What are subnets?
Subnets are Avalanche’s scaling solution. They offer an out-of-the-box solution for companies, DAOs, individuals, or even nations to create their unique blockchain with completely custom parameters. Subnets can be permissioned or permissionless, but most importantly, they are interoperable with other subnets. Unlike other blockchains, a subnet can have completely custom virtual machines. Subnets open the floodgates for innovation.
For example, most markets have many regulations prohibiting their integration with current blockchains, and a possible solution is a subnet with a custom Virtual Machine. This subnet would comply with all existing laws. A company could also create a subnet to trade debt instruments, track its supply chains, create new investment opportunities, and so much more.
Subnet Projects
Initial Subnet Offerings (ISO) will be an ample opportunity in 2022. ISOs are a tool for raising money for a project’s subnet. While no one has initiated an ISO yet, the five projects in this article have announced they are interested or have already begun work on their subnet. I expect the first ISOs to come out in early 2022.
Defi Kingdoms ($JEWEL)
DFK started on the Harmony blockchain, and after an explosion in interest, they have begun expanding to other chains. This project seamlessly merges P2E gaming with Defi, quite a feat. Users use the DFK DEX, LP pools, and purchase NFTs with in-game utility. Who knew the future of finance would be so fun?
DFK quickly realized the value a subnet could bring to its users. Their subnet will increase the speed of transactions, decrease time to finality, and prevent congestion since each subnet has its own set of validators. With a subnet, users will only need $JEWEL, the native DFK token, to make transactions, no need to hold AVAX or any other coin to play (or earn).
The DFK team recently posted pictures with some Avalabs team members. If you think DFK has finished pumping, well, strap in because a subnet will send this project to the stratosphere.
Pangolin ($PNG)
Pangolin was the first DEX on AVAX. Trader Joe has surpassed Pangolin to become the number 1 exchange on Avalanche despite arriving late to the party. However, a recent proposal by Justin Trollip, the Pangolin CEO, has excited red coiners everywhere. In his proposal, Justin lays out the plans for a subnet called Camelot.
Camelot validators must hold $PNG. One unique function of Camelot is its automatic arbitrage on DEXs and CEXs. Holders of $PNG will receive profits from the arbitrage. The first iteration of Camelot will provide liquidity to Pangolin, but the team plans to expand their services to other Defi protocols.
Colony Labs ($CLY)
Project description: Colony labs invests in upcoming $AVAX native projects and distributes tokens to stakers, making it an easy way to diversify your portfolio. Upcoming features include a validator program, AVAX top project index, and an LP program. Colony is an incubator for new projects, but it also invests 10% in proven projects and 30% in LP for projects in need of
liquidity. Few projects have multiple ways to create value for investors, making Colony an exceptional investment opportunity.
The upcoming validator program will invest 10% of Colony’s capital to validators on new subnets. Colony also plans to launch its subnet, which will roll out in Q4 2022. What will a Colony subnet offer? That is unknown, but expect more innovation from this experienced and fully doxxed team.
Blocknet ($aaBLOCK)
Blocknet is creating a decentralized index for subnets. What does this mean? Blocknet integration allows transactions and contracts on AVAX to interact with other blockchains or subnets. Blocknet’s Xrouter is a decentralized interoperability solution for blockchains, and they are considering moving to an AVAX subnet. Blocknet currently has its own chain, but they found the time and resources maintaining their chain have held them back. While nothing is official, they have openly stated they are considering moving to a subnet so their engineers and devs can develop their other projects.
Blocknet has been around since 2014, and they have a lot going on. The Blocknet indexing system is estimated to be complete by May 2022. Avalanche has also offered to help fund Blocknet’s migration to a subnet, which is excellent news for both parties. Their token ($aaBLOCK) is available on Pangolin swap. If you want to deal with ETH gas fees, you can also buy $aBLOCK on the Ethereum network via Uniswap. For more information on their other projects, check out their website.
Dexalot
Dexalot is the first CLOB (Central Limit Order Book) exchange on AVAX, which isn’t possible on other Layer 1s. Typical DEXs use an AMM (Automated Market Makers), an order book-based DEX reduces slippage and offers market and limit orders. Essentially, Dexalot brings the benefits of a CEX to a DEX. Dexalot currently only supports trading USDT and AVAX, but more pairs are coming.
While the current platform is in Beta, there have been rumors of a Dexalot subnet where you could exchange tokens and pay fees in a native Dexalot token. A subnet allows Dexalot to set its own fees, decrease transaction time, and configure an optimal environment for order book trading. There is no hard date for this subnet, but I highly recommend placing a few trades on Dexalot, just in case they reward early users with an airdrop.
Honorable Mention: XPower
Unlike the other projects on this list, XPower is a relatively small project with huge potential. XPower is a PoW token on a PoS chain. What does this mean? With Proof of Work, you mine cryptocurrencies using a CPU, GPU, or ASIC miner. Generally, the crypto you mine determines which method you will use. You can mine XPower with all three options.
XPower has three tokens, XPOWER.CPU, XPOWER.GPU, and XPOWER.ASIC. XPOWER.CPU is the easiest to get started with as most laptops and phones are perfectly capable of mining; however they give you fewer tokens per additional effort. XPOWER.GPU tokens give you more tokens for your effort while mining XPOWER.ASIC gives you tokens at a 1:1 effort to reward ratio.
After mining XPower, the next step is to mint your NFT! There are nine NFTs for each XPower coin. Each NFT level costs 1000x the last one. For example, a Unit NFT costs 1 XPower while a Kilo NFT costs 1000 XPower. In the future, you will be able to stake your NFTs to earn more XPOWER tokens!
The XPower roadmap lists a possible subnet in their future! If you’d like more information about this fascinating project, please join us on discord: https://discord.gg/dWe87pzj
DYOR
Subnets are a massive innovation in crypto. They will undoubtedly change how we interact with dApps and other chains. The five projects identified here are potentially great opportunities. As always, do your own research!
What subnets are you excited about? Let me know in the comments!
