Avalanche Subnets Explained

What is an Avalanche Subnet?

An Avalanche Subnet, or "subnetwork," is a collection of nodes (validators) focused on achieving consensus for transactions across one or more blockchains. Think of it as a smaller network within the broader Avalanche ecosystem, enabling developers to create custom blockchains suited to specific applications. This design fosters innovation and addresses scalability by distributing transaction loads across multiple subnetworks, each with its own rules and validators.

Subnets serve as a scalable solution, allowing the creation of personalized networks alongside the Primary Network. This setup ensures Avalanche can handle high transaction volumes efficiently without straining the main network. Validators on a Subnet must stake at least 2000 AVAX to join the Primary Network, which bolsters the platform's security and decentralization. Subnets are crucial for developing decentralized applications requiring high throughput and low costs, representing a significant advancement in blockchain technology.

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How to Create a Subnet on Avalanche

Creating a Subnet on Avalanche offers flexibility, scalability, and customization. Ensure you have at least 1 AVAX token in your Avalanche wallet for initial costs. Follow these steps:

• ‍Select Validators: Aim for a minimum of 5 validators, each with a stake of at least 2000 AVAX to ensure smooth operation.‍
• Pick Virtual Machines (VMs): Choose from VMs like EVM, AvalancheVM, or specialized VMs such as BlobVM for binary storage.‍
• Establish Rules and Criteria: Define features and capabilities for your validators. Select a consensus mechanism like Avalanche or Snowman.‍
• Deployment: Use Avalanche's development tools to launch your Subnet, incorporating your chosen VMs, validators, and rules.

Once deployed, your Subnet operates independently from the main Avalanche network, providing benefits like reduced latency and higher transaction speeds. For enhanced privacy, choose a VM like EVM that supports private transactions.

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How Many Subnets are Live?

The Avalanche network currently hosts 122 active Subnets, supported by 1,843 validators who have collectively staked 261,958,705 AVAX. These validators also contribute to the smooth operation of the X, P, and C blockchains within the Primary Network.

With 95 blockchains running on these Subnets, the network has facilitated nearly 997 million transactions, averaging a throughput of 11.62 transactions per second. Avalanche's vitality is further underscored by its 78,243 daily active addresses and 418,759 deployed smart contracts, highlighting its expansive growth and capabilities.

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Examples of Avalanche Subnets

A notable example of an Avalanche Subnet is the DeFi Kingdoms blockchain, also known as DFK Chain. Developed in collaboration with Avalanche, this Subnet supports the DeFi Kingdoms: Crystalvale expansion and uses its native JEWEL token for gas payments. This approach simplifies transactions and enhances user experience by reducing costs.

DFK Chain has a unique gas fee allocation model: 25% goes to validator wallets, encouraging network support; 50% is burned to increase JEWEL's market value; and 25% is allocated for community rewards, promoting user participation and ownership. With a total value locked at $3.97 million, DFK Chain demonstrates how Avalanche Subnets can be customized to enhance token utility and strengthen network resilience.

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Potential Subnet Use Cases

Avalanche Subnets offer a versatile structure for various app-specific chains or layer 2 environments similar to Arbitrum or Optimism. Here are some potential applications:

• ‍Decentralized Finance (DeFi) and Specialized Apps: Subnets are perfect for hosting DeFi platforms and specialized financial applications like perpetual exchanges. They provide the speed and scalability needed for platforms akin to GMX or DYDX, ensuring efficient and secure transactions.‍
• Onchain Gaming: Games like DeFi Kingdoms and Crabada can leverage Subnets' scalability and flexible architecture. This enhances the user experience with faster transaction speeds and lower latency.‍
• Real-World Assets: With integrated KYC functionality, Subnets can enable the tokenization of real-world assets such as treasuries and real estate. This allows regulated financial service providers to operate securely within a Subnet.‍
• Voting Systems: Subnets can create secure and transparent voting mechanisms, whether public for general elections or permissioned for corporate governance, providing immediate, immutable results.‍
• Supply Chain Management: The transparency and security of Subnets can be applied to supply chain management, ensuring each production and distribution step is verifiable and tamper-proof.

These examples highlight how Avalanche's Subnet technology can address diverse industry needs effectively.

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Bottom Line

Avalanche Subnets stand out as a modular scaling solution that meets the varied needs of multiple industries. Enabling the creation of custom blockchain networks within the Avalanche ecosystem, Subnets provide unmatched flexibility and efficiency. They handle high transaction volumes, enhance security, and support specialized applications, including decentralized finance, onchain gaming, real-world asset tokenization, voting systems, and supply chain management.

This approach not only addresses scalability challenges but also drives innovation, establishing Avalanche Subnets as a key technology for the future of decentralized applications and blockchain development.