Questions about How Avalanch Works

Hi,
I am interested in Avalanch from an investment perspective and have some questions about how it works having had a brief read through the introductory documentation. I have previous experience in blockchain investing.

  • launching a subnet it says costs 2000AVAX, as the price increases over time so will the cost of launching a subnet. Doesn’t this mean fewer subnets will be launched and stifle growth? Shouldn’t that price be fixed perhaps and adjusted to a USD amount for example so more ‘clients’ can participate etc? (or are the increased security from a higher coin price worth it for subnet ‘launchers’? Should there be more modular pricing for them?

  • What kind of of companies or organisations (banks? governments? government agencies etc? Are these valid examples?) will be launching subnets?

  • Do subnets have scalability problems? e.g. if a subnet was launched using Ehereum or Monero for privacy purposes for example, can they only scale to that degree and in which case is this a problem, if not, why not?

  • When are other programming languages going to be introduced (non-programmer here). I understand formal programming languages such as Haskell (used by Cardano) are important for removing bugs from smart contracts in particular. Aren’t buggy smart contracts a major issue and isn’t this a problem for Avalanch?

  • How does a delegator know which validators to trust?

  • It says that users can create a fixed cap asset - what if they want to issue an inflationary token/currency? (just want to check they can do this as lots of coins on coinmaketcap are not fixed cap, they have inflationary models to fund the governance for instance). Are these tokens Avalanches equivalent of ERC-20 tokens used to build decentralised applications using programming instruments such as smart contacts like to build things like Synthetix for example?

  • Also, what about the governance of Avalanch going forward, will it be decentralised someday (not that that is necessarily good - Cardano’s looks like a mess imo).

Thank you

Welcome to Avalanche!

  • Subnet creation costs 0.01 AVAX (https://docs.avax.network/learn/platform-overview/transaction-fees). The minimum stake needed to be a validator is 2000 AVAX, however there has been a vote to lower the minimum stake to 500 AVAX.

  • Banks and financial institutions like hedge funds would be ideal candidates to launch subnets. John Wu, the President of Ava Labs, has mentioned a trial with a European fund to help smooth workflow and shave a few basis points off their costs.

  • Current scale is 4500 tps, with the potential for much more, so no scalability issues.

  • Avalanche currently has the EVM and AVM, and has support for custom VMs. Someone could decide to launch a Haskell subnet if they wanted to, there’s nothing stopping them.

  • This is a tough one. Currently delegators rely on recommendations from community members.

  • Assets on the C-chain will have to be wrapped as ARC20 (ERC20 equivalent) before they can be used in smart contracts.

  • Decentralisation takes a while. I trust the team at Ava Labs to shepherd that process accordingly. Governance will go live with the launch of Apricot as well.

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Thank you for the reply.

Just to clarity, so subnet creation is extremely cheap, that is great. I just want to confirm a hazy area of my understanding - who validates what exactly, basically. Do all the validators validate everything/randomly and therefore private blockchains/subnets get validated, or do the companies running those private subnets (such as the European fund) you mentioned have to validate it themselves and therefore pay lots to run their network?

Thanks again

I think you can find all information you are looking for on this part of the docs :slight_smile:

https://docs.avax.network/learn/platform-overview
https://docs.avax.network/build/tutorials/platform/create-a-subnet

In summary :

By default, validators only validate the primary network

It allows validators to only validate blockchains which they are interested in.

To add validators on a new subnet, you have to do it from your node with API calls. At the moment you can’t do it via the wallet.

Validators that validate custom blockchain need to also validate the primary network and have 2000 AVAX staked.

Private blockchains can choose a set of validators based or some particular concerns => Compliance, information privacy, specific power requirements ( CPU, … ) => some validators could slow their application.

Personal view :

We already have lot of validators that secure the network and get rewards, the advantage for new subnets owner is: They can also pay few rewards for the validators of the primary network that want to validate the new subnet because for myself, to validate another subnet and get some additional rewards at the same cost of my structure/VPS, its like a free reward ^^

This is the great thing about Avalanche! In the case of private subnets, the fund could decide to only allow validators that have a specific set of qualifications (e.g. higher end hardware, KYC, geographic location, etc.) to validate the subnet. To incentivise this, the private subnet could provide rewards (in the form of native tokens or additional AVAX). Incentivised subnet functionality is on the roadmap.

Great, thanks for the replies.