Breaking down ACP-77: Reinventing Subnets on Avalanche.

The Avalanche Foundation has unveiled ACP-77, a transformative proposal set to redefine Subnet creation and operation within the Avalanche blockchain ecosystem. This ambitious initiative aims to lower entry barriers, enhance flexibility, and foster a more decentralized and dynamic network environment. Here, we delve into the intricacies of ACP-77, exploring its current context, proposed changes, benefits, and potential challenges.

-> Please note, ACP-77 proposes renaming 'Subnets' to 'Avalanche L1s (Layer 1s)'. If the proposal passes, they will henceforth be known as Avalanche L1s.

The Current landscape of Subnets

Subnets and their role: In the Avalanche ecosystem, subnets function as independent blockchains that leverage the mainnet for interoperability. However, the existing requirements for Subnet validation have created significant hurdles for developers.

The cost barrier: Currently, validators of Subnets must also validate the Avalanche mainnet, necessitating a minimum stake of 2,000 AVAX. At today's rates, this amounts to a substantial financial commitment, approximately $70,000. This high cost deters many developers that aim to jumpstart their Subnet by running their own validators, stifling innovation and limiting the expansion of the subnet ecosystem.

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Key proposals of ACP-77

ACP-77 introduces a series of pivotal changes designed to overhaul the Subnet creation process, making it more accessible and efficient.

1. Decoupling Subnet and Mainnet validation:

• Current Requirement: Validators must validate both the subnet and the mainnet, involving a high financial stake.
• Proposed Change: Subnet validators will no longer be required to validate the mainnet. This separation allows subnet creators to define their own validator sets and operational logic, significantly reducing costs.

2. Enhanced validator set management:

• Autonomy for Subnets: Subnet creators will gain the ability to establish their own rules for validator sets, staking rewards, and operational conditions. This autonomy empowers developers to tailor their subnet operations to their specific needs and goals.

3. P-Chain fee mechanism:

• Service payments: Subnet validators will pay the P-Chain for services such as validator set changes and cross-Subnet communication.
• Continuous balance depletion: Avalanche L1s will have balances on the P-chain that deplete continuously, requiring periodic refills to maintain operations. This ensures an ongoing contribution to the network’s overall functionality and security.

‍4. Streamlined synchronization:

• Current process: Validators must sync with the entire mainnet, which can be resource-intensive.
• Proposed process: Validators will only need to sync with the P-Chain, reducing resource requirements and streamlining the validation process.

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Benefits of ACP-77

The proposed changes in ACP-77 bring several significant benefits to the Avalanche network and its developers.

1. Lower costs and increased accessibility:

• Reduced Financial Barriers: By removing the 2,000 AVAX requirement, ACP-77 makes the creation of L1s and maintenance far more affordable. This democratization of Subnet access is poised to unlock a wave of innovation and participation within the ecosystem.

2. Greater flexibility and autonomy:

• Customizable operations: Subnet creators can now define their own validator rules, staking rewards, and operational conditions. This flexibility allows for highly customized and optimized Subnet operations, tailored to specific project needs.

3. Incentives for decentralization:

• Promoting decentralized models: The new framework encourages projects to adopt more decentralized, permissionless models. This shift towards decentralization enhances the resilience and diversity of the network.

4. Enhanced security and interoperability:

• Self-regulated security: Subnets will be responsible for their own security and validator integrity allowing even for restaking solutions as an example, promoting better self-regulation and robust security practices.
• Seamless interoperability: Through Avalanche Warp Messaging (AWM), Subnets will enjoy improved interoperability, facilitating smoother communication and collaboration across the network.

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Potential challenges and considerations

While ACP-77 promises numerous benefits, it also introduces certain challenges that need to be addressed.

1. Economic implications:

• Impact on AVAX tokenomics: The changes in validator requirements could affect the overall AVAX holdings among Subnet validators, influencing the tokenomics and market dynamics of AVAX. Careful analysis and management will be needed to maintain balance and stability.

2. Implementation complexity:

• Transition challenges: The shift to new validation models and the continuous fee mechanism introduces complexity in implementation. L1 operators will need to adapt to new cost structures and operational protocols, which may require significant adjustments and planning.

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Final word

ACP-77 represents a bold and forward-thinking step in the evolution of the Avalanche network. By lowering financial barriers, enhancing flexibility, and promoting decentralization, this proposal has the potential to unlock unprecedented growth and innovation within the Subnet ecosystem. While challenges remain, the careful implementation of ACP-77 could pave the way for a more accessible, dynamic, and resilient Avalanche network, fostering a new era of blockchain development and collaboration.

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About Chorus One

Chorus One is one of the biggest institutional staking providers globally, operating infrastructure for 60+ Proof-of-Stake networks, including Ethereum, Cosmos, Solana, Avalanche, and Near, amongst others. Since 2018, we have been at the forefront of the PoS industry and now offer easy enterprise-grade staking solutions, industry-leading research, and also invest in some of the most cutting-edge protocols through Chorus Ventures. We are a team of over 50 passionate individuals spread throughout the globe who believe in the transformative power of blockchain technology.