Avalanche Goals and Principles

Avalanche is a high-performance, scalable, customizable, and secure blockchain platform. It targets three broad use cases:

• Building application-specific blockchains, spanning permissioned (private) and permissionless (public) deployments.

• Building and launching highly scalable and decentralized applications (Dapps).

• Building arbitrarily complex digital assets with custom rules, covenants, and riders (smart assets).

The overarching aim of Avalanche is to provide a unifying platform for the creation, transfer, and trade of digital assets.

By construction, Avalanche possesses the following properties:

• Scalable Avalanche is designed to be massively scalable, robust, and efficient. The core consensus engine is able to support a global network of potentially hundreds of millions of internet-connected, low and highpowered devices that operate seamlessly, with low latencies and very high transactions per second.

• Secure Avalanche is designed to be robust and achieve high security. Classical consensus protocols are designed to withstand up to f attackers, and fail completely when faced with an attacker of size f + 1 or larger, and Nakamoto consensus provides no security when 51% of the miners are Byzantine. In contrast, Avalanche provides a very strong guarantee of safety when the attacker is below a certain threshold, which can be parametrized by the system designer, and it provides graceful degradation when the attacker exceeds this threshold. It can uphold safety (but not liveness) guarantees even when the attacker exceeds 51%. It is the first permissionless system to provide such strong security guarantees.

• Decentralized Avalanche is designed to provide unprecedented decentralization. This implies a commitment to multiple client implementations and no centralized control of any kind. The ecosystem is designed to avoid divisions between classes of users with different interests. Crucially, there is no distinction between miners, developers, and users.

• Governable and Democratic $AVAX is a highly inclusive platform, which enables anyone to connect to its network and participate in validation and first-hand in governance. Any token holder can have a vote in selecting key financial parameters and in choosing how the system evolves.

• Interoperable and Flexible Avalanche is designed to be a universal and flexible infrastructure for a multitude of blockchains/assets, where the base $AVAX is used for security and as a unit of account for exchange. The system is intended to support, in a value-neutral fashion, many blockchains to be built on top. The platform is designed from the ground up to make it easy to port existing blockchains onto it, to import balances, to support multiple scripting languages and virtual machines, and to meaningfully support multiple deployment scenarios.

Smart Contracts in $AVAX

At launch Avalanche supports standard Solidity-based smart contracts through the Ethereum virtual machine (EVM). We envision that the platform will support a richer and more powerful set of smart contract tools, including:

• Smart contracts with off-chain execution and on-chain verification.

• Smart contracts with parallel execution. Any smart contracts that do not operate on the same state in any subnet in Avalanche will be able to execute in parallel.

• An improved Solidity, called Solidity++. This new language will support versioning, safe mathematics and fixed point arithmetic, an improved type system, compilation to LLVM, and just-in-time execution.

If a developer requires EVM support but wants to deploy smart contracts in a private subnet, they can spin-up a new subnet directly. This is how Avalanche enables functionality-specific sharding through the subnets. Furthermore, if a developer requires interactions with the currently deployed Ethereum smart contracts, they can interact with the Athereum subnet, which is a spoon of Ethereum.

Finally, if a developer requires a different execution environment from the Ethereum virtual machine, they may choose to deploy their smart contract through a subnet that implements a different execution environment, such as DAML or WASM. Subnets can support additional features beyond VM behavior. For example, subnets can enforce performance requirements for bigger validator nodes that hold smart contracts for longer periods of time, or validators that hold contract state privately.

The $AVAX Native Token

Monetary Policy The native token, $AVAX, is capped-supply, where the cap is set at 720,000,000 tokens, with 360,000,000 tokens available on mainnet launch. However, unlike other capped-supply tokens which bake the rate of minting perpetually, $AVAX is designed to react to changing economic conditions. In particular, the objective of $AVAX’s monetary policy is to balance the incentives of users to stake the token versus using it to interact with the variety of services available on the platform.

Participants in the platform collectively act as a decentralized reserve bank. The levers available on Avalanche are staking rewards, fees, and airdrops, all of which are influenced by governable parameters. Staking rewards are set by on-chain governance, and are ruled by a function designed to never surpass the capped supply. Staking can be induced by increasing fees or increasing staking rewards. On the other hand, we can induce increased engagement with the Avalanche platform services by lowering fees, and decreasing the staking reward.

Uses

• Payments

• Staking

• Atomic Swaps

Payments:

True decentralized peer-to-peer payments are largely an unrealized dream for the industry due to the current lack of performance from incumbents. $AVAX is as powerful and easy to use as payments using Visa, allowing thousands of transactions globally every second, in a fully trustless, decentralized manner. Furthermore, for merchants worldwide, $AVAX provides a direct value proposition over Visa, namely lower fees.

Staking:

Securing the System On the Avalanche platform, sybil control is achieved via staking. In order to validate, a participant must lock up coins, or stake. Validators, sometimes referred to as stakers, are compensated for their validation services based on staking amount and staking duration, amongst other properties. The chosen compensation function should minimize variance, ensuring that large stakers do not disproportionately receive more compensation. Participants are also not subject to any “luck” factors, as in PoW mining. Such a reward scheme also discourages the formation of mining or staking pools enabling truly decentralized, trustless participation in the network.

Atomic swaps:

Besides providing the core security of the system, the $AVAX token serves as the universal unit of exchange. From there, the Avalanche platform will be able to support trustless atomic swaps natively on the platform enabling native, truly decentralized exchanges of any type of asset directly on Avalanche.

Governance

Governance is critical to the development and adoption of any platform because– as with all other types of systems– Avalanche will also face natural evolution and updates. $AVAX provides on-chain governance for critical parameters of the network where participants are able to vote on changes to the network and settle network upgrade decisions democratically. This includes factors such as the minimum staking amount, minting rate, as well as other economic parameters. This enables the platform to effectively perform dynamic parameter optimization through a crowd oracle. However, unlike some other governance platforms out there, Avalanche does not allow unlimited changes to arbitrary aspects of the system. Instead, only a pre-determined number of parameters can be modified via governance, rendering the system more predictable and increasing safety. Further, all governable parameters are subject to limits within specific time bounds, introducing hysteresis, and ensuring that the system remains predictable over short time ranges.

A workable process for finding globally acceptable values for system parameters is critical for decentralized systems without custodians. Avalanche can use its consensus mechanism to build a system that allows anyone to propose special transactions that are, in essence, system-wide polls. Any participating node may issue such proposals.

Nominal reward rate is an important parameter that affects any currency, whether digital or fiat. Unfortunately, cryptocurrencies that fix this parameter might face various issues, including deflation or inflation. To that end, the nominal reward rate is subject to governance, within pre-established boundaries. This will allow token holders to choose on whether $AVAX is eventually capped, uncapped, or even deflationary.