What is Avalanche?

Avalanche is an open-source platform for running decentralized applications and deploying public and private blockchains in a single, scalable ecosystem.

Avalanche consists of a Primary Network and an unlimited number of Subnets.

The Primary Network, in turn, includes three blockchains:

• Platform Chain (P-Chain) stores metadata, is responsible for coordinating validators, and tracks subnets;
• Contract Chain (C-Chain) allows the creation of Ethereum-compatible smart contracts;
• Exchange Chain (X-Chain) provides tools for exchanging data between subnets and creating interchangeable tokens and NFTs.

Avalanche subnets are similar to Ethereum's L2 solutions and Polkadot's parachemes, but with fully isolated blockchain states.

Any Avalanche user can create a subnet. To do so, a fee of 0.01 AVAX must be paid.

How does the Avalanche protocol work?

Nodes choose a color and then poll each other. If a node's decision differs from the majority position, it changes the decision.

The node chooses a yellow color and sends requests to five random nodes (highlighted with red rings in the figure). Most of them are blue, so the sender changes color. This interaction occurs in stages until all nodes are colored the same.

The time to receive responses is limited. This filters out nodes that create a lot of delay.

The algorithm determines the nodes randomly, but the chance of participating in transaction verification increases as the number of Avalanche tokens in the stacking increases.

Avalanche in June 2022

Overall, Avalanche saw moderate growth compared to previous quarters, and key metrics stabilized across the network. For example, comparing our results with the Messari report:

• The number of daily active addresses is almost 1/4 of Q1 2022: 23k for June and 92k for the first quarter
• Number of daily transactions for Q1 2022 is 865k, and for June - 169k
• The number of transactions per second is 6.24 TPS and the maximum number per second is 265. This is the data for June.
• Commission for June averaged $0.16, compared to $0.64 for Q1 2022

As a result, the decrease in the number of daily active addresses reached the 40,000 active address mark for June. By comparison (from Messari), Avalanche had140,000 active addresses in January. In the fourth quarter 2021, the network averaged about 70,000 daily active addresses, and in the first quarter 2021 that number reached a stable range, averaging 92,000.

As in the first quarter of 2022, transaction activity on the network followed the same pattern as the decline in daily active addresses. Overall, the average daily number of transactions on the Avalanche network fell from 865,000 last quarter to 330,000 in June.

In the first quarter, daily transactions grew due to the launch of additional DeFi applications and the rollout of GameFi subnets such as DeFi Kingdoms Crystalvale and Crabada.

With the release of Apricot, transaction fees have stabilized and now average about $0.16 (June)-0.67 (Q1) per transaction. It's not hard to guess that as daily active addresses and transactions fell, so did overall revenues.

Apricot provides "verifiable clearing," a process by which nodes can safely condense historical transactions.

This mechanism makes transaction fees lower and predictable for users. In June, the average gas price was 50-70nGwei, and the maximum was 0.0013 Gwei.

Competitive Field Analysis

The Layer-1 field today is a competitive race between new and established protocols to achieve the highest possible network speed at the lowest possible cost and with the highest possible security.

The focus of any of the competitors is to maximize these metrics while making trade-offs on centralization.

Let's take the results from "Optimism post airdrop events" and analyze them for Avalanche

The ideal blockchain must be fast, secure, widely used, and sufficiently decentralized.

Avalanche and Arbitrum reached similar daily transaction levels in June. Ethereum is holding steady at ~1.17 million transactions per day, with Avalanche now reaching ~74% of Ethereum's average daily transactions (around 200-300k). We see a similar situation for daily users.

Conclusion

Network usage, financial results, developer activity and network infrastructure continued to grow and stabilize in June 2022.

As a result, Avalanche showed signs of capturing market share relative to the leading EVM-compatible networks in several key metrics during the month.

Although market capitalization has almost always fallen, the network has seen a continued trend in usage, transaction generation, and movement toward optimal fundamental valuation.