What Is Avalanche (AVAX)? Is It a Threat to Ethereum?

Tired of Ethereum's slow transactions and high fees? It's time to switch to Avalanche.

Ethereum isn't just the world's second-most valuable cryptocurrency. Its blockchain hosts myriad decentralized projects and has become a favorite for DeFi and DApp developers. Though Ethereum is currently the big fish in terms of blockchains, it has some significant competition that could one day surpass its success. One such competitor, Avalanche, has a number of attributes that make it a potential Ethereum killer.

So, what is Avalanche, why is it becoming so popular, and is it better than Ethereum?

What Is Avalanche?

Avalanche is a blockchain platform launched in September 2020 by Ava Labs. Avalanche's native coin is AVAX, and has accumulated significant value in recent years as the blockchain's popularity has grown. There are three key features associated with the Avalanche blockchain that we'll discuss first here, beginning with the network's transaction times.

Are Avalanche's Transaction Times Faster Than Ethereum?

If you use the Ethereum blockchain, you may have found yourself frustrated at the transaction times. When a blockchain gains significant popularity and, therefore, more active users, a backlog of transactions can build up that validators haven't processed yet. This is known as network latency.

Now, this brings us to an important term in the crypto world: scalability. If a blockchain cannot expand to accommodate its increasing user base, then it has what you would call scalability issues. Bitcoin's blockchain has been dealing with limitations in scalability for some time now, with transaction times increasing and miners overrun with a backlog of unverified transactions. For example, at the time of writing, over 1,000 Bitcoin transactions are waiting for processing, held in the mempool.

Avalanche's developers are aware of this issue and have taken scalability into account in the design of the Avalanche network. Avalanche allows creators to launch their own blockchains from the original Avalanche blockchain, known as subnets, meaning a project's transactions can be handled on a separate sub-blockchain. These subnets can scale infinitely and are given their own set of validators to process transactions.

This gives Avalanche the ability to scale seamlessly and manage transactions in a far more dispersed fashion. Currently, Avalanche can process an incredible 4,500 transactions per second, while Ethereum can only process between 15 and 30 per second. This vast difference highlights Avalanche as the superior platform in terms of scalability and transaction periods.

However, Ethereum is now making moves to tackle its scalability limitations through blockchain sharding. We have an in-depth piece on blockchain sharding if you'd like to read further into the topic, but this method essentially involves splitting one blockchain into multiple to spread the transaction load. Ethereum is set to launch the first shard chains in 2023, so we don't yet know the outcome of this development.

How Much Are Avalanche's Transaction Fees?

If there's one thing that angers Ethereum users more than anything, it's gas fees. Gas fees are charged to all Ethereum users to make up for the huge amount of computational power that Ethereum requires to function. Gas fees fluctuate multiple times a day, but they can be frustratingly high at times, meaning a large chunk of your trading profits can be subtracted, or you have to pay a nasty fee whenever buying more crypto.

Avalanche, however, does not have this problem. While the blockchain does charge fees, these are minimal. To understand Avalanche's fees compared to those charged by Ethereum, we'll need to go over gwei and nAVAX quickly. A gwei represents a fractional amount of one ETH (one billionth of an ETH, to be precise) and is the unit used in gas fee charges.

A nAVAX, on the other hand, represents a billionth of one AVAX. Avalanche uses this unit to charge gas fees to users on its blockchain(s). Though both blockchains charge fees in this way, the Avalanche blockchain is much cheaper to use.

Remember that these gas fees fluctuate all the time, so there is no flat fee available in this case. But we can check out Ethereum and Avalanche gas fee calculators to understand the difference in fees between the two blockchains.

Currently, Avalanche charges a standard gas fee of 26 nAVAX (0.000000026 AVAX). On the other hand, Ethereum currently charges a standard gas fee of 41 gwei (0.0000000547 ETH). Don't forget here that ETH is currently worth around 75x more than AVAX, so every gwei is worth 75x more than every nAVAX. This means that Ethereum's current gas fees are exponentially higher than that charged by Avalanche. Even if both cryptos were worth the same, Ethereum is still charging a significantly higher gas fee.

Is Avalanche Eco-Friendly?

Many individuals dislike cryptocurrency, not for its volatility but for its carbon footprint. Cryptocurrency is a very, energy-intensive industry and is fast becoming one of the most environmentally damaging markets. Because of this, many developers attempt to mitigate their environmental impact, including the Avalanche blockchain.

Avalanche can achieve its eco-friendly status for several reasons. Firstly, it uses the proof of stake (PoS) consensus mechanism, which requires validators (block verifiers) to lock up a portion of AVAX to operate. At the moment, validators must lock up 2,000 AVAX to validate independently. Proof of stake is significantly more eco-friendly than proof of work (PoW) simply because it's more energy efficient.

But it's not just Avalanche's use of proof of stake that makes it an environmental marvel in the crypto world. After all, Ethereum is set to make the switch to PoS (and may have done when you read this, depending on the time!). Still, there are additional factors that allow Avalanche to outshine Ethereum in terms of eco-friendliness.

Firstly, validators on the Avalanche blockchain don't need to use high-end, energy-intensive hardware. Additionally, these validators operate on a need-to-work basis, so they don't have to run their hardware around the clock. If there is block validating to be done, then the validator is active. If not, their hardware can operate on stand-by. These little parts of Avalanche's protocol secure it as an environmentally-conscious option for crypto traders and DApp builders.

So, with these factors being considered, does Avalanche surpass Ethereum?

Is Avalanche Better than Ethereum?

There's no doubt that Ethereum can offer a diverse and useful platform on which DeFi developers can build their projects. Ethereum was the first smart contract-enabled blockchain, which acted as a huge point of attraction for the network. But its frustratingly high gas fees and scalability limitations are making it fall out of the favor of crypto enthusiasts, as other blockchains like Avalanche can offer them more.

With its eco-friendly protocol, low fees, and speedy transaction times, Avalanche allows its users to build projects and make trades without forking out a large sum of extra cash or waste a lot of time. What's more, those who use Avalanche can rest easy knowing that their crypto activities aren't having nearly as big of an effect on the environment as those conducted on other popular blockchains. It's really a win-win-win when it comes to Avalanche!