Avalanche(AVA) FAQ — Part 1: The AVA Token and Governance

This is the first installment of a series of articles where I go over around 10 of the most frequently asked questions I see from the community. This series will go over every aspect of the coin. Most of the questions I see on telegram are to do with the AVA token so that’s a good place to start.

If you notice any errors, comment down below and they will be corrected!

1. What is the initial supply and inflation?

The initial supply after the ICO will be 360,000,000 coins and the supply is capped at 720,000,000 coins. Inflation will be determined by users of the network through on-chain governance mechanisms.

2. How does the staking system work?

You will need about 2,000 $AVA to stake. People staking coins will receive rewards based on their proportion of the total staked coins they have staked. Staking rewards will be given out through inflation of the total supply and not fees.

3. What is the minimal amount of time required for a node to stake into the system?

The default value at genesis is 2 weeks.

4. What is the maximum amount of time a node can stake?

The default value at genesis is 52 weeks.

5. Will all transaction fees be burnt and why?

Yes, all transaction fees will be burnt instead of given out to stakers. As to why all fees will be burnt, the whitepaper states: 'Therefore, payment is global and for the good of the entire ecosystem. Fee burning increases scarcity of tokens in the system.'

6. What about if it’s too expensive to run a node and/or the supply cap is reached?

It will likely take many, many years for the supply cap to be reached. The team behind AVA are also looking into pruning the blockchain so that AVA does not suffer from perpetual state growth which should make running nodes extremely cheap anyways.

7. How much will transaction fees be?

Transaction fees will be variable and will be set through something called a sliding cost function whereby the (according to the whitepaper) 'fee is not set by the issuer of the transaction, but rather by a globally verifiable fee-function. As the congestion in the network increases, fees increase. At the end of some specific period of time, the function is recalculated to accommodate natural increases in transaction volume in the network.' Transaction fees will likely remain virtually zero.

Different types of transactions will also have different types of fees with the creation of sub-networks will have the biggest fee and simple payment transactions will have the smallest. Transaction fees on the main sub-net should be virtually zero. For subnets, transactions pay fees in that subnet’s native token, as well as some amount in $AVA. A transaction native to a subnetwork may specify its own transaction fee structure, and it is up to the creator of the subnet to choose a fee structure.

8. Won’t low transaction fees lead to spamming?

Perhaps, AVA plans to implement extra spam management features with later released as stated in their whitepaper:
'to prevent congestion, each transaction carries with it a local PoW. The PoW is initially of low difficulty and therefore a transaction can be immediately issued with very little overhead. However, if a specific key generates a large amount of transactions in a short amount of time, each subsequent transaction will 150 carry a larger amount of difficulty in its PoW puzzle. This mechanism works in conjunction with the fee burning.'

9. How does the AVA Governance system work?

The AVA platform enables key system parameters to be modified dynamically based on user input. AVA achieves this by allowing participating nodes to issue system wide polls: 'AVA 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.'

10. Why allow for the reward rate to be governed?

Many cryptocurrencies who fix reward rates often start dealing with many issues, including deflation or hyper-inflation. The reward rate in AVA will be subject to governance, within pre-established boundaries. This will allow token holders to choose the rate at which $AVA reaches its capped supply.

Bonus FAQ: When mainnet?

The AVA mainnet is planned to be released at around july.

Hope you enjoyed. I will try my best to keep these short and sweet so as to not bore you and help people learn more about what AVA is. If you have any extra questions, ask away in the comments.

Check out the AVA platform at: Avalabs.org