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How do they compare?  • Benzinga


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Over the past few months, Ethereum gas (ETH) prices have skyrocketed. The metric, measured in gwei, has increased exponentially. The fees have gone from less than $ 1 to sometimes over $ 500 for a single transaction. This increase has led many people to consider an alternative blockchain platform that offers lower fees. Avalanche is an alternative to Ethereum that focuses on low cost, high scalability transactions.

Smart contracts explained

Smart contracts are programs that facilitate transactions on the blockchain. They can be created by anyone on the Ethereum and Avalanche networks. These programs can be useful for automating tasks and increasing the utility of a blockchain.

In short, smart contracts are coded programs that use conditions. They operate on an “if-then” structure. If an event triggers the smart contract, it will automatically complete a task. A password is an example of a conditional. If the password is correct and matches the definition set by the program, it will grant the user access to the account.

Ethereum and Avalanche allow virtually anyone to create and upload a smart contract to their channel. However, the 2 chains have different ways of validating transactions on their respective networks.

Proof of work against proof of participation

Since November 2021, Ethereum has been using a Proof of Work (PoW) system to verify transactions. A PoW system uses computers to compete with each other to solve complex mathematical problems. The first computer to resolve the problem is authorized to verify the legitimacy of a transaction.

Users who successfully verify transactions receive an ETH, known as a block reward. ETH blocks are typically 12-14 seconds long. At the end of each block, around 2 ETH is given as a reward in addition to the transaction fees paid to miners.

The 2 main setbacks of Ethereum’s PoW system are power consumption and lack of scalability. Computers that verify ETH transactions use massive amounts of energy. The Ethereum chain currently uses around 91 TWh, which is comparable to the Philippines’ total energy consumption in a year. This amount of energy is also much less than what ETH actually needs. The reason for Ethereum’s high gas fees is that there are more transactions than the network can handle, so transactions are processed based on who pays the highest fees. Due to these issues, Ethereum plans to unveil ETH 2.0 in 2022. ETH 2.0 will have a Proof of Stake (PoS) consensus model.

Avalanche currently uses a PoS model. A PoS model allows token holders to lock in their investment for a chance to earn bulk rewards. Actors can support the network by verifying transactions. When a user bets on his position, the network controls the investment. This process can help prevent fraudulent activity by allowing the network to punish those who do not comply.

Users can wager AVAX, the native Avalanche token, for a period of between 2 weeks and 1 year. These validators must also have 2,000 AVAX to wager in order to receive rewards. Users can also delegate by selecting an existing validator. Delegates only need 25 AVAXs to receive rewards.

PoS is known to be faster and have lower costs, which combats the 2 major issues with the current Ethereum consensus model.

Ethereum vs. Avalanche

Ethereum and Avalanche both offer similar uses at the moment, but that scenario is subject to change. As more and more people start to use crypto, these uses can change dramatically. Ethereum is also bigger and has been around longer, so there are a lot of new uses being developed on Ethereum. Again, this trajectory may change if Ethereum’s fees continue to rise.

Ethereum and Avalanche are primarily used for Decentralized Finance (DeFi) applications. These include Decentralized Exchanges (DEX), Peer-to-Peer Lending, and Stable Coins. A DEX is basically a way for users to exchange tokens. While a majority of DEXs primarily use ETH, several new DEXs are built with AVAX as their primary token, such as Trader Joe DEX.

Disclosure: eToro USA LLC; Investments are subject to market risk, including possible loss of capital.

Users can also send cryptos to anyone else on the blockchain. This activity is called peer-to-peer payments and can be used in a variety of situations. Avalanche beats Ethereum because of its low fees and fast transactions.

Finally, stable coins can be built on both exchanges. Stablecoins are cryptocurrencies linked to an underlying asset, such as the US dollar or gold. These tokens also offer a variety of uses. Governments are even starting to experiment with stablecoins as they combine the security of the underlying assets with the speed and decentralization of crypto.

AVAX and ETH are both primarily used in the DeFi space right now, but new projects with much more specific uses are being built every day. Most of these projects are on Ethereum, as it has a much larger ecosystem of applications. However, these projects could potentially be built on different blockchains if ETH fails to resolve its gas royalty issues.

Music royalties are an issue the Ethereum chain is looking to solve. Many musical artists are unhappy with the lack of transparency in the payment process. Ethereum could solve this problem by automatically distributing royalty payments based on a defined agreement. The Open Music Initiative is currently exploring how Ethereum could be combined with their goals.

Current debate between Avalanche and Ethereum

Su Zhu is the CEO of a crypto venture capital fund named Three Arrows Capital. Su Zhu is also a strong supporter of Project Avalanche. Su Zhu has expressed his displeasure with the high gas prices on the Ethereum network. In a tweet from November 20, 2021, Su said, “Yes, I have given up on Ethereum despite its support in the past. Ethereum has abandoned its users despite supporting them in the past.

Su Zhu used his platform to speak out against Ethereum and in favor of Avalanche. His words sparked a massive debate around Ethereum’s scalability and overall usability. Many Ethereum investors have jumped ship and transferred their investments in different blockchains.

Between November 15 and 22, ETH fell by more than 10% while AVAX rose by almost 45%.

So which is better: Avalanche or Ethereum?

Is it impossible to say at the moment which channel is definitely the best. Ethereum is currently struggling with high gas charges, but ETH2.0 may be the solution to this problem. Avalanche has seen its popularity rise recently, but the gains might not continue if Ethereum can increase speeds and reduce costs. The success of ETH 2.0 may be the deciding factor for the future of Ethereum.

Benzinga has developed a specific methodology for classifying cryptocurrency exchanges and tools. We prioritized platforms based on offers, prices and promotions, customer service, mobile app, user experience and benefits, and security. To see a full breakdown of our methodology, please visit our Cryptocurrency Methodology page.


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