Avalanche Explained

Avalanche is an open-source platform for launching highly decentralized applications, new financial primitives, and new interoperable blockchains.

Blockchain Development

Blockchain poses a huge potential as a better data storage solution, however, adoption has not been widespread due to limiting factors in decentralization, scalability, and security (these factors are known as the blockchain trilemma). Blockchain applications begin to struggle with decentralization as the new services that aim to transfer the data away from a centralized authority, end up needing to monitor the application and become the centralized authority. In the scope of this use case, this means that all real estate would be able to be listed on this platform. To determine true decentralization, there couldn't be an authority that could prevent the listing of an asset. Secondly, many blockchain applications suffer from scalability due to their almost decade old consensus protocols and high network traffic that drive up the cost of transaction execution. Lastly, blockchain applications need to be built to defend themselves from attacks, bugs, and other unforeseen issues. Security becomes an increased concern as once these applications are launched, it's not as easy to make changes and release them again.

Analyzing Technologies

In the end, not all blockchain technologies are created equal. Each blockchain technology is governed by its own economics that were determined by the technologies used in development. In fact, even though bitcoin is pitched as an alternative to a peer-to-peer cash system, it would not be able to handle the transaction volume that VISA handles.

While Ethereum is the most popular platform on which people create decentralized applications (More than 3,000 decentralized projects currently run on the Ethereum blockchain) the high costs to execute transactions and the slow transaction finality would not make it suitable for the marketplace we are designing.

When determining a better solution, we compared different blockchain technologies based on the following characteristics:

  • Transaction Throughput: The number of transactions per second a database is able to perform.

  • Transaction Finality: Finality refers to a transaction being considered ‘final’ and it cannot be unwound. It is crucial that any transfer of payment or transfer of ownership of an asset has finality and is binding on both parties.

  • Energy Efficiency: Refers to the computational energy required to validate the blockchain network. Recently Bitcoin has been reported to consume more electricity than Argentina to power the network.

  • Number of Validators: The number of validators on a network are the number of users working to verify the transactions to determine whether they are legitimate and accurate.

  • Sybil Protection: In Proof of Stake, the authenticity of the public ledger is distributed to a participant node in proportion to the total amount of virtual currency held by that node.

  • Safety threshold: The percent of network control needed in order to perform a malicious attack on the blockchain.

A Better Consensus

In 2018 a new family of consensus protocols was released by an anonymous entity by the name of team rocket. The document outlined a new family of protocols called Avalanche. The avalanche protocols claimed to combine the benefits of "Nakamoto consensus" (robustness, scale, and decentralization) and "Classical consensus" (speed, quick finality, and energy efficiency) to form a revolutionary consensus engine. And as seen in the above graphic solve many of the challenges that other cryptocurrencies were facing through their novel technologies.

These protocols led for the creation of the Avalanche network. The Avalanche network consists of multiple blockchains, and uses a novel Proof of Stake consensus mechanism to achieve high throughput, estimated to reach over 4,500 transactions per second. This network enables millions of participants to validate while processing thousands of transactions per second down to sub second finalization times.

How The Avalanche Consensus Works

In this visual representation of the the Avalanche consensus, the tiles represent different nodes, wherein the color of each square represents its current proposal. As the consensus begins to spread throughout the network, the tiles change in darkness to show the node's conviction of the proposal. Ultimately, all nodes will end up the same color in the end.

Avalanche's Platform

Under the Avalanche model, each chain is a separate instance of a virtual machine, with support for multiple custom virtual machines, allowing chains to have use case-specific functionality. Each of these virtual machines is deployed on a custom blockchain network called a subnet, which is comprised of "a dynamic set of validators working together to achieve consensus on the state of a set of blockchains" - in other words, each subnet has its own set of incentive mechanisms to ensure validators stay honest.

It enables millions of participants to validate while processing thousands of transactions per second down to sub second finalization times. Avalanche pairs this engine with an architecture that can fit the custom needs of unique financial products and decentralized applications. This customized ability is achieved through subnetworks enabling anyone to launch their own tailor-made network with custom virtual machines.

An asset issuer on avalanche has the flexibility to digitize any asset starting with determining the features such as privacy enable transactions, permission or permissionless transactions, and smart contracts to help design custom compliance conditions. Avalanche is fast, flexible, and secure with a custom plug-and-play infrastructure that is built to serve the needs of decentralized applications asset issuers and financial marketplaces


To summarize, Avalanche is a blockchain technology that aims at solving many of the development hurdles and blockchain limitations faced by other technologies. The novel protocol used on Avalanche's platform coupled with its extensive documentation make it ideal for developing a new asset class such as real estate.


Last updated