TL;DR
Avalanche has a strange list of recent bedfellows. What other blockchain ecosystem can claim it welcomes partners ranging from investment banks to first-person shooter games? The technology that makes this possible is called subnets. Let’s review a few bustling Avalanche subnets.
A prelude. Avalanche has in recent weeks even outperformed Solana. Avax’s price is up more than 100% in 30 days. Transactions have spiked like crazy.
This spike in transactions appears to be unrelated to the topic of this article: subnets. But it’s worth touching on. A new token standard has hit Avalanche. These ASC-20 tokens use inscription to post information onto the Avalanche C-chain, in the metadata of each transaction. This new token standard is comparable to Bitcoin’s BRC-20 tokens.
These types of transactions have surged and are responsible for more than 95% of Avalanche’s daily on-chain transactions. This is just to show that a lot is going on on Avalanche. Now back to subnets.
What are Subnets?
What are Avalanche subnets? They are like private lanes off the highway called Avalanche. Each private lane (subnet) can have its own rules and operate independently while still being part of the larger Avalanche ecosystem.
Avalanche has three main chains, by the way:
- The Exchange (X) Chain
- The Contract (C) Chain
- The Platform (P) Chain. This coordinates Avalanche’s validators and allows for the creation and management of Subnets.
Avalanche subnets allow for the creation and customization of unique tokens and tokenomics that operate within each respective network.
- Each subnet must host at least one blockchain, but can host more.
- Each blockchain is only validated by the one subnet that it’s nested within.
- Validators can be members of multiple subnets (see image below).
- Validators must stake AVAX onto the main chain. Needless to say, this is good for the Avax price.
Who would want to deploy subnets? Well, the technology enables third-party developers to create and operate customized blockchains. Subnets can be tailored for specific purposes, like gaming, finance, or other specialized digital transactions.
Types of Avalanche Subnets
There are currently 20+ Avax subnets. See here the overview of subnets. Let’s discuss a few types, and for each type, a leading example.
Evergreen Subnets: Catering to Financial Institutions
In the spring of 2023, Avalanche launched Evergreen Subnets, a suite of blockchain tools designed for financial institutions. These institutions sometimes shy away from public and permissionless chains, which they obviously have no control over, and instead want something custom-made.
Still, they don’t want to build an entire blockchain ecosystem from the ground up. They do want to benefit from the security of established chains. That’s where Avalanche comes in, making the option of subnets available to these players. This means that the custom-built subnets for these tradfi institutions can be permissionedchains – unlike the permissionless chains we have come to love. With permissioned chains, the institutions gate the access. They need to, as they have Know-Your-Customer requirements to comply with.
Investment bank Citi recently delivered a proof-of-concept for an RFS (request for streaming) solution for…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
