In this article, we cover key economic releases amidst Trump's tariff hikes and resulting recession fears. We also look at what investors are watching leading up to the May 6 FOMC meeting, and how it might affect global markets and Bitcoin.

It's a tricky time for global financial markets, with worries swirling around US trade policy and its potential economic effects. Big tariff hikes in the ongoing US-China trade war have made the future feel uncertain, shaking things up for traders and investors.

As everyone tries to make sense of it all, key economic reports are giving us clues. Meanwhile, all eyes are on the upcoming Federal Open Market Committee (FOMC) meeting on May 6-7, 2025, for hints about where interest rates might be headed. Let's break down the latest data and look ahead to what the Fed might say.

Economic numbers released so far in April have significantly influenced market sentiment amid trade tensions and policy questions. These reports offer a snapshot of the US economy's health just before the newest tariffs start making their mark.

The US job market is still holding up, though some details suggest caution. Initial jobless claims for the week ending April 12 

. That's the lowest since February, and better than the 225,000 applications economists predicted, suggesting companies didn't immediately cut jobs after US president Donald Trump's 

However, continuing claims — the number of people receiving unemployment benefits after the first week — edged up slightly to 1.89 million for the week ending April 5. While new claims are low, higher continuing claims compared to a year ago suggest it might be getting tougher for laid-off workers to find new jobs. A strong job market could mean the Fed feels less pressure to cut interest rates, potentially helping the US dollar but weighing on riskier assets like stocks and crypto.

Good news arrived with the Consumer Price Index (CPI) report 

, showing inflation cooled more than expected in March. Headline CPI dipped 0.1% from the previous month, pulling the yearly rate down to 2.4% (from 2.8% in February), below the 2.6% Wall Street forecast.

More importantly for the Fed, core CPI (excluding food and energy) only nudged up 0.1% monthly. This brought the annual core rate down to 2.8%, its lowest since March 2021 and better than the 3% forecast. Lower energy costs — especially gas (−6.3% MoM) — played a big part. While softer inflation usually supports rate cuts, the looming impact of tariffs complicates things, as these duties are expected to push prices higher.

Following the encouraging CPI numbers, the Producer Price Index (PPI) on April 11 also pointed to easing costs for producers. Headline PPI 

 in March against forecasts of a 0.2% rise, slowing the annual rate sharply to 2.7% from 3.2%. Core PPI also fell 0.1% month-over-month, bringing its yearly rate to 3.3%.

Falling energy prices were again a major factor. But the report wasn't all positive — it showed early signs of tariffs hitting, with wholesale iron and steel mill prices jumping 7.1% in March, the biggest monthly leap since April 2021. If these input costs keep rising due to tariffs, it could squeeze company profits and push bond yields higher.

Markets have been volatile, reacting to economic data and trade policy shifts. US stocks saw big swings, with the S&P 500 reacting to both tariff fears and inflation news. When Trump 

 (excluding China) on April 9, it sparked a major relief rally. The S&P 500 had its 

, gaining 9.5% following the news, but overall uncertainty still lingers.

Bitcoin's price certainly reflected this turbulence. Following the April 1 JOLTS report

 from $82,563 to hit a recent high of $86,891 on April 2. However, the gains didn't last, as the price subsequently fell to $74,830 by April 7 amid intensifying US-China trade war tension. 

A recovery brought BTC back to $83,020 by April 10, but it dipped again before getting a boost from the better-than-expected core PPI report on April 11. This pushed the price up from $79,664 on April 11 to $84,074 by April 17. As of April 22, 2025, Bitcoin is trading at around $88,000.

As the US dollar weakened and recession worries grew, gold prices 

, hitting record highs as investors sought safety in the precious metal.

Fed FOMC on May 6–7: What are investors watching?

The upcoming FOMC meeting on May 6–7 is a key focus for traders seeking clarity on interest rates. Markets widely expect the Fed to keep the federal funds rate steady at 4.25%–4.50%. Although March's inflation cooled somewhat, it's still above the Fed's 2% target. Officials have signaled patience, especially with the job market looking stable — something Fed Chair Jerome Powell recently described as being in 

Most investors will watch the FOMC's statement and Powell's press conference for changes in tone, especially regarding tariffs. Fed officials like New York Fed President John Williams have acknowledged tariffs will likely boost inflation and slow growth.

 GDP growth could fall below 1% and inflation could rise to between 3.5% and 4% this year, due to tariffs and less immigration, stating it's "simply too early to know the answers" because of the uncertainty. Powell himself also noted signs the economy might have slowed in the first quarter.

While a May rate cut looks highly unlikely — the 

 shows slim odds — investors will listen for hints about when future cuts might occur. Market analysis suggests a cut at the June 18 meeting is more likely than not. Further out, markets might be pricing in about 

, but predictions vary (from one cut to five). Any sign that cuts could be delayed beyond June, or that the Fed is more worried about inflation, could negatively impact risk assets such as crypto.

Current market sentiment has sunk to extreme fear territory for the past month. Tariffs and recession fears drove a sharp sell-off in global markets and crypto, while economic data is sending mixed signals — a strong job market alongside cooling March inflation right before new tariffs hit.

The upcoming FOMC meeting is pivotal. A rate hold is expected, but the Fed's view on tariff impacts and future rate cuts will be critical. Crypto and equity traders should pay close attention to Fed communications and economic data in order to navigate the uncertainty and adjust their strategies.

If you're looking to diversify or manage risk across different assets, 

 makes it easy to trade gold, forex and other traditional finance markets alongside crypto via our

. You can trade over 100 pairs with features like tight spreads, tailored fees, top-tier liquidity and up to 500x leverage. 

Intermediate

macro.png

Macro this week: Tariffs, recession fear and the Fed’s next move ahead of May 6 FOMC meeting

BTC's price moves in response to the Fed's announcements, as its decisions on interest rates, inflation and liquidity impact investor sentiment and risk appetite.

 might be decentralized, but its price movements are influenced by global events, including US monetary policy. Every time the US Federal Reserve makes a statement or shifts its tone, Bitcoin traders react swiftly. Why does a traditional institution such as the Fed have such a strong grip on the crypto market? This article examines how and why BTC’s price responds to Fed announcements, from interest rate decisions to inflation outlooks.

​The Federal Reserve (the Fed) is the independent central bank of the United States, tasked with managing monetary policy to promote maximum employment and stable prices and to moderate long-term interest rates. Its decisions ripple through every financial market, including cryptocurrencies such as Bitcoin.

The Fed’s primary functions include the following:

The Federal Open Market Committee (FOMC) is the Fed’s policy‑making body, 

 of the Board of Governors, the president of the New York Fed and four rotating presidents of regional Federal Reserve Banks. They meet eight times a year to review economic conditions and set policy.

Decisions made during these meetings — especially regarding interest rates — are highly anticipated by financial markets. Traders analyze not only rate decisions but also the tone of the Fed’s statements. A "hawkish" tone signals higher rates to fight inflation, while a "dovish" tone suggests looser policy that aims to stimulate growth.

As the issuer of the world's primary reserve currency, the Fed's policy decisions have global ramifications, influencing borrowing costs and impacting assets such as bonds, equities, commodities and even cryptocurrencies like Bitcoin. This global impact explains why traders and investors closely analyze these statements and adjust their strategies accordingly. 

Key Fed events that have triggered BTC volatility

From interest rate decisions to inflation commentary and economic outlooks, key communications from the Fed often lead to sharp swings in BTC’s price.

Why does BTC’s price move every time the Fed speaks?

BTC’s volatility in response to Fed speeches boils down to macroeconomic influence. Fed announcements shape expectations for inflation, interest rates and liquidity, which are key factors for crypto markets. Following are some real-world reactions.

September 2024 — Fed cuts rates by 50 bps

 its benchmark interest rate by half a percentage point. This move was more aggressive than the 25 bps cut many investors had anticipated.

Following the announcement, Bitcoin's price surged toward $61,000. The larger-than-expected rate cut signaled increased liquidity and a more accommodative monetary policy, boosting investor confidence in risk assets such as cryptocurrencies. 

 at 4.25%–4.50% while tapering quantitative tightening, announcing a reduction in Treasury rolloffs from $25 billion to $5 billion per month. Despite downgrading growth forecasts, the Fed maintained three rate cuts in its 2025 projections, and avoided hawkish rhetoric on inflation overshoot. 

Bitcoin responded by skyrocketing 20% to $86,000 with traders interpreting these signals as sustained monetary support. This surge demonstrated how a dovish hold — coupled with clear guidance on balance sheet policy — can unleash rapid risk‑asset appreciation.

On Apr 16, 2025, Fed Chair Jerome Powell 

 that Trump’s new tariffs could drive inflation higher while choking off growth, mirroring 1970s‑style stagflation. He said the Fed would “wait and see” before shifting interest rates. Bitcoin briefly jumped toward $86,000 as traders eyed it as an inflation hedge, but then tumbled about 2.5% to roughly $83,700 within minutes, mirroring a broader stock sell‑off. By the next day, BTC had climbed back near $85,000 as markets digested the news.

Powell’s comments added uncertainty to the Fed’s policy outlook. While some view Bitcoin as a hedge against inflation and a way to escape traditional financial risks, it still tends to move with risk assets like stocks, often falling on poor economic news.

What traders and investors are really reacting to

When the Fed speaks, crypto traders read between the lines. Every speech, press release or policy statement is scrutinized for forward guidance.

Trading Bitcoin around major news — especially when it comes to the Fed — requires a disciplined approach.

The bigger picture: Is BTC becoming more macro sensitive?

Yes. Bitcoin's price is becoming more influenced by broader economic trends, such as monetary policies and financial market dynamics. In its early years, Bitcoin's value was driven mainly by internal factors like technological advancements and crypto-specific sentiment. However, with growing institutional adoption, Bitcoin has become more tied to traditional financial markets.

For instance, in March–April 2024, BTC 

, echoing similar rallies in stocks and bonds. This move demonstrated how Bitcoin’s price is now closely tied to macro liquidity and institutional trading flows, behaving more and more like a high-risk asset.

Predicting BTC price via the Bybit FOMC Brawl

Think you’ve got a read on how Bitcoin will react to the next Fed move? Put your prediction to the test with Bybit’s FOMC Brawl — a price prediction event that makes macro-driven trading fun, easy and potentially rewarding, with a total 20,000 USDT prize pool up for grabs through May 7, 2025, 10AM UTC.

 events. The first one splits users into two groups:

) expiring by May 9, 2025, and you’ll automatically be placed in the corresponding camp. The team with the highest trading volume wins, with the 18,000 USDT prize pool to be split proportionally among participants.

There’s also a second event with a prize pool of 2,000 USDT, exclusively for new users who sign up for the event and buy BTC Call or Put Options with an expiration on or before May 9, 2025 and achieve an effective USDT Options trading volume > 0. 

Bitcoin’s price reacts to Federal Reserve announcements because the Fed’s policies on interest rates, inflation and liquidity directly impact investor risk appetite and market dynamics. Rate hikes or cuts alter the appeal of risk assets such as BTC, while inflation fears or economic uncertainty drive demand for alternatives. Traders monitor Fed signals to anticipate liquidity changes and adjust strategies, cementing BTC’s role as a macro-influenced asset. As institutional adoption grows, Bitcoin increasingly mirrors traditional markets’ sensitivity to macroeconomic shifts.

btc price movement.png

Explainer: Why does BTC’s price move every time the Fed speaks?

Walrus is a decentralized storage protocol that efficiently manages large data files (blobs) through an innovative encoding method called Red Stuff. Learn more.

 systems excel at managing decentralized computation, but struggle with efficiently storing and retrieving substantial chunks of data. Enter Walrus (WAL), a groundbreaking decentralized storage protocol built on the 

Designed to solve storage limitations while maintaining the security and decentralization principles of 

, Walrus represents a significant advancement in blockchain infrastructure. This article explores what Walrus is, how it works and why it might be the future of decentralized data storage.

 is a decentralized storage protocol that efficiently manages large data files (blobs) through an innovative encoding method called Red Stuff. It operates on the Sui blockchain with a network of independent storage nodes to ensure high integrity, availability and authenticity for 

Walrus emerged from Mysten Labs, creators of the high-performance Sui blockchain. Recognizing a fundamental challenge in web3, the team set out to solve the problem of efficient data storage that had plagued blockchain systems since their inception.

Mysten Labs identified that traditional approaches required complete data replication across all validators, creating exponential costs at scale. This inefficiency made storing substantial files prohibitively expensive and limited blockchain applications.

The team developed the revolutionary Red Stuff encoding protocol, delivering the speed and efficiency of centralized storage while preserving principles of decentralization. In March 2025, Walrus secured $140 million in funding, led by Standard Crypto, with participation from a16z crypto, Electric Capital and Franklin Templeton Digital Assets.

Walrus tackles the fundamental problem of storage inefficiency in blockchain systems. Traditional blockchains require every validator to replicate all data, creating exponential costs as networks scale. Such inefficiency has prevented widespread adoption of decentralized storage for data-intensive applications.

Walrus solves the cost barrier through its innovative Red Stuff encoding technology. By eliminating unnecessary redundancy but maintaining security, Walrus dramatically reduces storage expenses as compared to existing solutions. The resulting cost structure makes decentralized storage economically viable for everyday applications that were previously priced out of the market. 

In addition, Walrus addresses the scalability limitations that plague current decentralized storage networks. Existing solutions often collapse under large datasets, while Walrus's architecture efficiently handles terabytes of information across 

, gaming assets, social media content and AI data. 

Finally, Walrus resolves the centralization problem inherent in traditional storage solutions. By removing single points of control, Walrus prevents censorship and unauthorized data manipulation. Applications built on Walrus benefit from guaranteed data availability and integrity, free from centralized authority interference.

Walrus uses Red Stuff encoding with two-dimensional erasure coding to store and retrieve data efficiently. The protocol achieves faster processing across its storage network by employing simple XOR operations instead of complex calculations.

 (DPoS) consensus model, whereby users stake WAL tokens to participate. 

 with higher stakes store and serve data during each epoch, aligning economic incentives with network security.

When users upload files, Walrus divides them into "slivers" distributed across multiple nodes, creating redundancy that preserves availability even when some nodes fail. Operations are organized into epochs, with committees of storage nodes managing network data, while Sui blockchain integration handles coordination, verification and economic incentives.

Walrus offers several innovative features that enhance its functionality as a decentralized storage solution.

 WAL tokens to participate in network operations, while storage providers stake to secure validator positions. Malicious behavior faces swift consequences via slashing penalties targeted at dishonest participants.

The protocol distributes rewards to storage nodes based on their staked amount and performance. Reliable operation and data integrity receive financial incentives, encouraging operators to maintain a long-term commitment, since they benefit from the network's continued growth.

WAL staking empowers token holders with governance authority over the protocol's future. Stakeholders vote on critical upgrades, parameter adjustments and strategic initiatives, ensuring Walrus evolves according to community needs, rather than vis centralized decision-making.

Walruscan serves as the comprehensive network explorer for the Walrus ecosystem, offering transparency into all operations. The dashboard presents real-time storage metrics, currently tracking approximately 309 TB used across 3.5 million blobs within the total available capacity of 4,123 TB.

Users can monitor network activity, including writes, reads and node performance. These metrics allow users to evaluate storage providers based on actual performance rather than marketing claims, helping them select reliable operators for their specific needs.

Walruscan also verifies data availability and provides detailed statistics on pricing, staking amounts and reward distribution. By making these metrics publicly accessible, the explorer fosters accountability and trust between users and service providers while providing valuable insights for investment and development decisions.

NFT projects can leverage Walrus to securely store metadata and digital assets. The protocol's tamperproof storage ensures the longevity and authenticity of valuable digital collectibles while maintaining consistent accessibility.

Decentralized social media platforms can benefit from Walrus's ability to store user-generated content efficiently at scale. Images, videos and text can be distributed across the network without relying on centralized servers, creating truly censorship-resistant platforms.

AI development teams can utilize Walrus to maintain data provenance throughout the machine learning lifecycle. Datasets create verifiable records of origin and modifications, critical for regulatory compliance and ethical AI development.

DApps can overcome storage limitations through Walrus integration. Because computation is separated from storage concerns, DApps can handle larger datasets without sacrificing decentralization principles, while blockchain gaming can achieve new levels of asset persistence and player ownership.

Walrus achieved a major milestone in March 2025 with its successful mainnet launch, securing immediate listings on prominent exchanges such as Bybit. Prior to this, the team conducted rigorous testing of the Red Stuff encoding algorithm while attracting $140 million in funding from leading investors.

For Q2 2025, Walrus plans to establish strategic partnerships with major DApps across multiple blockchain ecosystems. Its Q3 2025 road map focuses on security enhancements with encrypted storage and customizable access control systems, particularly benefiting users with sensitive data requirements.

In Q4 2025, Walrus will prioritize network scaling and performance optimization in order to handle increasing data volumes while maintaining efficiency. Looking to 2026, development will center on comprehensive developer tools, including language-specific SDKs and integration frameworks to simplify building with Walrus.

 powering the Walrus ecosystem. Its maximum supply is 5 billion tokens. WAL enables storage payments, validator staking and governance participation across the network.

Walrus’s tokenomics model creates natural demand as users purchase storage with WAL, while validators stake tokens to secure operations and earn rewards. Governance rights empower WAL holders to vote on upgrades and parameter adjustments, ensuring the protocol evolves according to stakeholder priorities.

The WAL token is to be allocated as follows: 

WAL’s distribution will follow a strategic release schedule extending to March 2033, with vesting periods ranging from 50 months to 8 years.

WAL's price trajectory is closely tied to Walrus's growth as a decentralized storage solution for web3 applications. Currently trading at approximately $0.4138 (as of Apr 17, 2025), WAL has shown promising momentum following its recent mainnet launch and exchange listings.

While cryptocurrency price predictions are inherently speculative, several analysts have offered forecasts for WAL's future value. CoinCodex 

 $0.50 and $1.04 in 2026, with an average price of $0.75. Looking further ahead to 2030, CoinCodex forecasts suggest a range from $1.12 to $1.59.

DigitalCoinPrice offers a similar outlook, predicting that 

 $0.81 and $0.97 by the end of 2026, with the most likely price hovering around $0.90. For 2030, DigitalCoinPrice anticipates WAL potentially crossing the $2.00 threshold.

These projections suggest a positive long-term outlook for WAL, supported by growing demand for decentralized storage solutions. However, WAL's future value will ultimately depend upon Walrus's technological development, widespread adoption across various web3 sectors and broader cryptocurrency market conditions.

Looking to trade Walrus tokens? Bybit now offers the WAL/USDT Spot trading pair. To get started, you'll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

While Walrus demonstrates innovative technology and strong backing in the decentralized storage space, investors must carefully weigh its growth outlook against potential risk factors.

WAL shows promising potential, with substantial financial backing and innovative encoding technology. Increasing demand for decentralized storage solutions provides a favorable market environment. However, potential investors should 

, particularly given Walrus's early position in its development journey.

Walrus revolutionizes web3 data storage by combining innovative Red Stuff encoding with Sui blockchain technology to deliver efficient, secure solutions for NFTs, social platforms, AI, gaming and DApps. With substantial funding, technical advantages and growing market need, Walrus demonstrates tremendous potential for the future of web3 data management.

walrus crypto.png

Walrus (WAL): Your solution for large-scale data on web3

The proposal suggests replacing Ethereum’s current execution layer (EVM) with RISC-V, aiming to improve scalability, simplify the execution layer, and boost efficiency.

The S&P 500 dropped 2.36% as all sectors fell amid Fed concerns and China trade tensions. Gold hit a record high above $3,450 amid rising haven demand driven by recession fears, USD weakness, and Trump’s attacks on Fed Chair Powell. Market uncertainty and geopolitical tensions continue to support the rally. Despite the pullback, the uptrend remains intact. The Coindesk Indices, which tracks the broader crypto market, are down by 0.63%, Bitcoin rose 3.33% while Ether fell 0.81% over the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is BERA, up 3.0%, following Berachain's Governance Guardians announcement, new ecosystem projects, and community updates.

Berachain (BERA), launched in August 2021, is a high-performance Layer 1 blockchain that uses a Proof-of-Liquidity consensus mechanism to enhance network security through ecosystem liquidity. It offers Ethereum compatibility with EVM-identical execution. 

 saw the launch of Governance Guardians, new ecosystem projects like BeraToners and Lair Finance, and collaborations between Berachain projects like Euler and Beraborrow. The community remains active with multiple initiatives and ongoing promotions.

Check out the latest prices, charts, and data of 

 suggests replacing Ethereum’s current execution layer (EVM) with RISC-V, aiming to improve scalability, simplify the execution layer, and boost efficiency. This change would allow smart contracts to remain compatible with existing Ethereum infrastructure while providing significant optimizations for the execution of smart contracts, especially in relation to zk-EVM proving. RISC-V-based smart contracts could bring efficiency gains of up to 100x in certain cases, particularly by optimizing time-consuming processes like state computation and block execution. Two potential implementation paths are proposed: maintaining dual VMs (EVM and RISC-V) or transitioning to a RISC-V interpreter for EVM contracts. This change could simplify the execution layer and enhance the long-term scalability of Ethereum.

Yesterday, BTC spot ETFs saw $339.7M in total inflows, with $303.1M from non-GBTC funds and $36.6M from GBTC.

, with an airdrop to follow. Users can earn points by depositing tokens such as ETH, USDC, and USDT. Those who previously participated in the Cred farming season and ranked in the top 31,250 can now claim their SuperAlien NFTs by minting all rewards on the site.

Beginner

2.png

Vitalik Buterin's proposal to replace Ethereum's EVM with RISC-V for enhanced scalability and efficiency

Altcoins

Crypto

DeFi

There's clear evidence that demand for Avalanche is growing as the DeFi ecosystem expands. But how can you utilize this decentralized platform? Learn now.

Avalanche_Consensus_Protocol.png

How_Avalanche_Consensus_Works.png

With the rising interest in cryptocurrency, there’s a race to make the most feature-rich blockchain. As a result, some impressive platforms have emerged in the past few years. One of these is the Avalanche Network (native token: AVAX).

Avalanche is an open-source platform for decentralized applications and 

. Its developers aim to steer the market toward decentralized finance and build new foundations in the field.

How did the Avalanche network begin — and should you invest in it? Below, we discuss the Avalanche Foundation and AVAX in detail.

Some of these limitations include centralization, lack of scalability, and slow transaction speeds. The platform’s native Avalanche consensus protocol offers high throughput, low latency and resistance to attacks in order to eliminate these issues.

 was launched in September 2020. Its developers raised $42 million only two months ago in a successful native token sale. All 72 million of the Avalanche tokens sold out in under 

. The investors are from over 100 countries around the globe.

Therefore, it was almost a given that Avalanche would be a popular project in the coming year, with such a phenomenal response to its 

. The president of Ava Labs, John Wu, commented, “The success and velocity of the Avalanche sale is a testament to the quality of our project, and the impact it can have on both institutional and decentralized finance.”

, with its extended confirmation times during which users have to wait for a new block to be 

In contrast, Avalanche features a heterogeneous network on which several validator sets and blockchains are present to offer the same security standard as 

The Avalanche network aims to take on Wall Street’s traditional role of building new finance foundations, thereby offering users a platform that’s 

Avalanche’s native token is called AVAX. It secures the Avalanche network via staking. Token holders can use it to pay fees and conduct 

will not lose the AVAX tokens, which are the 

, since these tokens don’t act as collateral. As a result, validators have a lower risk of losing money. This particular feature of AVAX makes it different from Ethereum and other cryptocurrency platforms.

In addition, the Avalanche network encourages participation and incorporates predictability in staking.

AVAX is also used to pay for fees on the network. Just as with the 

, the tokens don’t go to validators or miners. Instead, 

 to ensure that the whole ecosystem is benefiting, rather than just a few players.

 created the AVAX token, Avalanche network and the novel consensus protocol made by “Team Rocket” which aims to revolutionize the classical 

protocols and Nakamoto consensus. A professor at Cornell University, Emin Gün Sirer, formed Ava Labs along with two computer science PhDs, Maofan “Ted” Yin and Kevin Sekniqi.

Sirer attended Princeton University on scholarship. He earned his PhD in Computer Science and Engineering from Princeton in 2000 and became an assistant professional at Cornell University the next year.

His first attempt at starting a cryptocurrency was in 2002–2003 when he created a peer-to-peer virtual currency, Karma, with Sangeeth Chandrakumar and Vivek Vishnumurthy. Karma was created six years before Bitcoin and was the first cryptocurrency to use a PoW minting process.

However, unlike Bitcoin, Karma didn’t combine the consensus protocol with the new supply’s minting. Also, Karma was introduced at an unfortunate time, right after 9/11. Funding was scarce, and there were security concerns regarding Karma’s peer-to-peer model of virtual currency.

Sirer assessed the decentralization of Ethereum and Bitcoin before the cryptocurrency market overheated in 2017. He recorded his findings in 2018, remarking that further research was required to decentralize the consensus protocols.

 in 2018, Sirer’s next step was the creation of Avalanche, often termed “Blockchain 3.0” since it improves on its predecessors.

The working mechanism of Avalanche is different from former blockchains and other similar platforms. It has three interoperable blockchains: a Platform Chain, a Contract Chain and an Exchange Chain.

The Exchange Chain, or X-Chain, helps create and trade new crypto assets. Meanwhile, the C-Chain is the Ethereum virtual machine implementation of Avalanche, enabling the creation of smart contracts. Finally, the P-Chain tracks and creates subnets and coordinates validators.

The Snowman mechanism secures the C-Chain and P-Chain, enabling smart contracts with high throughput, whereas the DAG-optimized Avalanche consensus secures the X-Chain. The Avalanche consensus protocol allows transaction finality in just a few seconds.

Since the Avalanche network’s architecture is split across three blockchains, the network is well-optimized for security, speed and flexibility. Thus, it is a robust platform for enterprise and individual use, as developers can flexibly build different applications.

AVAX, the native token in the Avalanche ecosystem, is used for staking and paying network fees. What makes Avalanche so unique is that it can handle significantly more transactions than many other blockchains. In fact, it can handle 

, compared to only 15 TPS on Ethereum and 7 TPS on Bitcoin.

Bitcoin  -  7 transactions per second

Ethereum  -  15 transactions per second

Ripple   -  1500 transactions per second

Avalanche  -  4500 transactions per second

Also, it gets to transaction finality in just three seconds or less. This makes it a much better option for bringing scalability to decentralized applications.

Along with being more scalable than other blockchains, Avalanche is also interoperable.

It achieves this interoperability by enabling blockchains between or within a subnet to facilitate communication. Thus, these can be complementary, while supporting cross-chain value transfers.

Avalanche is also more inclusive than other Proof of Stake blockchains which only allow a certain number of validators. Anyone who stakes at least 2,000 AVAX can participate in Avalanche network consensus.

Although Avalanche supports the Ethereum Virtual Machine, the ecosystem doesn’t use the same consensus mechanism as the Ethereum network.

Avalanche’s architecture includes subnetworks or subnets. They are similar to sharding on Ethereum 2.0. You can think of subnets as the clone of a default blockchain. A subnet is a set of validators that work together to achieve consensus.

In a subnet, validators may be required to have the 

The network’s architecture also supports private subnets where only predefined validators can join. Thus, the blockchain’s contents will only be visible to these validators. The private subnets are ideal for organizations that want to keep their data confidential.

Users can create subnets on-demand and according to their specifications. As previously mentioned, a subnet could launch another subnet upon temporary exhaustion of its scaling limits to fulfil the network demands while effectively increasing the number of transactions.

The unlimited range for subnet creation on Avalanche shows how it can resolve scalability issues of conventional blockchains. All subnets must be a validator for the Primary Network chain as well as their own blockchain, and each subnet must be a Primary Network member (2,000 AVAX) for validating the Primary Network.

Here is a brief overview of how Avalanche’s architecture works: the primary network validates the built-in blockchains on Avalanche. The P-Chain coordinates validators, creates subnets and uses the Snowman Consensus Protocol, which enables self-executing smart contracts on the network.

Within this protocol, the X-Chain creates assets, exchanges assets and uses the Avalanche consensus protocol. The C-Chain runs executive EVM contracts and uses the Snowman consensus protocol.

The Avalanche consensus protocol has three mechanisms that give structural support to the network. These are the non-BFT protocol (Slush) that progressively built up to Snowflake and Snowball. These are single-decree consensus protocols with increasing robustness and are all based on the common majority-based metastable voting mechanism.

, “Inspired by gossip algorithms, this new family gains its safety through a deliberately metastable mechanism. Specifically, the system operates by repeatedly sampling the network at random and steering the correct nodes towards the same outcome. Analysis shows that metastability is a powerful, albeit non-universal, technique: it can move a large network to an irreversible state quickly. However, it is not always guaranteed to do so.”

In gossip algorithms, the connected nodes are randomly sampled to receive information. The Avalanche consensus protocol takes inspiration from this algorithm as it subsamples nodes to achieve consensus.

Let’s explain this with an example. Suppose there’s a network where the nodes have to select between two numbers, such as four and five. A node in this network will randomly pick several nodes and ask them to choose a number.

All of these selected nodes will send back a response with their chosen number. With this response, the node that posed the question initially would know which number the network is leaning toward.

Subsequently, all in-network nodes will undergo this process to achieve a consensus in the network. If there’s a tie between both options in the first voting round, the network will have a second round of voting in which the likelihood of a tie will be lower.

With every round of voting, the probability keeps reducing. This feature of the network is called 

, which means the network will eventually land on a single choice. 

The entire purpose of achieving a consensus within the network is to ensure that the nodes agree with each other and that there’s no “tie.”

As each round of voting comes to an end, the network begins to determine the final number more rapidly. Once all nodes come to a consensus, the network will achieve a finality. In Avalanche, this happens in a matter of seconds.

At the beginning of 2021, Avalanche launched the 

. Just a few months later, the developers launched the aptly named Avalanche Bridge, making transaction fees five times cheaper and enhancing cross-chain interoperability. 

According to the developers, the Avalanche Bridge has been designed to:

 hot wallet, browser extension for users to seamlessly and securely navigate the Avalanche ecosystem. Core is more than just a wallet, it's an all-in-one operating system bringing together Avalanche apps, Subnets, bridges, and NFTs in one seamless browser experience.

Core welcomes new users from the Bitcoin community, who can now deploy BTC across Avalanche’s DeFi ecosystem. In the future, Core will connect users to Avalanche Subnets, Ethereum, and other blockchain networks. Over the last month, the Avalanche Bridge has seen 

 worth of Bitcoin bridged natively to Avalanche.

Avalanche (AVAX): An Innovative Consensus Protocol in DeFi

Compete for 2,500 USDT Every Week

Earn Points by Completing Tasks

Event Rules

Register now and get 10 points

Write/Reply Comments (0/5)

Publish an Article (0/5)

Share an Article on Social Media (0/5)

Like an Article (0/5)

Read an Article (0/5)

Weekly Leaderboard