Figment’s First Look: AVA

Figment Networks will be supporting the AVA Network, AVA stakeholders, and AVA developers with our infrastructure, our Web 3 Explorer Hubble, and our Web 3 API access gateway Data Hub. Learn more about AVA by reading below.

What is AVA?

AVA is an upcoming layer one protocol by AVA Labs that plans to offer high-throughput, fast finality, and unprecedented decentralization. Developers will be able to launch their own public or private blockchains (called subnets), create and trade digital assets, and build scalable smart contracts and decentralized applications.

Subnets within the AVA network will be highly customizable and will have their own incentive structures.

Because of this customization, companies can create legally compliant permissioned subnets while still being connected to the grander AVA network. This could lead to the creation of new financial primitives and bring more traditional financial products into the blockchain space in a decentralized way.

The Team

AVA Labs was founded by Cornell Computer Scientists Emin Gün Sirer (CEO) and Kevin Sekniqi (COO) in 2018. The team brought in finance executive John Wu earlier this year as President of AVA Labs. AVA Labs is backed by the likes of Andreesen Horowitz and Polychain Capital.

Subnet Architecture

AVA Labs describes AVA as a “heterogeneous network of many blockchains and validator sets”. Blockchains on AVA are validated by a customizable group of validators called “subnets”. Users can create new subnetworks that function within their own specified ruleset. This can include, but not limited to:

• Who is able to validate within the subnet.
• Defining what makes a valid block.
• The genesis state of the chain.
• What occurs when a block is accepted.
• What RPC endpoints are exposed.
• What to save in the database.

An interesting aspect of the subnet model is that it allows validators to choose what blockchains they would like to validate in rather than be obligated to validate the state of every blockchain within AVA.

That being said, all validators must validate on the “default subnet” of AVA. The default subnet validates AVA’s base blockchains. Outside of technical requirements, the only requirement to validate on the default subnet is to have AVA tokens, the native token on the AVA blockchain, staked to your validator.

Base Blockchains

There are three blockchains validated by the default subnet:

• X-Chain: The X-Chain allows for creating and trading digital assets, like the AVA token. Transaction fees on this blockchain are paid in AVA.
• P-Chain: The P-Chain manages the metadata of the AVA network. This allows users to create their own blockchains and subnets.
• C-Chain: The C-Chain is an instance of the Ethereum Virtual Machine, which allows users to create smart contracts. This blockchain is powered by AVA’s novel Avalanche consensus protocol.

Use Cases

Because of the AVA Network being highly customizable, the use cases for the network are limitless. That being said, a unique use case that the AVA Labs team is focusing on is fully compliant financial products and applications built on the blockchain.

Subnets on AVA can be permissioned or permissionless. One of the benefits of creating a permissioned subnet is that it allows subnet owners to be fully compliant with local laws and regulations.

For example, subnet owners can require information about their users in order to comply with KYC, anti money laundering, and risk management regulations, while still benefiting from the speed and scalability of building on AVA.

This customization has the potential to bring a whole new group of financial assets into the digital space that were unable to benefit from other blockchain networks due to their permissionless nature.

Network Economics

The Token

The AVA token is the native asset on AVA.

At the base level, the AVA token will be used for –

• rewarding validators for validating on the default subnet
• paying for transaction fees on the default subnet
• creating a new subnet or blockchain
• sending an asset to the X-Chain
• on-chain governance participation

Minting New AVA

The supply cap of AVA is set at 720,000, and there will be 360,000 AVA available at launch. Additional AVA tokens will be minted as a reward mechanism for validators and token holders who decide to stake their AVA tokens.

Because of AVA’s fixed supply and minting structure, AVA is a deflationary token, similar to Bitcoin. As you can see, more tokens are minted as more tokens are staked on AVA. This is different when compared to other Proof of Stake based blockchains that mint new tokens when there is less staking participation as a way to incentivize more staking.

Staking AVA

Although there is no unbonding period, the minimum staking duration is two weeks. A staker will receive a higher percentage of rewards if they decide to stake for longer amounts (up to a year), thus incentivizing longer stake lengths. A staker will receive 11.11% more rewards if they decide to stake for a full year in comparison to staking for 2 weeks.

Slashing

There will be no slashing on AVA, but validators may lose a share of rewards if they are down and incorrect when validating.

Governance

The AVA governance model allows only a few features to be subject to governance, and those features will be subject to bounds. These features are:

• Minimal staking amount required to participate
• Minimal amount of time required to stake
• Maximum amount of time a node can stake
• Reward rate
• Fee structure

Anyone with AVA is allowed to participate in governance and any node participating in the network can issue a governance proposal.

Difference between Subnets

It is important to note that the network economics mentioned above only pertain to the default subnet on AVA. All additional subnets will have their own unique economic and governance structure.

Future Developments

AVA recently concluded its Denali incentivized testnet and is scheduled to launch its mainnet in July 2020.

AVA’s mainnet plans to launch with:

• Transaction fees
• Custom validators
• Asset registry
• Sharding through subnets
• On-chain governance

Check out AVA Labs’ Discord or our AMA recap with the AVA Labs team for more information.

Originally published at https://figment.network