AVAX Token

AVAX is the native utility token of Avalanche. It's a hard-capped, scarce asset that is used to pay for fees, secure the platform through staking, and provide a basic unit of account between the multiple Avalanche L1s created on Avalanche.

Utility

AVAX is a capped-supply (up to 720M) resource in the Avalanche ecosystem that's used to power the network. AVAX is used to secure the ecosystem through staking and for day-to-day operations like issuing transactions.

AVAX represents the weight that each node has in network decisions. No single actor owns the Avalanche Network, so each validator in the network is given a proportional weight in the network's decisions corresponding to the proportion of total stake that they own through proof of stake (PoS).

Any entity trying to execute a transaction on Avalanche Primary Network pays a corresponding fee (commonly known as "gas") to run it on the network. The fees used to execute a transaction on Avalanche is burned, or permanently removed from circulating supply.

Tokenomics

A fixed amount of 360M AVAX was minted at genesis, but a small amount of AVAX is constantly minted as a reward to validators. The protocol rewards validators for good behavior by minting them AVAX rewards at the end of their staking period. The minting process offsets the AVAX burned by transactions fees. While AVAX is still far away from its supply cap, it will almost always remain an inflationary asset.

Avalanche does not take away any portion of a validator's already staked tokens (commonly known as "slashing") for negligent/malicious staking periods, however this behavior is disincentivized as validators who attempt to do harm to the network would expend their node's computing resources for no reward.

AVAX is minted as a staking reward when a validation period ends successfully. The amount is computed by reward.Calculator from four network parameters and three properties of the validation.

The minting rate scales linearly with how much of the minting period the validation covered:

$$\text{MintingRate} = \text{MinConsumptionRate} + \left(\text{MaxConsumptionRate} - \text{MinConsumptionRate}\right) \times \frac{\text{StakingDuration}}{\text{MintingPeriod}}$$

That rate is then applied to the staker's share of the remaining un-minted supply:

$$\text{Reward} = \left(\text{SupplyCap} - \text{CurrentSupply}\right) \times \frac{\text{StakedAmount}}{\text{CurrentSupply}} \times \text{MintingRate} \times \frac{\text{StakingDuration}}{\text{MintingPeriod}}$$

The result is capped at $\text{SupplyCap} - \text{CurrentSupply}$. That cap, together with the $\left(\text{SupplyCap} - \text{CurrentSupply}\right)$ factor shrinking as supply grows, is what guarantees AVAX never exceeds $720M$ tokens.

Mainnet Parameters

Set in genesis/genesis_mainnet.go:

Consumption rates are stored in millionths (PercentDenominator is 1000000), so 120000 means 12%. All internal arithmetic is integer arithmetic on big.Int, with truncating division, so a floating-point reimplementation can differ by a few nAVAX.

Why Longer Staking Earns More

A validation covering the full minting period earns MaxConsumptionRate. A very short one earns close to MinConsumptionRate:

So a one-year validation earned about 19.9% more per token than a 48-hour one before Helicon, rising to about 59.5% once ACP-285 is fully phased in. This is what incentivizes stakers to commit for longer periods. During the 90-day ramp the effective rate sits between the two columns.

Worked Example

A 2,000 AVAX validation, with a current supply of 460M AVAX, running for 48 hours:

$$\text{MintingRate} = 0.10 + \left(0.12 - 0.10\right) \times \frac{48}{8760} = 0.1001096$$ $$\text{Reward} = \left(720M - 460M\right) \times \frac{2{,}000}{460M} \times 0.1001096 \times \frac{48}{8760} \approx 0.62\ \text{AVAX}$$

Running the same inputs through the node's calculator returns 620095131 nAVAX. After the ACP-285 ramp completes, the same validation returns 466089567 nAVAX.