Subnets are custom blockchains living inside of the main chain. This will help layer 1’s ability to scale.
If every project was able to have their own subnet, transactions inside of that subnet would be using their own token as gas fees. This would replace the layer 1 gas fee token.
These standalone subnets would allow developers to set their own rules, which could be different from the initial layer 1 the subnet is built on. Inside these subnets, the developers have complete control.
Avalanche is currently the leader of the pack with subnets. We touched on this before in our $AVAX Deep Dive. $AVAX introduced “Multiverse” subnets as a way to keep gas fees low and transactions high. This will help $AVAX support to growth of P2E Gaming.
Avalanche has three different subnets out of the box, all three of these have different use cases.
- X-chain has a main use case in creating and exchanging assets.
- P-chain coordinates validators and creates subnets.
- C-chain executes the smart contracts.
They want all projects to have a standalone subnet. The Avalanche Foundation has announced a fund of $290 Million to help innovate subnets in their ecosystem. Avalanche put emphasis around GameFi, DeFi, and NFTs for this funding.
There are projects using and testing this new feature already.
DeFi Kingdoms, has recently branched their game to their own avalanche subnet. The expansion, Crystalvale, has a new token called CRYSTAL. This is running on its own subnet called “Appchain”.
These projects taking the “risky” jump will break the ice and help onboard other projects.
The only headwind I see with this feature:
Avalanche is quoted saying they believe subnets will be a key to KYC infrastructure. They believe this will put them ahead of regulation and institutional adoption. I think this will frighten some users.
I personally think the idea of subnets is genius. I’ve always been in the belief that scalability issues are a good thing. This means your product is being used and consumers like it.
Excited to see what the next version of Avalanche has for us!
Nothing in this post is intended to be financial advice. Always do your own research.
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