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Avalanche 9000, the largest network upgrade on the Avalanche (AVAX) protocol since launch, will be unveiled during the Avalanche Summit crypto conference on October 16, 2024.
What is Avalanche 9000? How will it help Avalanche’s real world asset (RWA) tokenization push? Let’s find out.
What is Avalanche 9000?
Avalanche 9000 is a set of network upgrades expected to make creating layer one (L1) blockchains on Avalanche simpler, cheaper, and more customizable. It is being implemented via seven Avalanche Community Proposals (ACP).
For context, Avalanche is home to a number of L1 chains that use Avalanche validators to bootstrap their consensus mechanism and security.
Before the Avalanche 9000 upgrade, all validators on Avalanche had to sync with a special Avalanche L1 chain known as the Primary Network before making their validator services available to other L1s.
Furthermore, nodes had to stake at least 2,000 AVAX tokens (about $55,800 at the time of writing) to become a validator on Avalanche.
With the introduction of Avalanche 9000, validators do not need to validate the Primary Network nor do they need to stake 2,000 AVAX tokens to operate their own L1 chain.
Instead, Avalanche validators will only have to pay a “continuous fee” estimated at 1 to 10 AVAX per month per validator.
Additionally, the removal of the obligation to validate the Primary Network is expected to lower the cost of running validator nodes on Avalanche.
Avalanche 9000 Upgrade Sets Avalanche for RWA Wave
Providing flexibility to compliance-first companies who want to build their own blockchains on Avalanche was a key reason behind the Avalanche 9000 upgrade.
2024 has been a year in which several traditional finance institutions gained confidence in exploring the world of cryptocurrencies following the approval of spot Bitcoin and spot Ether ETFs.
The increased institutional interest has made RWA tokenization a key area of growth for the industry.
Now, Avalanche hopes to capitalize on the ongoing RWA tokenization trend by removing the obligation for Avalanche validators to validate its permissionless and public blockchain – the Primary Network.
“Regulated entities that are prohibited from validating permissionless, smart contract-enabled blockchains cannot launch a Subnet (a set of Avalanche validators that validate an L1) because they cannot opt-out of Primary Network Validation,” read ACP77.
Following the implementation of Avalanche 9000, institutions will be able to create private blockchains on Avalanche without worrying about exposure to public permissionless blockchains.
According to RWA analytics company rwa.xyz, Avalanche is miles behind leader Ethereum (ETH) in terms of total on-chain RWA token value excluding stablecoins.
As of October 16, 2024, Ethereum’s RWA token valuation, excluding stablecoins, stood at over $2.98 billion compared to Avalanche’s $30.6 million. Stellar (XLM), Solana (SOL), Polygon (POL), and Arbitrum (ARB) had more RWA token value (excluding stablecoins) than Avalanche.
Could Avalanche 9000 upgrades help Avalanche make up ground in the RWA tokenization race?
Performance Upgrades via Avalanche 9000
An extra benefit of separating Avalanche’s validators from its Primary Network is that congestion and fault in the Primary Network will not affect the performance of other L1s and vice versa.
Avalanche 9000 will also introduce a dynamic fee mechanism via ACP103. Dynamic fee mechanism refers to a gas fee policy that raises transaction fees during periods of high demand and lowers transaction fees during periods of low demand.
Dynamic fee mechanism helps prevent network congestion by incentivizing network participants to withhold transactions during periods of high demand.
Meanwhile, ACP131 will make Avalanche’s L1s more EVM-compatible by introducing Ethereum Cancun upgrade opcodes.
The Bottom Line
Avalanche was one of the hottest crypto projects in the market during the bull run of 2021. While the hype around the project has cooled, the success of Avalanche 9000 could resurrect investor interest around Avalanche.
In 2024, Avalanche has already showcased that it can support high-quality blockchain gaming projects like Off The Grid.
Next, Avalanche aims to attract institutions and traditional finance heavyweights to its shores with the Avalanche 9000 upgrade.
