Avalanche vs Ethereum

The year 2021 has been a remarkable year for cryptocurrency. However, the hike doesn’t guarantee the individual position of each cryptocurrency in the market. Ethereum and Algorand have both also seen a good year due to their advances and since Avalanche is a competitor of Ethereum, it makes it interesting to gather the facts that relate the two.

In this article, we are going to see how the two are similar or different in their characteristic details. To do that, we will consider each aspect of cryptocurrency and compare the two.

Avalanche vs Ethereum: Comparison based on Smart contracts

The network of both Ethereum and Avalanche is based on smart contracts. Smart contracts are applications that facilitate blockchain transactions and anyone on the Ethereum and Avalanche networks can create them. These programs mainly help to automate operations and increase the utility of a blockchain.

Smart contracts operate by executing basic logical statements typed into code on a blockchain. There are several computers working as a network to perform the actions and it meets the conditions upon execution, it performs the task. These actions essentially include transferring funds to the proper parties, issuing a ticket, or any other action achievable using cryptocurrency. Upon the completion of the traction, the blockchain updates itself. This means that the transaction is unchangeable, and the results are only visible to parties who have permission to view them.

Proof of Stake vs. Proof of Work

To validate transactions, Ethereum employs a proof-of-work (PoW) system, however, it has been in the news regarding the upgrade of the system to Proof of stake. A PoW system pits computers against one another to solve complicated math problems. The first computer that solves the challenge has the permission to validate a transaction.

Users who correctly verify transactions get an ETH token as a reward. The two fundamental drawbacks of Ethereum’s PoW technology are its high energy consumption and lack of scalability. The Ethereum chain presently consumes approximately 91 TWh.

This amount of energy is also significantly less than what ETH requires. Because there are more transactions than the network can handle, the user who pays the highest charge gets to complete the transaction first. As a result of these difficulties, Ethereum intends to release ETH 2.0, the proof-of-stake (PoS) consensus model in 2022.

Avalanche currently employs a point-of-sale (PoS) paradigm. A PoS architecture allows token holders to lock up their investment in exchange for the potential to collect block rewards. By verifying transactions, stakers can help the network. The network has control over the investment when a user stakes their position.

This procedure can aid in the prevention of fraudulent behavior by allowing the network to penalize individuals who do not comply. Users can stake AVAX, Avalanche’s native token, for any period ranging from two weeks to one year. To collect rewards, these validators must also have 2,000 AVAX to stake.

Application comparing Avalanche vs Ethereum

Currently, Ethereum and Avalanche provide similar functions, but this is likely to change. As more individuals begin to use cryptocurrency, these applications may evolve dramatically. Because Ethereum is larger and has been around for a longer period, more new applications are developing. Again, if Ethereum’s fees continue to grow, this trajectory may alter.

Ethereum and Avalanche are popular for decentralized finance (DeFi) applications. Decentralized exchanges (DEXs), peer-to-peer lending, and Stablecoins are examples of these. A DEX is essentially a platform for users to exchange tokens. While the majority of DEXs are wrought with ETH as the primary token, numerous new DEXs, such as the Trader Joe DEX, are developing using AVAX as the primary token.

Users can send cryptocurrency to anyone on the blockchain. Also known as peer-to-peer payments, they are applicable in a variety of contexts. Avalanche outperforms Ethereum due to its low costs and quick transactions.

Finally, users can create Stablecoins on both exchanges. Stablecoins are cryptocurrencies that have the backing of a physical asset, such as the US dollar or gold (or any fiat currency). These tokens can also serve a variety of purposes. Governments are even experimenting with Stablecoins, which combine the security of underlying assets with the speed and democratization of crypto.

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The working Principle

To provide improved scalability and functionality, Avalanche integrates three distinct blockchain networks. The protocol functions as a frictionless payment mechanism, cryptocurrency, and DeFi ecosystem all at the same time. The three blockchains, X-chain, C-chain, and P-chain, each play a unique role in the network. They work together to enable Avalanche developers to design more powerful Dapps.

X-chain: The X-chain is the network in charge of the creation of new digital assets. This network allows for the generation of new tokens, NFTs (non-fungible tokens), Stablecoins, and other cryptocurrencies. AVAX can collateralize these assets.

C-chain: The C-chain also known as conversion chain facilitates Ethereum developer onboarding. It includes several protocols that will assist Ethereum developers in effortlessly converting their Dapps to Avalanche.

P-chain: The P-chain is in charge of monitoring and validating subnet states. These Avalanche-powered blockchains configure the fulfillment of almost any requirement. P-chain also hosts several of the network’s DeFi features, including its staking procedures.

Ethereum is a blockchain that functions at the layer one level. Notably, Ethereum, contrary to popular belief, is not a cryptocurrency. It is the network that Ether (ETH), the network’s utility token, is based on. To compute smart contract equations and host data, it makes use of a network of participants known as nodes. These nodes receive rewards with ETH based on their participation level for their work.

Which is more valuable, Avalanche or Ethereum?

First of all, it is not very easy to explain Avalanche vs Ethereum. Although they are different in many basic points, in the long term this might change as well. Hence, it’s tough to state which chain is unquestionably superior right now.

Ethereum is currently dealing with excessive gas fees, but ETH2.0 may be the solution. Avalanche’s popularity has recently increased, but gains may not last if Ethereum can boost speeds and cut costs. The success of ETH 2.0 could be decisive for Ethereum’s future.