for Byzantine tolerance, which prevents nodes from trying to trick the network into remaining imbalanced, and does not allow nodes to decide on two different colors. Additionally, if a user tries to double spend, the consensus algorithm might not be able to decide and the money will become lost. Unlike Nakamoto and Classical Consensus, one bad actor does not cause problems for anyone other than themselves. Time will only tell whether or not Avalanche’s novel algorithm and improvements in efficiency will make it stand out in a crowded layer one space.