What is Avalanche Multiverse?
On Tuesday, March 8th, the Avalanche Foundation announced a new incentive program worth millions of dollars in order to stimulate new developments on the Avalanche blockchain.
The Multiverse Program will be funded with 4 million AVAX (Currently worth around $290 Million) with a focus on “accelerating the adoption and growth of its novel “subnet” functionality, which enables a rich ecosystem of scalable app-specific blockchains.”
This will include support for new ecosystems including, but not limited to, blockchain-enabled gaming, DeFi, NFTs, and institutional use cases.
What is a Subnet?
This entire incentive program is focused on the development of AVAX Subnets.
A Subnet, or Subnetwork, is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains. Each blockchain is validated by exactly one Subnet. A Subnet can validate arbitrarily many blockchains. A node may be a member of arbitrarily many Subnets.
A Subnet enables virtually anyone to build their own layer 1 or layer 2 blockchains using the Avalanche infrastructure.
These subnets can have their own unique consensus mechanisms (Proof of Work, Proof of Stake, etc) and can also be public or private.
Subnets can also support KYC Requirements for users, a feature that will likely be attractive for institutional use cases.
One of the first use cases will be a DeFi Kingdoms specific subnet with a combined maximum of $15M of incentives for AVAX and CRYSTAL, a new Avalanche-native token created by DeFi Kingdoms to complement its existing JEWEL token.
The market sentiment seems to be bullish on the development of subnets for the Avalanche ecosystem.
All custom subnets must stake at least 2,000 AVAX in order to validate the network. This will create more buying pressure on the native AVAX token as more subnets are developed.
The development of subnets could be the bridge we have been looking for to link traditional finance with decentralized finance.
“Avalanche Subnets enable us to create an ideal environment for institutions to migrate on-chain and experience the power of DeFi protocols first-hand as users rather than just as investors,” Stani Kulechov, founder and CEO of Aave, said in a statement. “This is a significant leap toward a future where the barriers between traditional and decentralized finance cease to exist.”
The Importance of Incentive Programs.
Incentive programs have been crucial in the development and growth of Layer 1 Blockchains. Avalanche is no exception.
In August of 2021, Avalanche announced Avalanche Rush, a $180M liquidity mining incentive program to introduce more applications and assets to its growing DeFi ecosystem.
This program spurred a new wave of DeFi growth on Avalanche.
Since launching on August 18, 2021 total value locked (“TVL”) on Avalanche has increased from $312M to almost $16B, with unique addresses growing from 137K to 2.2M, and transactions soaring from 4M to 112M.
If history was to repeat itself, we could see a huge increase in price for AVAX.
Of course, market conditions are much harsher now than in August 2021, so it is unclear if this new incentive program will have the same positive impact as Avalanche Rush.
Final Thoughts
Avalanche Multiverse is an exciting incentive program that is much needed considering the current crypto landscape.
It is by no means a guarantee that AVAX will see a significant price increase as a result of this program.
However, if you are bullish on GameFi and the Metaverse, Avalanche is leading the way in terms of adoption and technology to support the next wave of projects.
What are your thoughts on The Avalanche Multiverse incentive program? Are you bullish on AVAX.