Foresight&Ava Labs&Avatar: Avalanche From EVM-Compatible L1 to Subnet Practitioner

Introduction

Ever since its mainnet launch in 2020, Avalanche has grown into a vibrant ecosystem with over 500 projects building on top with over $9B TVL. With its unique subnet architecture and consensus mechanism, Avalanche seems to provide an interesting value proposition to the market: it can be viewed as an EVM-Compatible L1 or an organization of heterogeneous networks, and L2s can also be built on top of its infrastructure. As subnets gain more traction, the year 2022 will be a transformative year for Avalanche as its identity gradually evolves from just another “Ethereum killer” to a true subnet practitioner.

2. Avalanche Overview

Avalanche is an open-source platform developed by Ava Labs. It provides an interoperable, highly scalable ecosystem for developers and enterprises to launch customized blockchains with subnets. With the novel Avalanche consensus, the platform achieves 4500 TPS and near-instant transaction finality.

(Ava Lab Founding Team; Source: Ava.Network)

2.1 Understanding Ethereum’s Scalability Problems

To understand the architecture of Avalanche, we should first take a look at the Ethereum scaling problem.

  1. Horizontal Scaling Solution: Avalanche Subnets. Instead of a monolithic blockchain, Avalanche should be seen as an organization of blockchains validated by different subnets. The subnet solution has provided Avalanche with infinite possibilities to scale, as developers could start their subnet in as little as 12 hours.

2.2 Vertical Scaling Solution: Avalanche Consensus

2.2.1 Avalanche consensus

2.3 Horizontal Scaling Solution: Avalanche Subnet

2.3.1 Avalanche Architecture

3. Subnet Use Case

3.1 GameFi Use Case–The First Subnet on Avalanche

( DFK chain Stats; Source: @AVAXholic)

3.2 Subnet with native KYC functionality

3.3 Enterprises Use Cases–Beyond GameFi, Beyond Web 3.0

One of Ava Labs’ goals is to apply crypto-based innovations to traditional businesses. By blending these two worlds, Ava Labs thinks it can make everyday transactions such as paying for coffee or even buying a house cheaper and easier.

3.4 Other examples of subnet use cases:

  • Specialize in the fractionalizing and sale of assets that correspond to real estate, where validators have to store archive records off-chain for the property. (Dapps that might potentially adopt subnet solutions: Retok Finance)
  • For very high-performance applications a subnet could require validators to require large amounts of RAM or CPU power for applications needing 10,000+ TPS.
  • Private subnets are similar to enterprise blockchains such as JP Morgan’s Quorum, R3’s Corda, and hyperledger where access is restricted and the content of the blockchain is only visible to these participants.
  • Existing blockchain can port their state over to Avalanche and use its consensus mechanism for faster performance, finality, and increased security. So blockchain such as Bitcoin Cash, Ethereum classic could each have their own subnet and utilize POS, using their own token as stake. There is already an Avalanche version of Zcash on a Subnet.

4. Competitive Analysis

4.1 Comparison with L1s: Cosmos, BNB, Avalanche

As people realize the power of subnets, competition in this space has become heated:

(Avalanche Comparison with BNB, Cosmos; Reference: A Comparison of Heterogeneous Blockchain Networks.)

4.2 Comparison with L2 Rollups

Apart from the battles in L1s, the competition between different layers should also be discussed. Rollups move transaction computations off-chain, but store transaction data to the Ethereum chain, which means that rollups are secured by Layer 1.

(Avalanche Comparison with L2s, Reference: Ava. Network, Arbitrum.Network; @StarkWareLtd|Twitter,@zkSync|Twitter)

5. Avalanche Ecosystem

Avalanche has a vibrant ecosystem with more than 500 projects built on top of it. Here are some new projects that seem interesting.

5.1 Shrapnel

5.2 Arrow Market

5.3 Dexalot

  • Negligible transaction costs, improving financial inclusivity
  • Subnet utilises $ALOT as gas, adding extra buying pressure to the native token

6. Valuation

Going back to the analogy at the start, we believe blockchains are like cities or countries. The core value of a blockchain network should be the ability to cultivate innovation, which could be partly reflected through the network usage, developer ecosystem, and Total Value Locked.

8. Closing Remarks

In a nutshell, Avalanche offers developers a scalable, practical, and lightweight EVM-compatible scaling solution. Avalanche may be the first to come up with the idea of the subnet, but it’s not going to be the only one. Yet we have strong confidence in Avalanche in the incoming battle, because of its novel consensus, thoughtful design in architecture, and strong leadership team.

About Foresight Ventures

Foresight Ventures believes crypto will define the next few decades of innovation. The fund invests early and makes decisions quickly, providing wide-ranging support for projects from its robust ecosystem that includes major market players crypto exchange Bitget and crypto wallet BitKeep. Its founding and partnership team includes veterans of some of the top financial and technology firms dedicated to sourcing and supporting the next generation of disruptive innovations across Web3.

Reference

1. Avalanche Architecture

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Foresight Ventures is a blockchain technology-focused investment firm, focusing on identifying disruptive innovation opportunities that will change the industry

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Foresight Ventures

Foresight Ventures

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Foresight Ventures is a blockchain technology-focused investment firm, focusing on identifying disruptive innovation opportunities that will change the industry