There’s a lot of hype around Avalanche at the moment, with new users pouring into the ecosystem. However, when you purchase AVAX for the first time and try to withdraw it to the Avalanche network, one confusing detail you are confronted with is the existence of three separate chains: the c-chain, the x-chain, and the p-chain.
On Binance for example, when withdrawing AVAX you are given the options of “Avalanche” or “AVAX C-Chain”, but very few newcomers to the network will have any idea what these are and which one should be selected (“Avalanche” is actually the x-chain). Sending to the wrong chain could cause funds to be lost, so it’s definitely worth grasping what these 3 chains actually are!
C-Chain (Contract Chain)
If you want to use the Avalanche network for DeFi, then the C-Chain is the one you want. The C stands for contract, and this is the chain that’s used for smart contracts. The key difference with the other chains is that the c-chain uses an Ethereum-style address with 0x at the beginning, and can be added to MetaMask.
If you paste a MetaMask wallet address into Binance or another exchange, it should automatically prevent you from sending to the x-chain, which is handy. Most Avalanche DeFi platforms like AAVE, Trader Joe, and Benqi accept MetaMask, so it’s worth adding the Avalanche c-chain to MetaMask if you want to use them. It is possible to have a c-chain address in the Avalanche wallet too, although most DeFi platforms don’t accept it.
X-Chain (Exchange Chain)
The key difference between the x-chain and the c-chain is that the x-chain cannot be used with MetaMask or a similar wallet, and cannot be used in DeFi. Your x-chain address is accessed from the Avalanche wallet, and you get a new address after every deposit (although the old addresses remain valid too). The format is different from Ethereum-style 0x addresses.
Quite simply, the x-chain is used to send and receive funds, and that’s its sole purpose. The advantage of this approach is that the x-chain can be tailored specifically for transfers, without trying to be all things to all people. Of course, it’s possible to send funds on the more versatile c-chain too, but on the c-chain gas fees can rise to several dollars when the network is busy, while on the x-chain the transaction fee is a fixed 0.001 AVAX, which is about $0.08 at current prices. The x-chain is also much quicker due to its streamlined nature.
Avalanche X- chain is also know as DAG( Directed Acyclic Graph). DAGs link individual transactions to other transactions, rather than waiting for blocks of transactions to coalesce and be validated together.
P-Chain (Platform Chain)
The final chain that Avalanche offers is the p-chain (p standing for platform). The primary function of this is for staking AVAX and serving as a validator. If you’re a validator (or delegating to a validator), then your AVAX rewards will be received on this chain. It’s also possible to receive transfers from the other two Avalanche chains (X and C). If you have no interest in staking AVAX, then you don’t need to worry about this one at all!
Final Thought
In short, the c-chain is for DeFi, the x-chain is for transfers, and the p-chain is for staking. There’s no question that this approach is more efficient than the standard single-chain approach, and is much more scalable. However, there’s no getting away from the fact that it’s a bit of a hassle and very confusing for beginners. Time will tell whether this approach is the right one!