Avalanche to Invest $290M in 'Subnets' for DeFi, GameFi and NFTs
Avalanche is launching a major initiative in the subnets market.
By: Samuel Haig •Byte
Following last year’s rise of low-cost scalable Layer 1s, an increasing number of projects are now seeking to foster multi-chain ecosystems under the umbrella of a single network.
Avalanche is the latest, announcing the launch of a $290M incentive fund intended to accelerate the growth of “subnets” within its network on March 8. The move follows the impressive growth of the Cosmos’ IBC ecosystem, and the phased roll-out of Polkadot’s parachain architecture. Ethereum’s Layer 2 networks also command a total value locked of more than $5.5B.
The Avalanche Multiverse incentive program is intended to foster the development of app-specific subnet blockchains targeting the DeFi, GameFi, and NFT sectors. Subnets enable developers to customize their chains to be unique from the Avalanche mainnet, including selecting network gas tokens, validator sets, and fee models.
Ava Labs also revealed it will build a subnet targeting institution DeFi applications boasting native Know Your Customer (KYC) functionality. The chain will be developed in partnership with Aave Companies, Wintermute, a digital asset liquidity provider, and Valkyrie, a crypto asset management firm, among other institutional-facing crypto firms.
The know-your-customer piece will be provided by the digital asset firm Securitize. Its co-founder, Carlos Domingo, said that “the integration of Securitize iD natively into wallets through the Avalanche C-Chain will provide regulatory consistent, direct access to all DeFi apps” that are hosted on the subnet.
Stani Kulechov, the founder and CEO of Aave, described the chain as “a significant leap toward a future where the barriers between traditional and decentralized finance cease to exist.” Avalanche described the chain as enabling regulated institutions to “access DeFi primitives at scale.
DeFi Kingdoms, an NFT-powered play-to-earn MMORPG, will be among the first projects to take advantage of Avalanche’s incentive program by launching its own subnet. The team will offer $15M in incentives to foster development on its forthcoming EVM-compatible subnet, DFK Chain.
DeFi Kingdoms’ governance token JEWEL will also serve as the network gas token for DFK Chain once it is live. A portion of the JEWEL fees will be burnt, with validators receiving a share of the fees, as well as the protocol’s Quest Fund — which rewards the DeFi Kingdoms community.
Existing Avalanche validators will be commissioned to validate the DFK Chain. Validators are required to be staking a minimum of 2,000 AVAX tokens, in addition to staking its native JEWEL token. DeFi Kingdoms plans for the chain to later become a permissionless proof-of-stake network allowing anyone to validate “as the subnet technology advances.”
DeFi Kingdoms will also launch “Outposts” that allow users to onboard DFK Chain from other networks, including fiat onramps. Outposts will be launched on the Avalanche C-chain and Harmony networks initially.