Previous years marked the appearance of the so-called “Ethereum killers.” One of them, Avalanche, was launched in 2020 and promised to overthrow the smart contracts king.
Since it has yet to deliver on its promises, many early Avalanche investors are about to swap all their tokens back to altcoin #1. Should they convert AVAX to ETH or is the young asset yet to show its potential?
What Is Ethereum and How Does It Work?
Ethereum is the second cryptocurrency in the world in terms of popularity and trading volumes. In 2021, the capitalization of Ethereum exceeded $500 billion. Such popularity can be explained by the following qualities of the network:
- Support for wider functions of blockchain technology compared to Bitcoin (and other projects);
- Great team of enthusiasts behind the project;
- The rapid rise in the price of ETH in 2017-2018, which made it attractive for investment.
Ethereum is running on the PoS consensus mechanism. Proof of Stake (PoS) allows ETH holders to validate transactions in blocks depending on the number of coins in their possession. That is, the more cryptocurrencies a validator has, the more opportunities they get.
The main value of Ethereum is smart contracts. They were created with the aim of completely excluding the participation of third parties in transactions. A signature is a digital code, and a blockchain is a guarantor. If the terms of the contract are met, one side of the contract receives the money, and the other receives the goods.
Also, Ethereum is famous for hosting dApps in its network. Since dApp is an application that runs without a backend on a decentralized computer system, Ethereum serves as a great solution for this purpose. Accordingly, dApps use the main advantages of the blockchain: transparency, reliability, and data immutability.
What Is Avalanche and How Does It Work?
Avalanche is a blockchain project launched in 2020. It aims to conquer three top niches in crypto:
- Decentralized applications (dApps);
- Smart contacts;
- Subnets (custom blockchains).
“Subnets are powerful, reliable, and secure private or public blockchains built as offshoots of the core Avalanche platform,” said John Wu, president of Ava Labs. According to him, their developers can fully customize the design, but they must fulfill one condition — to help ensure the safety of Avalanche.
Avalanche is often compared to Ethereum because both coins support smart contracts. This technology is critical to decentralized financial services (DeFi), applications, and non-fungible tokens (NFTs).
In addition, Avalanche is also compatible with the Ethereum Virtual Machine technology, and there are high hopes for this because in this way it would be possible to even host Ethereum applications on this blockchain while increasing their scalability and transaction speed. Thus, perhaps Avalanche will solve the problem of low throughput and high fees, which Ethereum has not yet coped with.
Avalanche’s Benefits Over Ethereum
Let’s investigate in detail in what areas Avalanche outweighs its competitor.
Avalanche provides scalability through innovative architecture. Notably, the network consists of three separate blockchains that work together seamlessly. These are the X-chain, P-chain, and C-chain. The base chain is the X chain, synonymous with the Avalanche blockchain.
Transactions on the X chain are immutable at 0.001 AVAX, which ensures that transactions remain fairly affordable and fast.
Avalanche is designed to be faster than Ethereum. It can process 4.5 thousand transactions per second with the prospect of overclocking up to 20 thousand. At the same time, Ethereum can only process about 37.
So, Is Avalanche Better?
Avalanche (AVAX) is more of a promising asset rather than a real competitor for Ethereum. The fact that the coin quickly took a leading position speaks in favor of the seriousness of the project. Theoretically, Avalanche is far better than Ethereum; however, in practice, we see that the latter is a more mature and stable technology.