How Avalanche’s ACP-77 is Fueling Subnet Growth and Institutional Adoption?
The Avalanche ecosystem has been gaining momentum all across the blockchain space. Now, the introduction of Avalanche’s ACP-77 is poised to accelerate its growth even further. Subnets, a key feature of Avalanche, have already proven to be a game-changer by offering a scalable, interoperable, and flexible environment. However, the existing model, which requires subnets to validate the mainnet in addition to their own chain, has created significant entry barriers. This article delves into how ACP-77 is set to revolutionize the Avalanche ecosystem by lowering these barriers, enhancing decentralization, and providing a more efficient operational framework for developers and institutions alike.
Understanding Avalanche’s ACP-77
Avalanche’s ACP-77 is a proposal that seeks to redefine subnet creation within the Avalanche ecosystem. Proposed by Dhruba Basu, ACP-77 builds upon the foundation laid by ACP-13, incorporating some of its language while introducing significant changes aimed at enhancing decentralization and creating a dynamic network environment. The primary goal of ACP-77 is to decouple subnet validation from mainnet validation, thereby reducing the resource burden and making it easier for developers to launch subnets.
Technical Enhancements of ACP-77
1. Decoupling Subnet and Mainnet Validation
One of the most significant changes introduced by ACP-77 is the decoupling of subnet validation from mainnet validation. In the existing setup, subnets are required to validate not only their own chain but also the mainnet, which creates a substantial resource burden. This dual validation process necessitates significant hardware investments and increases the complexity of operating a subnet. ACP-77 addresses this issue by allowing subnets to validate only their own chain, leading to a more efficient and scalable system.
With this decoupling, subnets can now have their own validator sets and operational logic, which allows for greater flexibility and operational efficiency. This change is expected to encourage more subnets to participate in the Avalanche ecosystem, thereby enhancing decentralization and making the network more dynamic.
2. Improved Validator Set Management
Another critical enhancement brought by ACP-77 is the ability for subnets to manage their own validator sets independently of the mainnet. In the current system, subnets are non-autonomous and must abide by the rules set by the mainnet. However, under ACP-77, subnets will have the autonomy to define their own staking rewards, operational efficiencies, and data storage mechanisms.
For example, previously, subnets had to pay a fixed fee to the P-chain to keep their validator sets updated. ACP-77 introduces a dynamic base fee model that significantly reduces data storage costs by distributing the storage burden among all subnet validators registered to the P-chain. This change not only reduces costs but also allows subnets to optimize their operations based on their specific needs.
3. Optimizing the P-Chain Fee Mechanism
The P-chain in Avalanche is responsible for consensus, validator coordination, and subnet creation. Under ACP-77, the fee mechanism for P-chain services will be optimized to make it more flexible and cost-effective. Instead of paying a lump sum for integration, subnets will only maintain a periodic balance based on their usage. This balance will deplete as services are used, and subnets will need to renew it periodically.
This pay-as-you-go model ensures that subnets are only charged for the services they use, making it more economical for developers and reducing the overall cost of operating a subnet. The flexibility offered by this model is expected to attract more developers to the Avalanche ecosystem, further driving subnet growth.
4. Flexible Synchronicity
In the previous Avalanche setup, subnets were required to sync with the P-chain, C-chain, and X-chain. This synchronization process added complexity and increased the resources required to maintain a subnet. ACP-77 simplifies this process by requiring subnets to sync only with the P-chain. This reduction in required synchronization will lead to quicker validation processes and lower resource investments, making it easier for developers to operate subnets.
Advantages of the Avalanche ACP-77 Upgrade
1. Staking and Reward Flexibility
One of the most significant benefits of ACP-77 is the increased flexibility it offers in staking and reward mechanisms. By decoupling subnets from the Avalanche mainnet, developers now have the autonomy to define reward mechanisms that best suit their specific use cases. This flexibility allows for more tailored subnet operations, which can enhance the performance and efficiency of applications running on these subnets.
2. Reduction in Off-Chain Costs
The decoupling of subnet and mainnet validation also leads to a significant reduction in off-chain costs. The more computation a network performs, the more hardware-intensive its operations become. Under ACP-77, subnets are only responsible for managing their own chains, which reduces the hardware requirements. According to AVA Labs, the hardware cost to run a subnet validator will be reduced by three times per month. For instance, if a developer was spending $300 per month to run a validator node on a subnet, under ACP-77, this cost could drop to just $100.
3. Enhanced Decentralization
ACP-77 is expected to significantly enhance decentralization within the Avalanche ecosystem. Previously, the requirement to pledge 2000 AVAX to launch a subnet created a substantial barrier to entry. This barrier limited participation and reduced the number of subnets that could be launched. However, with the decoupling of subnets from the mainnet, this requirement is eliminated, opening the door for more developers to launch their own subnets with minimal investment.
This increased participation will lead to a more decentralized and vibrant ecosystem, with a diverse range of applications and use cases being developed on Avalanche subnets.
4. Improved Gaming Infrastructure
The gaming industry has been increasingly drawn to the Avalanche ecosystem due to its scalability and performance. ACP-77 makes Avalanche even more attractive for gaming developers by reducing hardware requirements and allowing for greater customization of the gaming environment. Developers can now launch their gaming dApps with minimal investment and tailor the subnet to their specific needs, including creating native custom tokens for in-game payments.
5. Potential Challenges of ACP-77
While ACP-77 brings numerous benefits, there are potential challenges that cannot be ignored. The removal of the 2000 AVAX pledge requirement may impact the tokenomics of the Avalanche ecosystem, particularly in terms of supply and demand dynamics. Previously, the pledge requirement created a favorable demand for AVAX tokens, but this demand may decrease under the new model. The full impact of this change on the ecosystem’s tokenomics will only become clear once ACP-77 has been in operation for some time.
Additionally, the increased autonomy of subnets in creating their own economic models and governance structures may create challenges for existing Layer 1 networks. These networks may find it difficult to integrate with the new model, where each subnet operates with its own rules and value capture mechanisms.
Conclusion
Avalanche’s ACP-77 is a vital upgrade that is addressing the key inefficiencies in the current subnet model and paves the way for greater decentralization, lower costs, and enhanced flexibility. By decoupling subnets from the mainnet and introducing a more dynamic fee structure, ACP-77 lowers the barriers to entry for developers and institutions, making it easier to launch and operate subnets within the Avalanche ecosystem.
As the blockchain industry continues to evolve, the introduction of ACP-77 positions Avalanche as a leading platform for scalable, interoperable, and decentralized applications. While challenges remain, the potential benefits of ACP-77 far outweigh the drawbacks, making it a significant milestone in the ongoing development of the Avalanche ecosystem.
