What is Avalanche crypto?
Summary
Avalanche is a blockchain ecosystem in which an app can use shared chains or a dedicated Avalanche L1 with its own rules. AVAX pays fees and supports staking on the primary network.
- An app can use a shared Avalanche chain or a dedicated L1.
- AVAX has fee and staking roles on the primary network; an L1 may set different fee rules.
- Virtune Avalanche ETP is physically backed by AVAX but does not let its holder use the network.
A shared chain or one built for an app
Avalanche lets an application use a shared blockchain or operate on a dedicated chain with its own rules. Imagine a game whose players exchange digital items. It could run on Avalanche's C-Chain alongside other apps. If it needs different rules for transaction fees or who can validate activity, its developer can create an Avalanche L11. Older descriptions call these dedicated networks subnets.
This choice is Avalanche's practical difference from a network where every app uses the same chain. Polkadot takes another approach: specialised chains share security within one connected system. The primary network contains C-Chain for smart-contract apps, P-Chain for coordination2 and X-Chain for assets. The names matter mainly when a user moves an asset between them or chooses the correct network in a wallet.
Where does AVAX fit?
AVAX pays fees and supports staking on the primary network3. Dedicated L1s can set their own fee rules, so activity on every Avalanche L1 does not necessarily mean a fee paid in AVAX. That distinction matters when judging how broader ecosystem activity relates to the asset.
AVAX has a maximum supply of 720 million3. New AVAX may arise through staking rewards, while primary-network fees are removed from circulation. Neither mechanism determines its market price. Avalanche uses Snowman consensus4 to agree on transactions, but the time a complete app interaction takes also depends on the service.
AVAX directly or through an ETP
AVAX in a wallet can pay fees and be used in network functions. Virtune Avalanche ETP offers AVAX price exposure through a security without requiring the investor to manage a crypto wallet. It is physically backed with AVAX held as collateral5. The ETP holder owns the security and cannot spend its collateral on the network. Staking rewards are not part of this ETP.
The product is listed on Nasdaq Stockholm and Nasdaq Helsinki.
Costs when buying Virtune Avalanche ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.49% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Risks to understand
AVAX can lose value despite its supply limit or network use. A dedicated L1 also has rules and technical risks of its own. Direct holders manage wallet or custody choices; ETP investors additionally face issuer, custody and trading risks. Physical backing does not protect against price falls. Crypto-assets can lose substantial value6.
Related product
Sources
- Avalanche: Dapp's and L1's
- Avalanche: Avalanche Primary Network
- Avalanche (Ava Labs): AVAX Token
- Avalanche (Ava Labs): Snowman Consensus
- Virtune Investor Relations: Collateralization Methodology
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
