Modular blockchains are all the hype in the crypto market as it gives high scalability performance that makes transactions faster and cheaper while still maintaining high security.
From the old days of having to pay more than $20 worth of transaction fee and having to wait more than 30 minutes for a transaction to be executed, now thanks to the modular blockchain infrastructure, the crypto market has evolved with blockchains charging transaction fees as low as less than $0.00001 and an execution speed of less than 1 minute.
One of the pioneers of this infrastructure is the Avalanche Blockchain, which is a modular blockchain that is built with three layers of blockchain on it.
Understanding The Three Layers of Avalanche
Avalanche is a relatively old blockchain technology because it has been around since the last bull market, which was around the year 2020.
It is considered old because the crypto market comes up with new technologies everyday, creating newer and newer blockchains by the day.
Even though it has been around for quite a while in the market, it is certainly ahead of its time with its own modular infrastructure.
Avalanche also has its own consensus mechanism, where the developers behind it, Ava Labs, created by taking inspiration from Bitcoin.
That is one of the reasons why Avalanche is considered old because it still uses a consensus mechanism that was inspired by Bitcoin, which is really outdated.
But don’t underestimate the blockchain as it can process more than 6,500 transactions per second with a relatively low gas fee of less than $0.01 per transaction.
The great thing about Avalanche is that it has a different consensus mechanism for each of its layers that has individual functions that makes the blockchain run smoothly.
The three chains are the X-Chain, the C-Chain, and the P-Chain, which are short for exchange chain, contract chain, and platform chain.
X-Chain
The X-Chain is a layer of the blockchain that is used to maintain tokens and communicate with other platforms or blockchain regarding token management.
This layer communicates with other blockchains when there is a bridge connected to Avalanche to receive and send cryptocurrencies from Avalanche to another Blockchain or vice versa.
Communications with exchanges also happens on this layer, which means that centralized exchanges send and receive tokens on the Avalanche Ecosystem through this layer.
The consensus mechanism of this layer is called the Avalanche Consensus Mechanism which is the consensus mechanism that was inspired by Bitcoin.
The consensus mechanism takes inspiration from the Nakamoto Consensus but combines it with the Byzantine Fault Tolerance Mechanism, so that the blockchain stays on even when some validators are faulty.
This consensus mechanism is also used to validate communications between this layer and the other two layers, which is where most of the transactions happen as this layer only manages the tokens and coins side of things.
C-Chain
Aside from processing transactions, Avalanche can also be used as a place to build Decentralized Applications or DApps.
To build applications on top of Avalanche, developers need to use the C-Chain to interact with as this layer is the layer that processes all smart contracts that exist on Avalanche.
The layer uses a different consensus mechanism than the X-Chain, because in this layer the consensus mechanism is called the Snowman Consensus Mechanism.
This consensus mechanism was created by Ava Labs, the team behind Avalanche, which took inspiration from the Delegated Proof of Stake Blockchain and combines with the Directed Acyclic Graph Mechanism.
Because of the combination of the two mechanisms, the blockchain is fast, scalable and does not require the validators to battle with computational power like other Proof of Work Blockchains, but require them to stake AVAX, the coin of the Avalanche Blockchain, in order to be a validator.
It is worth mentioning that this layer is semi-decentralized, as most of the validators on this layer come from the Ava Labs team itself.
P-Chain
Although that layer is semi-decentralized, there is another layer that is used for all the public validators to contribute to the validation mechanism of the Avalanche Blockchain, which is the P-Chain.
The P-Chain is the place for all validating purposes, to validate all transactions that happen on the X-Chain and the C-Chain, so that security is kept to a maximum.
The consensus used by these public validators is the Snowman Consensus, so validators need to stake and can receive AVAX from holders to stake on their node, due to the Delegated Proof of Stake mechanism.
Currently there are almost 2,000 validators on the blockchain, which shows how decentralization is still kept in the blockchain.
Conclusion
Overall the three layers of Avalanche creates a fast and cheap blockchain for users to use everyday. Sadly they still cannot tackle the trilemma problem that blockchains usually face.
The trilemma problem is when a blockchain has to sacrifice one to get two of these three aspects which are scalability, security, and decentralization.
Avalanche has sacrificed the decentralization aspect of the chain to keep it scalable and secure at the same time.
But that is not a problem, as the blockchain has been running for four years and has not give any suspicion that comes from the semi centralization aspect of it.
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