Avalanche has maintained steady momentum over 2024, competing amongst the largest Layer-1 (L1) blockchain networks on the market for another year. However, this year has been particularly eventful for Avalanche, with its ecosystem improving across several fronts.
DeFi offerings have grown richer and more liquid, with stablecoins, tokenized real-world assets, and institutional money markets gaining traction. Parallel to this financial layer, the gaming sector—already a strong suit for Avalanche—has seen landmark moments such as the launch of Off The Grid, a next-generation battle royale game that tests the boundaries of blockchain-based in-game economies. Enterprise adoption and real-world integrations illustrate the platform’s appeal to institutional, governmental, and retail users seeking transparent, efficient, and verifiable solutions for commerce, finance, and public administration.
However, nothing has a larger impact than the coming launch of Avalanche9000 — a sweeping network upgrade that will fundamentally reshape the entire network’s capabilities. Avalanche9000 represents a major performance and mechanical upgrade to Avalanche, moving toward a more scalable, low-cost, and composable ecosystem of interoperable L1 blockchains.
This innovative model will make the Avalanche C-chain arguably the most modular, efficient ecosystem on the market to date. By creating an environment for affordable deployments, lowering base transaction fees, and simplifying cross-chain communication, Avalanche9000 will transform how developers interact with Avalanche, bootstrapping development for countless L1s.
This report provides a comprehensive overview of these developments, focusing particularly on Avalanche9000 and its subcomponents (notably ACP-125 and Retro9000), analyzing L1 gaming growth through the lens of OTG’s success, reviewing key enterprise adoption narratives, and looking ahead into 2025.
Avalanche9000
Avalanche9000 represents the largest and most impactful network upgrade since Avalanche’s initial launch. Its primary objective is to reduce the economic and technical barriers that have historically hindered the deployment of new L1 chains (formerly subnets) within the Avalanche ecosystem. Unlike legacy architectures, Avalanche’s multi-chain design envisions a network of customizable L1s connected through a shared liquidity hub and interchain messaging layer (ICM).
Departing from the traditional Subnet model, developers no longer need to validate the main network or stake 2,000 AVAX upfront. Instead, a minimal ongoing fee drastically reduces expenses. Drawing inspiration from Ethereum's EIP-4844, which slashed Layer 2 gas fees, Avalanche9000 achieves similar affordability for L1s, comparable to Celestia-based rollups, while offering superior interoperability and reliability. The upgrade also introduces L1-specific validators, empowering each blockchain to adopt its own consensus mechanisms, such as Proof of Stake or Proof of Authority, enhancing tokenomics and value. Additionally, the cost of running a validator has dropped significantly, from 2,000 AVAX (approximately $100,000) to just 1.33 AVAX per month.
One of the most critical breakthroughs introduced with Avalanche9000 is the elimination of the P-Chain validator requirement. Previously, deploying a new L1 required operators to also be validators on Avalanche’s primary network, which meant staking 2000 AVAX — a significant capital requirement. Avalanche9000 replaces this infrastructure with a dynamic ValidatorManager smart contract and an ongoing, nominal AVAX-denominated fee.
This shift allows L1 validators to operate independently, no longer bound to Avalanche's primary validation network while ensuring a fair economic contribution through fees. Existing subnets have the option to convert from the traditional 2000 AVAX staking model to the new validator framework via ACP-77. Importantly, this conversion is optional, allowing current operators to maintain the legacy model if preferred.
This shift is monumental for projects looking to launch custom L1s. By drastically reducing startup costs and operating expenses, Avalanche9000 enables virtually any project to spin up a custom-designed L1 tailored to its specific use case. For context, think about the high capital requirements and technical complexities associated with launching an L2 on Ethereum or a standalone L1 on other major networks like Cardano or Tron. Avalanche’s model, in contrast, makes it economically viable for smaller teams, enterprises, and on-chain protocols to create their own L1 with minimal friction. This significantly democratizes L1 development and opens the door to a flood of niche, domain-specific chains that can interconnect with Avalanche’s broader liquidity hub and shared tooling ecosystem.
This reimagining of network architecture does two major things:
- Resource Optimization – Existing applications and protocols become exponentially more resource-efficient, as they can operate on their own dedicated L1s with tailored economics, logic, and execution environments.
- New Ecosystem Expansion – The barriers to entry are reduced so dramatically that an entirely new wave of sophisticated, purpose-built L1 ecosystems can now flourish. These L1s are no longer cost-prohibitive to launch, unlocking innovation and experimentation at a pace that rivals or surpasses the growth of traditional L2s.
However, Avalanche9000 is so much more than just a technical overhaul. It really is a ground-up restructuring of the fundamental elements of Avalanche’s long-term infrastructure, which is why it is referred to as the most important development since mainnet. By pairing this upgrade with economic incentives, tooling support, and developer grants, Avalanche hopes that this upgrade will set the stage for massive ecosystem expansion (specifically regarding new L1s being launched).
ACP-125: Reducing Transaction Costs
One of the key components of the Avalanche9000 release is ACP-125, a crucial proposal designed to drastically reduce the minimum base fee on the C-chain from 25 nAVAX to only 1nAVAX. While simple in concept, this fee reduction carries rather major implications that will ultimately strengthen Avalanche’s competitiveness against hyper-efficient L2s like Base.
Historically, Avalanche’s minimum base fee often remained at or near its established floor. This effectively imposed a cost structure that frequently exceeded true market demand. In periods of low activity, users faced relatively high transaction expenses, discouraging deeper experimentation, small-value transfers, and more frequent interactions with dApps. The result was an underutilization of the network’s capabilities, as higher fees reduced the incentive to transact freely and fluidly.
Market-Driven Fee Realignment
By implementing ACP-125, Avalanche introduces a more responsive fee environment. Now, when demand is low, the minimum base fee can drop significantly, reducing user costs and stimulating higher transaction throughput. This closer alignment between fees and actual network usage not only encourages existing users to engage more deeply but also makes Avalanche far more accessible to newcomers exploring DeFi, gaming, NFTs, or enterprise applications for the first time.
Why is this so important? Networks like Solana and various Ethereum L2 solutions raise the bar for low-cost, high-speed transactions, and lowering Avalanche’s base fee ensures that it can hold its own against these rivals. Developers building cost-sensitive applications, whether they are micro-transactions in on-chain games, NFT marketplaces, or DeFi platforms catering to smaller accounts, can now consider Avalanche a top-tier choice. In essence, ACP-125 neutralizes a potential deterrent to adoption and positions Avalanche to win over users who prioritize affordability alongside performance.
It's worth saying that cheaper transactions do far more than just save users money — they invite a surge in network activity:
- DeFi Protocols: Lower costs mean more arbitrage opportunities, cheaper yield farming, and a more welcoming environment for stablecoin issuance and lending.
- NFT Markets: Artists and creators benefit from reduced minting fees, making it viable to issue lower-priced collectibles or experiment with dynamic NFT mechanics that require frequent state changes.
- Gaming dApps: With transaction costs minimized, on-chain actions like purchasing in-game assets, opening loot crates, or participating in tournaments become easier, enhancing gameplay and user retention.
- Enterprise and Institutional Use Cases: Lower fees reduce overhead for large-scale, repeated operations, such as data logging, supply chain verifications, or tokenizing financial instruments.
Long-Term Network Health
While reducing fees might initially appear to curtail AVAX burn and nominally impact tokenomics, the strategic bet is that increased activity will compensate for any short-term revenue drop. More transactions mean more engaged users, more liquidity, and a healthier ecosystem. Over time, this boost in network vibrancy could enhance the overall utility and desirability of AVAX, reinforcing Avalanche’s core economic engine.
In the context of Avalanche9000’s broader goals — simplifying L1 creation, fostering an environment ripe for innovation, and attracting a wide spectrum of participants — ACP-125 serves as a powerful enabler. By solving a subtle but significant economic inefficiency, Avalanche positions itself not just as a high-performance chain but one that meets users and developers where they are, at prices they’re willing to pay.
Retro9000 and Other Initiatives
Running parallel to Avalanche9000’s technical transformations is a complementary suite of initiatives that outline Avalanche’s commitment to ecosystem growth. The biggest among these is Retro9000, a $40 million retroactive grant program aimed at inspiring the next wave of developers to join the Avalanche ecosystem and leverage Avalanche9000.
Retro9000’s core proposition is rewarding builders who help pioneer the ecosystem’s development from its earliest stages. Instead of waiting for maturity and mainstream adoption before offering grants, Avalanche is betting on its early adopters first. There is a particular push by Avalanche to get developers to take on projects showcasing what can be done with Avalanche9000, such as:
- Launching new L1s
- Experimenting with custom virtual machines (VMs)
- Developing advanced tooling kits
- Contributing to the critical infrastructure needed to continuously scale Avalanche
This creates a culture of proactive innovation, where early risk-takers are not only recognized but materially supported.
Accelerating Tooling and Infrastructure Build-Out
One of Avalanche’s strategic goals is to cultivate an environment where launching an L1 becomes as straightforward and cost-effective as deploying a smart contract was in previous blockchain generations. Retro9000 helps realize this vision by channeling capital toward foundational layers:
- Developer Tools & SDKs: Empowering teams to build easy-to-use libraries, APIs, and debugging tools that reduce the complexity of spinning up and maintaining custom L1s.
- Testing & Monitoring Frameworks: Providing robust systems for stress-testing performance, monitoring network health, and diagnosing issues, ensuring that even highly specialized L1s can operate reliably.
- Cross-Chain Protocols & Services: Enhancing interchain messaging capabilities, bridging solutions, and liquidity routing services that bind the ecosystem together, reinforcing the “network of networks” philosophy behind Avalanche9000.
By rewarding those who improve the entire network’s utility and stability, Avalanche encourages a virtuous cycle: more developers produce better tools, which attract more users, which in turn draw more capital and attention. Over time, this self-reinforcing dynamic fosters a resilient, decentralized ecosystem that can adapt to market shifts, user demands, and emerging technologies.
L1 Gaming Growth
Gaming has emerged as one of Avalanche’s most dynamic growth areas, reflecting the platform’s capacity for high throughput, rapid finality, and seamless user experiences. Unlike traditional blockchains that force all applications to share the same network resources, Avalanche’s multi-chain architecture allows game developers to launch dedicated L1 gaming chains. These specialized environments can be fine-tuned for specific gameplay mechanics, transaction throughput requirements, and economic models, offering a level of customization that mainstream gaming studios find increasingly appealing.
Before Q4 2024, Avalanche had already built a reputation for blending traditional game design with decentralized features — such as player-owned assets, in-game token economies, and NFT-driven marketplaces. With Avalanche9000, this synergy is magnified. Lower fees introduced by ACP-125 reduce the friction of player actions that frequently involve microtransactions, while simpler L1 deployment mechanics make it easier for studios to spin up and maintain tailored gaming blockchains.
Overall, Avalanche’s approach to gaming is about more than just “putting games on chain.” It’s about reimagining the relationship between players, content creators, and the platforms they use. Game developers now have the freedom to sculpt their environments — determine how and when fees are charged, customize token mechanics, and shape how players engage with on-chain assets. This creative liberty positions Avalanche as a prime candidate for the next wave of Web3 gaming studios looking to innovate beyond the conventional models and constraints of legacy platforms.
Off The Grid (OTG) Launch
The Q4 2024 launch of Off The Grid (OTG) is a watershed moment that underscores Avalanche’s readiness to handle complex, large-scale gaming operations. OTG is a next-generation battle royale experience that marries the competitive intensity of mainstream shooters with the economic depth of blockchain-enabled item ownership, trading, and rewards.
OTG’s early performance metrics speak volumes. In its initial weeks, the game facilitated millions of on-chain transactions: players looted items, traded equipment in real-time, and participated in in-game events that required immediate, trustless verification. Avalanche’s consensus mechanism delivered sub-second finality, keeping gameplay smooth and uninterrupted despite a torrent of user-driven actions. This performance benchmark sets Avalanche apart, proving that high-octane gaming, traditionally the domain of centralized servers, can indeed thrive on decentralized infrastructure.
In OTG, items are not mere pixels on a screen but genuine digital assets. Players truly own their equipment, skins, and collectibles. These NFTs can be transferred freely in secondary markets, used as collateral in on-chain lending protocols, or perhaps even carried into future Avalanche-based games. This fluidity of value creates a new paradigm where gaming assets transcend their initial game environment, blurring the line between “in-game items” and “digital property.”
Broader Implications for Web3 Gaming
The success of OTG really sets up the entirety of Web3 gaming with a coherent, successful proof of concept that blockchain games can absolutely launch as AAA titles and land on the world’s largest gaming platforms, including PC, Playstation, and Xbox. For one, if a high-stakes battle royale title can run seamlessly on Avalanche, there is no reason that RPGs, MMORPGs, sports simulations, strategy games, and more cannot follow. Each new genre brings its own communities, content creators, and developers, enriching Avalanche’s gaming metaverse.
It also shows that any of these gaming titles, no matter the complexity, can leverage Avalanche9000’s simplified L1 deployment process, allowing smaller studios to potentially launch their own gaming ecosystems without the prohibitive costs that otherwise exist. This opens the field to indie developers, niche gaming communities, and experimental formats that break the mold of conventional titles.
Avalanche’s multi-chain architecture and ICM framework create the potential for interconnected gaming realms, too. This makes a ton of sense for tons of different scenarios. For example, imagine an NFT weapon earned in OTG serving a purpose in a future fantasy RPG built on a separate Avalanche L1 or tokens from a racing game integrating into a larger metaverse. This interoperability fosters richer player experiences and longer lifecycle value for digital assets.
Catalyst for Mainstream Adoption
Gaming is a cultural gateway. A compelling game could draw in many users who might never interact with DeFi or enterprise blockchain solutions. Once they join the Avalanche ecosystem, they discover financial products, NFT marketplaces, or even tokenized real-world assets. In this sense, gaming can serve as a powerful onboarding channel, converting casual players into broader Web3 participants.
By meeting the demands of a title like OTG, Avalanche has effectively proven that it is a leading platform for next-generation gaming. Coupled with Avalanche9000’s technical upgrades and economic incentives, it sets the stage for a future where immersive, community-driven, asset-rich games become a staple of the Avalanche network.
Enterprise Adoption
As 2024 draws to a close, Avalanche’s roster of enterprise and institutional partners has grown from promising early movers to include some of the world’s largest financial institutions, technology companies, and public agencies. The results speak to Avalanche’s ability to offer a secure, scalable, and compliant environment for tokenizing traditional assets, streamlining cross-border commerce, and modernizing public services.
Where early experiments focused on niche tokenization efforts or pilot projects, today’s partnerships represent a wholesale embrace of blockchain at the institutional and infrastructure levels. Collectively, these alliances now encompass billions of dollars in assets, hundreds of millions of end-users, and strategic integrations that place Avalanche at the heart of global finance, commerce, and governance.
Across the network, Avalanche has attracted a range of household names and industry leaders. By December 2024, the cumulative value of tokenized funds, institutional liquidity pools, and enterprise-grade deployments secured on Avalanche surpassed several billion dollars in total locked value (TVL). This figure includes global asset managers, multinational payment processors, and enterprise service providers who trust Avalanche to run mission-critical applications.
Some prominent examples include:
- BlackRock’s BUIDL Fund
One of the world’s largest asset managers, BlackRock, has tokenized its USD Institutional Digital Liquidity (BUIDL) Fund — exceeding $500 million — on Avalanche. This marks a turning point, as BlackRock’s presence provides substantial on-chain liquidity and serves as a high-profile validation of Avalanche’s suitability for large-scale institutional products. Additionally, Securitize has launched a groundbreaking "sToken" to provide institutional investors with liquidity from real-world assets (RWAs) while maintaining yield. Developed in partnership with Elixir, the token utilizes Ethereum’s ERC-4626 standard for yield-bearing vaults. This innovation allows holders of Securitize-issued RWAs to convert their assets into Elixir's deUSD, a decentralized dollar token, without sacrificing returns. The program enables these composable tokens to be utilized across the DeFi ecosystem while continuing to generate income from assets like BlackRock's tokenized Treasuries. This development highlights the rapid advancements in blockchain-based tokenization, with major financial institutions exploring its potential to transform asset issuance, transfer, and utilization.
- Franklin Templeton’s Tokenized Money Market Fund
Franklin Templeton, managing $1.5 trillion+ globally in traditional markets, brought a $420 million U.S. Government Money Fund onto Avalanche. This bridging of a blue-chip financial product into the blockchain domain lowers operational frictions for institutional participants, offering them the best of both worlds — traditional stability and on-chain accessibility.
- Grayscale Avalanche Trust
Grayscale introduced the Grayscale Avalanche Trust, offering a regulated, compliance-first avenue for accredited investors to gain exposure to AVAX. While the trust’s AUM may fluctuate over time, its existence shows there is undeniable institutional interest and opens the door for more liquidity inflows from legacy capital markets.
Impact on Liquidity and Market Depth
The infusion of institutional-grade assets and liquidity providers helps stabilize markets and foster predictable pricing, narrowing bid-ask spreads and improving risk management tools for traders, lenders, and borrowers. Multi-billion-dollar funds also encourage secondary market formation, enabling 24/7 global trading, fractional ownership, and expanded collateral options for DeFi protocols. Taken together, this depth and quality of liquidity position Avalanche as a liquidity hub for both crypto-natives and TradFi entrants.
As these institutions integrate, service providers (compliance specialists, analytics platforms, custodians, etc.) are increasingly incentivized to build on Avalanche, further enhancing infrastructure reliability and user experience. This synergy creates a positive feedback loop: top-tier integrations attract high-quality service providers, which in turn support more sophisticated institutional participants, reinforcing Avalanche’s network effects.
Use Cases in Action
RWA Tokenization at Scale
Securitize’s tokenization of $1B+ in RWAs through Elixir’s deUSD program is only the beginning. Over the past quarter, additional issuers have followed suit, pushing the total RWA pipeline on Avalanche well past the billion-dollar mark. These on-chain representations of bonds, private loans, and real estate portfolios aren’t mere proofs of concept; they offer real yield opportunities to DeFi users, unlock new forms of collateral for lending platforms, and enable institutional participants to leverage blockchain’s instant settlement and global reach.
Government-Level Transformations
The California DMV’s decision to digitize 42 million car titles — an asset class representing tens of billions of dollars in vehicle value — on Avalanche highlights the platform’s capability to handle massive public-sector databases. By reducing administrative overhead, mitigating fraud risk, and streamlining transferability, Avalanche demonstrated its readiness to tackle real-world, large-scale data challenges. Beyond California, other state and municipal agencies have reportedly begun evaluating similar integrations, potentially transforming how society handles asset registries, real estate deeds, business licenses, and more.
Quantifying Efficiency Gains
While the immediate economic value of improved administrative processes can be hard to measure, the downstream impact of digitizing millions of titles is immense. Reduced processing times, fewer errors, and less dependency on paper-based systems can save taxpayers and government agencies millions of dollars annually. Over time, these efficiencies may enable dynamic pricing models, more competitive insurance markets, and improved accountability and transparency in vehicle financing and leasing sectors.
J.P. Morgan’s Kinexys Project EPIC
As part of a privacy and composability exploration by J.P. Morgan, AvaCloud—a managed service on Avalanche—was selected to participate, reflecting Wall Street’s interest in advanced blockchain functionalities. Such initiatives can catalyze the integration of enterprise-grade identity and compliance solutions on Avalanche, making it safer and simpler for large financial institutions to operate on-chain.
Multi-Billion Payment Ecosystems via StraitsX and Alipay+
Payment leaders with user bases exceeding a billion users collectively have begun leveraging Avalanche for cross-border, stablecoin-powered settlements. These tie-ins potentially unlock billions in annual transaction volumes, offering merchants and consumers near-instant transfers at minimal cost. The downstream economic impact is profound: lower friction in emerging markets, expanded remittance services, and new lines of revenue for merchants and payment processors.
Quantifying Global Market Reach
Consider that Alipay+ and GrabPay collectively serve roughly 1.3 billion people across Asia, with merchant networks in the tens of millions. Even if a fraction of these users interact with Avalanche-based payments, the absolute number of on-chain transactions could eclipse the activity seen in many smaller blockchain ecosystems. Each incremental integration, whether it is from a multinational beverage company tokenizing premium malt beer for brand engagement or a major sports franchise launching a loyalty program, adds layers of economic utility and brand recognition.
Plus, with tokenized mutual funds, stablecoins representing various fiat currencies, and an array of securitized assets online, Avalanche provides a continuous, global marketplace that never closes. Institutional traders can rebalance portfolios at any hour, global retail investors can access previously restricted asset classes, and fractional ownership allows smaller players to participate in historically gated markets. These expanded market dynamics increase capital efficiency, drive innovation in financial structuring, and potentially lower overall capital costs for businesses seeking funding.
Conclusion
A combination of technical upgrades, ecosystem incentives, and real-world integrations characterizes Avalanche’s journey through Q4 2024 and beyond. The Avalanche9000 upgrade, headlined by ACP-125, is one of the biggest moments in Avalanche’s history. By aligning transaction fees with market realities and lowering the barrier to L1 chain deployment, Avalanche positions itself as a platform where speed, scalability, and affordability all come together.
Retro9000’s grants program complements these technical improvements by fueling a thriving developer ecosystem, ensuring that the multi-chain vision is not just aspirational but operational. In parallel, gaming’s meteoric growth demonstrates Avalanche’s readiness to host complex, high-performance applications that can attract and retain mainstream user bases. This even expands into enterprise adoption, from digitized DMV titles to tokenized money funds.
Taken together, these advancements help to solidify Avalanche’s standing as a blockchain platform that’s not only technologically competitive but also strategically aligned with user needs, developer innovation, and institutional confidence. As Avalanche9000 goes live on mainnet, the stage is set for an era in which Avalanche continues to develop and improve.
Disclaimer: This report was commissioned by Ava Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Avalanche has maintained steady momentum over 2024, competing amongst the largest Layer-1 (L1) blockchain networks on the market for another year. However, this year has been particularly eventful for Avalanche, with its ecosystem improving across several fronts.
DeFi offerings have grown richer and more liquid, with stablecoins, tokenized real-world assets, and institutional money markets gaining traction. Parallel to this financial layer, the gaming sector—already a strong suit for Avalanche—has seen landmark moments such as the launch of Off The Grid, a next-generation battle royale game that tests the boundaries of blockchain-based in-game economies. Enterprise adoption and real-world integrations illustrate the platform’s appeal to institutional, governmental, and retail users seeking transparent, efficient, and verifiable solutions for commerce, finance, and public administration.
However, nothing has a larger impact than the coming launch of Avalanche9000 — a sweeping network upgrade that will fundamentally reshape the entire network’s capabilities. Avalanche9000 represents a major performance and mechanical upgrade to Avalanche, moving toward a more scalable, low-cost, and composable ecosystem of interoperable L1 blockchains.
This innovative model will make the Avalanche C-chain arguably the most modular, efficient ecosystem on the market to date. By creating an environment for affordable deployments, lowering base transaction fees, and simplifying cross-chain communication, Avalanche9000 will transform how developers interact with Avalanche, bootstrapping development for countless L1s.
This report provides a comprehensive overview of these developments, focusing particularly on Avalanche9000 and its subcomponents (notably ACP-125 and Retro9000), analyzing L1 gaming growth through the lens of OTG’s success, reviewing key enterprise adoption narratives, and looking ahead into 2025.
Avalanche9000
Avalanche9000 represents the largest and most impactful network upgrade since Avalanche’s initial launch. Its primary objective is to reduce the economic and technical barriers that have historically hindered the deployment of new L1 chains (formerly subnets) within the Avalanche ecosystem. Unlike legacy architectures, Avalanche’s multi-chain design envisions a network of customizable L1s connected through a shared liquidity hub and interchain messaging layer (ICM).
Departing from the traditional Subnet model, developers no longer need to validate the main network or stake 2,000 AVAX upfront. Instead, a minimal ongoing fee drastically reduces expenses. Drawing inspiration from Ethereum's EIP-4844, which slashed Layer 2 gas fees, Avalanche9000 achieves similar affordability for L1s, comparable to Celestia-based rollups, while offering superior interoperability and reliability. The upgrade also introduces L1-specific validators, empowering each blockchain to adopt its own consensus mechanisms, such as Proof of Stake or Proof of Authority, enhancing tokenomics and value. Additionally, the cost of running a validator has dropped significantly, from 2,000 AVAX (approximately $100,000) to just 1.33 AVAX per month.
One of the most critical breakthroughs introduced with Avalanche9000 is the elimination of the P-Chain validator requirement. Previously, deploying a new L1 required operators to also be validators on Avalanche’s primary network, which meant staking 2000 AVAX — a significant capital requirement. Avalanche9000 replaces this infrastructure with a dynamic ValidatorManager smart contract and an ongoing, nominal AVAX-denominated fee.
This shift allows L1 validators to operate independently, no longer bound to Avalanche's primary validation network while ensuring a fair economic contribution through fees. Existing subnets have the option to convert from the traditional 2000 AVAX staking model to the new validator framework via ACP-77. Importantly, this conversion is optional, allowing current operators to maintain the legacy model if preferred.
This shift is monumental for projects looking to launch custom L1s. By drastically reducing startup costs and operating expenses, Avalanche9000 enables virtually any project to spin up a custom-designed L1 tailored to its specific use case. For context, think about the high capital requirements and technical complexities associated with launching an L2 on Ethereum or a standalone L1 on other major networks like Cardano or Tron. Avalanche’s model, in contrast, makes it economically viable for smaller teams, enterprises, and on-chain protocols to create their own L1 with minimal friction. This significantly democratizes L1 development and opens the door to a flood of niche, domain-specific chains that can interconnect with Avalanche’s broader liquidity hub and shared tooling ecosystem.
This reimagining of network architecture does two major things:
- Resource Optimization – Existing applications and protocols become exponentially more resource-efficient, as they can operate on their own dedicated L1s with tailored economics, logic, and execution environments.
- New Ecosystem Expansion – The barriers to entry are reduced so dramatically that an entirely new wave of sophisticated, purpose-built L1 ecosystems can now flourish. These L1s are no longer cost-prohibitive to launch, unlocking innovation and experimentation at a pace that rivals or surpasses the growth of traditional L2s.
However, Avalanche9000 is so much more than just a technical overhaul. It really is a ground-up restructuring of the fundamental elements of Avalanche’s long-term infrastructure, which is why it is referred to as the most important development since mainnet. By pairing this upgrade with economic incentives, tooling support, and developer grants, Avalanche hopes that this upgrade will set the stage for massive ecosystem expansion (specifically regarding new L1s being launched).
ACP-125: Reducing Transaction Costs
One of the key components of the Avalanche9000 release is ACP-125, a crucial proposal designed to drastically reduce the minimum base fee on the C-chain from 25 nAVAX to only 1nAVAX. While simple in concept, this fee reduction carries rather major implications that will ultimately strengthen Avalanche’s competitiveness against hyper-efficient L2s like Base.
Historically, Avalanche’s minimum base fee often remained at or near its established floor. This effectively imposed a cost structure that frequently exceeded true market demand. In periods of low activity, users faced relatively high transaction expenses, discouraging deeper experimentation, small-value transfers, and more frequent interactions with dApps. The result was an underutilization of the network’s capabilities, as higher fees reduced the incentive to transact freely and fluidly.
Market-Driven Fee Realignment
By implementing ACP-125, Avalanche introduces a more responsive fee environment. Now, when demand is low, the minimum base fee can drop significantly, reducing user costs and stimulating higher transaction throughput. This closer alignment between fees and actual network usage not only encourages existing users to engage more deeply but also makes Avalanche far more accessible to newcomers exploring DeFi, gaming, NFTs, or enterprise applications for the first time.
Why is this so important? Networks like Solana and various Ethereum L2 solutions raise the bar for low-cost, high-speed transactions, and lowering Avalanche’s base fee ensures that it can hold its own against these rivals. Developers building cost-sensitive applications, whether they are micro-transactions in on-chain games, NFT marketplaces, or DeFi platforms catering to smaller accounts, can now consider Avalanche a top-tier choice. In essence, ACP-125 neutralizes a potential deterrent to adoption and positions Avalanche to win over users who prioritize affordability alongside performance.
It's worth saying that cheaper transactions do far more than just save users money — they invite a surge in network activity:
- DeFi Protocols: Lower costs mean more arbitrage opportunities, cheaper yield farming, and a more welcoming environment for stablecoin issuance and lending.
- NFT Markets: Artists and creators benefit from reduced minting fees, making it viable to issue lower-priced collectibles or experiment with dynamic NFT mechanics that require frequent state changes.
- Gaming dApps: With transaction costs minimized, on-chain actions like purchasing in-game assets, opening loot crates, or participating in tournaments become easier, enhancing gameplay and user retention.
- Enterprise and Institutional Use Cases: Lower fees reduce overhead for large-scale, repeated operations, such as data logging, supply chain verifications, or tokenizing financial instruments.
Long-Term Network Health
While reducing fees might initially appear to curtail AVAX burn and nominally impact tokenomics, the strategic bet is that increased activity will compensate for any short-term revenue drop. More transactions mean more engaged users, more liquidity, and a healthier ecosystem. Over time, this boost in network vibrancy could enhance the overall utility and desirability of AVAX, reinforcing Avalanche’s core economic engine.
In the context of Avalanche9000’s broader goals — simplifying L1 creation, fostering an environment ripe for innovation, and attracting a wide spectrum of participants — ACP-125 serves as a powerful enabler. By solving a subtle but significant economic inefficiency, Avalanche positions itself not just as a high-performance chain but one that meets users and developers where they are, at prices they’re willing to pay.
Retro9000 and Other Initiatives
Running parallel to Avalanche9000’s technical transformations is a complementary suite of initiatives that outline Avalanche’s commitment to ecosystem growth. The biggest among these is Retro9000, a $40 million retroactive grant program aimed at inspiring the next wave of developers to join the Avalanche ecosystem and leverage Avalanche9000.
Retro9000’s core proposition is rewarding builders who help pioneer the ecosystem’s development from its earliest stages. Instead of waiting for maturity and mainstream adoption before offering grants, Avalanche is betting on its early adopters first. There is a particular push by Avalanche to get developers to take on projects showcasing what can be done with Avalanche9000, such as:
- Launching new L1s
- Experimenting with custom virtual machines (VMs)
- Developing advanced tooling kits
- Contributing to the critical infrastructure needed to continuously scale Avalanche
This creates a culture of proactive innovation, where early risk-takers are not only recognized but materially supported.
Accelerating Tooling and Infrastructure Build-Out
One of Avalanche’s strategic goals is to cultivate an environment where launching an L1 becomes as straightforward and cost-effective as deploying a smart contract was in previous blockchain generations. Retro9000 helps realize this vision by channeling capital toward foundational layers:
- Developer Tools & SDKs: Empowering teams to build easy-to-use libraries, APIs, and debugging tools that reduce the complexity of spinning up and maintaining custom L1s.
- Testing & Monitoring Frameworks: Providing robust systems for stress-testing performance, monitoring network health, and diagnosing issues, ensuring that even highly specialized L1s can operate reliably.
- Cross-Chain Protocols & Services: Enhancing interchain messaging capabilities, bridging solutions, and liquidity routing services that bind the ecosystem together, reinforcing the “network of networks” philosophy behind Avalanche9000.
By rewarding those who improve the entire network’s utility and stability, Avalanche encourages a virtuous cycle: more developers produce better tools, which attract more users, which in turn draw more capital and attention. Over time, this self-reinforcing dynamic fosters a resilient, decentralized ecosystem that can adapt to market shifts, user demands, and emerging technologies.
L1 Gaming Growth
Gaming has emerged as one of Avalanche’s most dynamic growth areas, reflecting the platform’s capacity for high throughput, rapid finality, and seamless user experiences. Unlike traditional blockchains that force all applications to share the same network resources, Avalanche’s multi-chain architecture allows game developers to launch dedicated L1 gaming chains. These specialized environments can be fine-tuned for specific gameplay mechanics, transaction throughput requirements, and economic models, offering a level of customization that mainstream gaming studios find increasingly appealing.
Before Q4 2024, Avalanche had already built a reputation for blending traditional game design with decentralized features — such as player-owned assets, in-game token economies, and NFT-driven marketplaces. With Avalanche9000, this synergy is magnified. Lower fees introduced by ACP-125 reduce the friction of player actions that frequently involve microtransactions, while simpler L1 deployment mechanics make it easier for studios to spin up and maintain tailored gaming blockchains.
Overall, Avalanche’s approach to gaming is about more than just “putting games on chain.” It’s about reimagining the relationship between players, content creators, and the platforms they use. Game developers now have the freedom to sculpt their environments — determine how and when fees are charged, customize token mechanics, and shape how players engage with on-chain assets. This creative liberty positions Avalanche as a prime candidate for the next wave of Web3 gaming studios looking to innovate beyond the conventional models and constraints of legacy platforms.
Off The Grid (OTG) Launch
The Q4 2024 launch of Off The Grid (OTG) is a watershed moment that underscores Avalanche’s readiness to handle complex, large-scale gaming operations. OTG is a next-generation battle royale experience that marries the competitive intensity of mainstream shooters with the economic depth of blockchain-enabled item ownership, trading, and rewards.
OTG’s early performance metrics speak volumes. In its initial weeks, the game facilitated millions of on-chain transactions: players looted items, traded equipment in real-time, and participated in in-game events that required immediate, trustless verification. Avalanche’s consensus mechanism delivered sub-second finality, keeping gameplay smooth and uninterrupted despite a torrent of user-driven actions. This performance benchmark sets Avalanche apart, proving that high-octane gaming, traditionally the domain of centralized servers, can indeed thrive on decentralized infrastructure.
In OTG, items are not mere pixels on a screen but genuine digital assets. Players truly own their equipment, skins, and collectibles. These NFTs can be transferred freely in secondary markets, used as collateral in on-chain lending protocols, or perhaps even carried into future Avalanche-based games. This fluidity of value creates a new paradigm where gaming assets transcend their initial game environment, blurring the line between “in-game items” and “digital property.”
Broader Implications for Web3 Gaming
The success of OTG really sets up the entirety of Web3 gaming with a coherent, successful proof of concept that blockchain games can absolutely launch as AAA titles and land on the world’s largest gaming platforms, including PC, Playstation, and Xbox. For one, if a high-stakes battle royale title can run seamlessly on Avalanche, there is no reason that RPGs, MMORPGs, sports simulations, strategy games, and more cannot follow. Each new genre brings its own communities, content creators, and developers, enriching Avalanche’s gaming metaverse.
It also shows that any of these gaming titles, no matter the complexity, can leverage Avalanche9000’s simplified L1 deployment process, allowing smaller studios to potentially launch their own gaming ecosystems without the prohibitive costs that otherwise exist. This opens the field to indie developers, niche gaming communities, and experimental formats that break the mold of conventional titles.
Avalanche’s multi-chain architecture and ICM framework create the potential for interconnected gaming realms, too. This makes a ton of sense for tons of different scenarios. For example, imagine an NFT weapon earned in OTG serving a purpose in a future fantasy RPG built on a separate Avalanche L1 or tokens from a racing game integrating into a larger metaverse. This interoperability fosters richer player experiences and longer lifecycle value for digital assets.
Catalyst for Mainstream Adoption
Gaming is a cultural gateway. A compelling game could draw in many users who might never interact with DeFi or enterprise blockchain solutions. Once they join the Avalanche ecosystem, they discover financial products, NFT marketplaces, or even tokenized real-world assets. In this sense, gaming can serve as a powerful onboarding channel, converting casual players into broader Web3 participants.
By meeting the demands of a title like OTG, Avalanche has effectively proven that it is a leading platform for next-generation gaming. Coupled with Avalanche9000’s technical upgrades and economic incentives, it sets the stage for a future where immersive, community-driven, asset-rich games become a staple of the Avalanche network.
Enterprise Adoption
As 2024 draws to a close, Avalanche’s roster of enterprise and institutional partners has grown from promising early movers to include some of the world’s largest financial institutions, technology companies, and public agencies. The results speak to Avalanche’s ability to offer a secure, scalable, and compliant environment for tokenizing traditional assets, streamlining cross-border commerce, and modernizing public services.
Where early experiments focused on niche tokenization efforts or pilot projects, today’s partnerships represent a wholesale embrace of blockchain at the institutional and infrastructure levels. Collectively, these alliances now encompass billions of dollars in assets, hundreds of millions of end-users, and strategic integrations that place Avalanche at the heart of global finance, commerce, and governance.
Across the network, Avalanche has attracted a range of household names and industry leaders. By December 2024, the cumulative value of tokenized funds, institutional liquidity pools, and enterprise-grade deployments secured on Avalanche surpassed several billion dollars in total locked value (TVL). This figure includes global asset managers, multinational payment processors, and enterprise service providers who trust Avalanche to run mission-critical applications.
Some prominent examples include:
- BlackRock’s BUIDL Fund
One of the world’s largest asset managers, BlackRock, has tokenized its USD Institutional Digital Liquidity (BUIDL) Fund — exceeding $500 million — on Avalanche. This marks a turning point, as BlackRock’s presence provides substantial on-chain liquidity and serves as a high-profile validation of Avalanche’s suitability for large-scale institutional products. Additionally, Securitize has launched a groundbreaking "sToken" to provide institutional investors with liquidity from real-world assets (RWAs) while maintaining yield. Developed in partnership with Elixir, the token utilizes Ethereum’s ERC-4626 standard for yield-bearing vaults. This innovation allows holders of Securitize-issued RWAs to convert their assets into Elixir's deUSD, a decentralized dollar token, without sacrificing returns. The program enables these composable tokens to be utilized across the DeFi ecosystem while continuing to generate income from assets like BlackRock's tokenized Treasuries. This development highlights the rapid advancements in blockchain-based tokenization, with major financial institutions exploring its potential to transform asset issuance, transfer, and utilization.
- Franklin Templeton’s Tokenized Money Market Fund
Franklin Templeton, managing $1.5 trillion+ globally in traditional markets, brought a $420 million U.S. Government Money Fund onto Avalanche. This bridging of a blue-chip financial product into the blockchain domain lowers operational frictions for institutional participants, offering them the best of both worlds — traditional stability and on-chain accessibility.
- Grayscale Avalanche Trust
Grayscale introduced the Grayscale Avalanche Trust, offering a regulated, compliance-first avenue for accredited investors to gain exposure to AVAX. While the trust’s AUM may fluctuate over time, its existence shows there is undeniable institutional interest and opens the door for more liquidity inflows from legacy capital markets.
Impact on Liquidity and Market Depth
The infusion of institutional-grade assets and liquidity providers helps stabilize markets and foster predictable pricing, narrowing bid-ask spreads and improving risk management tools for traders, lenders, and borrowers. Multi-billion-dollar funds also encourage secondary market formation, enabling 24/7 global trading, fractional ownership, and expanded collateral options for DeFi protocols. Taken together, this depth and quality of liquidity position Avalanche as a liquidity hub for both crypto-natives and TradFi entrants.
As these institutions integrate, service providers (compliance specialists, analytics platforms, custodians, etc.) are increasingly incentivized to build on Avalanche, further enhancing infrastructure reliability and user experience. This synergy creates a positive feedback loop: top-tier integrations attract high-quality service providers, which in turn support more sophisticated institutional participants, reinforcing Avalanche’s network effects.
Use Cases in Action
RWA Tokenization at Scale
Securitize’s tokenization of $1B+ in RWAs through Elixir’s deUSD program is only the beginning. Over the past quarter, additional issuers have followed suit, pushing the total RWA pipeline on Avalanche well past the billion-dollar mark. These on-chain representations of bonds, private loans, and real estate portfolios aren’t mere proofs of concept; they offer real yield opportunities to DeFi users, unlock new forms of collateral for lending platforms, and enable institutional participants to leverage blockchain’s instant settlement and global reach.
Government-Level Transformations
The California DMV’s decision to digitize 42 million car titles — an asset class representing tens of billions of dollars in vehicle value — on Avalanche highlights the platform’s capability to handle massive public-sector databases. By reducing administrative overhead, mitigating fraud risk, and streamlining transferability, Avalanche demonstrated its readiness to tackle real-world, large-scale data challenges. Beyond California, other state and municipal agencies have reportedly begun evaluating similar integrations, potentially transforming how society handles asset registries, real estate deeds, business licenses, and more.
Quantifying Efficiency Gains
While the immediate economic value of improved administrative processes can be hard to measure, the downstream impact of digitizing millions of titles is immense. Reduced processing times, fewer errors, and less dependency on paper-based systems can save taxpayers and government agencies millions of dollars annually. Over time, these efficiencies may enable dynamic pricing models, more competitive insurance markets, and improved accountability and transparency in vehicle financing and leasing sectors.
J.P. Morgan’s Kinexys Project EPIC
As part of a privacy and composability exploration by J.P. Morgan, AvaCloud—a managed service on Avalanche—was selected to participate, reflecting Wall Street’s interest in advanced blockchain functionalities. Such initiatives can catalyze the integration of enterprise-grade identity and compliance solutions on Avalanche, making it safer and simpler for large financial institutions to operate on-chain.
Multi-Billion Payment Ecosystems via StraitsX and Alipay+
Payment leaders with user bases exceeding a billion users collectively have begun leveraging Avalanche for cross-border, stablecoin-powered settlements. These tie-ins potentially unlock billions in annual transaction volumes, offering merchants and consumers near-instant transfers at minimal cost. The downstream economic impact is profound: lower friction in emerging markets, expanded remittance services, and new lines of revenue for merchants and payment processors.
Quantifying Global Market Reach
Consider that Alipay+ and GrabPay collectively serve roughly 1.3 billion people across Asia, with merchant networks in the tens of millions. Even if a fraction of these users interact with Avalanche-based payments, the absolute number of on-chain transactions could eclipse the activity seen in many smaller blockchain ecosystems. Each incremental integration, whether it is from a multinational beverage company tokenizing premium malt beer for brand engagement or a major sports franchise launching a loyalty program, adds layers of economic utility and brand recognition.
Plus, with tokenized mutual funds, stablecoins representing various fiat currencies, and an array of securitized assets online, Avalanche provides a continuous, global marketplace that never closes. Institutional traders can rebalance portfolios at any hour, global retail investors can access previously restricted asset classes, and fractional ownership allows smaller players to participate in historically gated markets. These expanded market dynamics increase capital efficiency, drive innovation in financial structuring, and potentially lower overall capital costs for businesses seeking funding.
Conclusion
A combination of technical upgrades, ecosystem incentives, and real-world integrations characterizes Avalanche’s journey through Q4 2024 and beyond. The Avalanche9000 upgrade, headlined by ACP-125, is one of the biggest moments in Avalanche’s history. By aligning transaction fees with market realities and lowering the barrier to L1 chain deployment, Avalanche positions itself as a platform where speed, scalability, and affordability all come together.
Retro9000’s grants program complements these technical improvements by fueling a thriving developer ecosystem, ensuring that the multi-chain vision is not just aspirational but operational. In parallel, gaming’s meteoric growth demonstrates Avalanche’s readiness to host complex, high-performance applications that can attract and retain mainstream user bases. This even expands into enterprise adoption, from digitized DMV titles to tokenized money funds.
Taken together, these advancements help to solidify Avalanche’s standing as a blockchain platform that’s not only technologically competitive but also strategically aligned with user needs, developer innovation, and institutional confidence. As Avalanche9000 goes live on mainnet, the stage is set for an era in which Avalanche continues to develop and improve.
Disclaimer: This report was commissioned by Ava Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Avalanche has maintained steady momentum over 2024, competing amongst the largest Layer-1 (L1) blockchain networks on the market for another year. However, this year has been particularly eventful for Avalanche, with its ecosystem improving across several fronts.
DeFi offerings have grown richer and more liquid, with stablecoins, tokenized real-world assets, and institutional money markets gaining traction. Parallel to this financial layer, the gaming sector—already a strong suit for Avalanche—has seen landmark moments such as the launch of Off The Grid, a next-generation battle royale game that tests the boundaries of blockchain-based in-game economies. Enterprise adoption and real-world integrations illustrate the platform’s appeal to institutional, governmental, and retail users seeking transparent, efficient, and verifiable solutions for commerce, finance, and public administration.
However, nothing has a larger impact than the coming launch of Avalanche9000 — a sweeping network upgrade that will fundamentally reshape the entire network’s capabilities. Avalanche9000 represents a major performance and mechanical upgrade to Avalanche, moving toward a more scalable, low-cost, and composable ecosystem of interoperable L1 blockchains.
This innovative model will make the Avalanche C-chain arguably the most modular, efficient ecosystem on the market to date. By creating an environment for affordable deployments, lowering base transaction fees, and simplifying cross-chain communication, Avalanche9000 will transform how developers interact with Avalanche, bootstrapping development for countless L1s.
This report provides a comprehensive overview of these developments, focusing particularly on Avalanche9000 and its subcomponents (notably ACP-125 and Retro9000), analyzing L1 gaming growth through the lens of OTG’s success, reviewing key enterprise adoption narratives, and looking ahead into 2025.
Avalanche9000
Avalanche9000 represents the largest and most impactful network upgrade since Avalanche’s initial launch. Its primary objective is to reduce the economic and technical barriers that have historically hindered the deployment of new L1 chains (formerly subnets) within the Avalanche ecosystem. Unlike legacy architectures, Avalanche’s multi-chain design envisions a network of customizable L1s connected through a shared liquidity hub and interchain messaging layer (ICM).
Departing from the traditional Subnet model, developers no longer need to validate the main network or stake 2,000 AVAX upfront. Instead, a minimal ongoing fee drastically reduces expenses. Drawing inspiration from Ethereum's EIP-4844, which slashed Layer 2 gas fees, Avalanche9000 achieves similar affordability for L1s, comparable to Celestia-based rollups, while offering superior interoperability and reliability. The upgrade also introduces L1-specific validators, empowering each blockchain to adopt its own consensus mechanisms, such as Proof of Stake or Proof of Authority, enhancing tokenomics and value. Additionally, the cost of running a validator has dropped significantly, from 2,000 AVAX (approximately $100,000) to just 1.33 AVAX per month.
One of the most critical breakthroughs introduced with Avalanche9000 is the elimination of the P-Chain validator requirement. Previously, deploying a new L1 required operators to also be validators on Avalanche’s primary network, which meant staking 2000 AVAX — a significant capital requirement. Avalanche9000 replaces this infrastructure with a dynamic ValidatorManager smart contract and an ongoing, nominal AVAX-denominated fee.
This shift allows L1 validators to operate independently, no longer bound to Avalanche's primary validation network while ensuring a fair economic contribution through fees. Existing subnets have the option to convert from the traditional 2000 AVAX staking model to the new validator framework via ACP-77. Importantly, this conversion is optional, allowing current operators to maintain the legacy model if preferred.
This shift is monumental for projects looking to launch custom L1s. By drastically reducing startup costs and operating expenses, Avalanche9000 enables virtually any project to spin up a custom-designed L1 tailored to its specific use case. For context, think about the high capital requirements and technical complexities associated with launching an L2 on Ethereum or a standalone L1 on other major networks like Cardano or Tron. Avalanche’s model, in contrast, makes it economically viable for smaller teams, enterprises, and on-chain protocols to create their own L1 with minimal friction. This significantly democratizes L1 development and opens the door to a flood of niche, domain-specific chains that can interconnect with Avalanche’s broader liquidity hub and shared tooling ecosystem.
This reimagining of network architecture does two major things:
- Resource Optimization – Existing applications and protocols become exponentially more resource-efficient, as they can operate on their own dedicated L1s with tailored economics, logic, and execution environments.
- New Ecosystem Expansion – The barriers to entry are reduced so dramatically that an entirely new wave of sophisticated, purpose-built L1 ecosystems can now flourish. These L1s are no longer cost-prohibitive to launch, unlocking innovation and experimentation at a pace that rivals or surpasses the growth of traditional L2s.
However, Avalanche9000 is so much more than just a technical overhaul. It really is a ground-up restructuring of the fundamental elements of Avalanche’s long-term infrastructure, which is why it is referred to as the most important development since mainnet. By pairing this upgrade with economic incentives, tooling support, and developer grants, Avalanche hopes that this upgrade will set the stage for massive ecosystem expansion (specifically regarding new L1s being launched).
ACP-125: Reducing Transaction Costs
One of the key components of the Avalanche9000 release is ACP-125, a crucial proposal designed to drastically reduce the minimum base fee on the C-chain from 25 nAVAX to only 1nAVAX. While simple in concept, this fee reduction carries rather major implications that will ultimately strengthen Avalanche’s competitiveness against hyper-efficient L2s like Base.
Historically, Avalanche’s minimum base fee often remained at or near its established floor. This effectively imposed a cost structure that frequently exceeded true market demand. In periods of low activity, users faced relatively high transaction expenses, discouraging deeper experimentation, small-value transfers, and more frequent interactions with dApps. The result was an underutilization of the network’s capabilities, as higher fees reduced the incentive to transact freely and fluidly.
Market-Driven Fee Realignment
By implementing ACP-125, Avalanche introduces a more responsive fee environment. Now, when demand is low, the minimum base fee can drop significantly, reducing user costs and stimulating higher transaction throughput. This closer alignment between fees and actual network usage not only encourages existing users to engage more deeply but also makes Avalanche far more accessible to newcomers exploring DeFi, gaming, NFTs, or enterprise applications for the first time.
Why is this so important? Networks like Solana and various Ethereum L2 solutions raise the bar for low-cost, high-speed transactions, and lowering Avalanche’s base fee ensures that it can hold its own against these rivals. Developers building cost-sensitive applications, whether they are micro-transactions in on-chain games, NFT marketplaces, or DeFi platforms catering to smaller accounts, can now consider Avalanche a top-tier choice. In essence, ACP-125 neutralizes a potential deterrent to adoption and positions Avalanche to win over users who prioritize affordability alongside performance.
It's worth saying that cheaper transactions do far more than just save users money — they invite a surge in network activity:
- DeFi Protocols: Lower costs mean more arbitrage opportunities, cheaper yield farming, and a more welcoming environment for stablecoin issuance and lending.
- NFT Markets: Artists and creators benefit from reduced minting fees, making it viable to issue lower-priced collectibles or experiment with dynamic NFT mechanics that require frequent state changes.
- Gaming dApps: With transaction costs minimized, on-chain actions like purchasing in-game assets, opening loot crates, or participating in tournaments become easier, enhancing gameplay and user retention.
- Enterprise and Institutional Use Cases: Lower fees reduce overhead for large-scale, repeated operations, such as data logging, supply chain verifications, or tokenizing financial instruments.
Long-Term Network Health
While reducing fees might initially appear to curtail AVAX burn and nominally impact tokenomics, the strategic bet is that increased activity will compensate for any short-term revenue drop. More transactions mean more engaged users, more liquidity, and a healthier ecosystem. Over time, this boost in network vibrancy could enhance the overall utility and desirability of AVAX, reinforcing Avalanche’s core economic engine.
In the context of Avalanche9000’s broader goals — simplifying L1 creation, fostering an environment ripe for innovation, and attracting a wide spectrum of participants — ACP-125 serves as a powerful enabler. By solving a subtle but significant economic inefficiency, Avalanche positions itself not just as a high-performance chain but one that meets users and developers where they are, at prices they’re willing to pay.
Retro9000 and Other Initiatives
Running parallel to Avalanche9000’s technical transformations is a complementary suite of initiatives that outline Avalanche’s commitment to ecosystem growth. The biggest among these is Retro9000, a $40 million retroactive grant program aimed at inspiring the next wave of developers to join the Avalanche ecosystem and leverage Avalanche9000.
Retro9000’s core proposition is rewarding builders who help pioneer the ecosystem’s development from its earliest stages. Instead of waiting for maturity and mainstream adoption before offering grants, Avalanche is betting on its early adopters first. There is a particular push by Avalanche to get developers to take on projects showcasing what can be done with Avalanche9000, such as:
- Launching new L1s
- Experimenting with custom virtual machines (VMs)
- Developing advanced tooling kits
- Contributing to the critical infrastructure needed to continuously scale Avalanche
This creates a culture of proactive innovation, where early risk-takers are not only recognized but materially supported.
Accelerating Tooling and Infrastructure Build-Out
One of Avalanche’s strategic goals is to cultivate an environment where launching an L1 becomes as straightforward and cost-effective as deploying a smart contract was in previous blockchain generations. Retro9000 helps realize this vision by channeling capital toward foundational layers:
- Developer Tools & SDKs: Empowering teams to build easy-to-use libraries, APIs, and debugging tools that reduce the complexity of spinning up and maintaining custom L1s.
- Testing & Monitoring Frameworks: Providing robust systems for stress-testing performance, monitoring network health, and diagnosing issues, ensuring that even highly specialized L1s can operate reliably.
- Cross-Chain Protocols & Services: Enhancing interchain messaging capabilities, bridging solutions, and liquidity routing services that bind the ecosystem together, reinforcing the “network of networks” philosophy behind Avalanche9000.
By rewarding those who improve the entire network’s utility and stability, Avalanche encourages a virtuous cycle: more developers produce better tools, which attract more users, which in turn draw more capital and attention. Over time, this self-reinforcing dynamic fosters a resilient, decentralized ecosystem that can adapt to market shifts, user demands, and emerging technologies.
L1 Gaming Growth
Gaming has emerged as one of Avalanche’s most dynamic growth areas, reflecting the platform’s capacity for high throughput, rapid finality, and seamless user experiences. Unlike traditional blockchains that force all applications to share the same network resources, Avalanche’s multi-chain architecture allows game developers to launch dedicated L1 gaming chains. These specialized environments can be fine-tuned for specific gameplay mechanics, transaction throughput requirements, and economic models, offering a level of customization that mainstream gaming studios find increasingly appealing.
Before Q4 2024, Avalanche had already built a reputation for blending traditional game design with decentralized features — such as player-owned assets, in-game token economies, and NFT-driven marketplaces. With Avalanche9000, this synergy is magnified. Lower fees introduced by ACP-125 reduce the friction of player actions that frequently involve microtransactions, while simpler L1 deployment mechanics make it easier for studios to spin up and maintain tailored gaming blockchains.
Overall, Avalanche’s approach to gaming is about more than just “putting games on chain.” It’s about reimagining the relationship between players, content creators, and the platforms they use. Game developers now have the freedom to sculpt their environments — determine how and when fees are charged, customize token mechanics, and shape how players engage with on-chain assets. This creative liberty positions Avalanche as a prime candidate for the next wave of Web3 gaming studios looking to innovate beyond the conventional models and constraints of legacy platforms.
Off The Grid (OTG) Launch
The Q4 2024 launch of Off The Grid (OTG) is a watershed moment that underscores Avalanche’s readiness to handle complex, large-scale gaming operations. OTG is a next-generation battle royale experience that marries the competitive intensity of mainstream shooters with the economic depth of blockchain-enabled item ownership, trading, and rewards.
OTG’s early performance metrics speak volumes. In its initial weeks, the game facilitated millions of on-chain transactions: players looted items, traded equipment in real-time, and participated in in-game events that required immediate, trustless verification. Avalanche’s consensus mechanism delivered sub-second finality, keeping gameplay smooth and uninterrupted despite a torrent of user-driven actions. This performance benchmark sets Avalanche apart, proving that high-octane gaming, traditionally the domain of centralized servers, can indeed thrive on decentralized infrastructure.
In OTG, items are not mere pixels on a screen but genuine digital assets. Players truly own their equipment, skins, and collectibles. These NFTs can be transferred freely in secondary markets, used as collateral in on-chain lending protocols, or perhaps even carried into future Avalanche-based games. This fluidity of value creates a new paradigm where gaming assets transcend their initial game environment, blurring the line between “in-game items” and “digital property.”
Broader Implications for Web3 Gaming
The success of OTG really sets up the entirety of Web3 gaming with a coherent, successful proof of concept that blockchain games can absolutely launch as AAA titles and land on the world’s largest gaming platforms, including PC, Playstation, and Xbox. For one, if a high-stakes battle royale title can run seamlessly on Avalanche, there is no reason that RPGs, MMORPGs, sports simulations, strategy games, and more cannot follow. Each new genre brings its own communities, content creators, and developers, enriching Avalanche’s gaming metaverse.
It also shows that any of these gaming titles, no matter the complexity, can leverage Avalanche9000’s simplified L1 deployment process, allowing smaller studios to potentially launch their own gaming ecosystems without the prohibitive costs that otherwise exist. This opens the field to indie developers, niche gaming communities, and experimental formats that break the mold of conventional titles.
Avalanche’s multi-chain architecture and ICM framework create the potential for interconnected gaming realms, too. This makes a ton of sense for tons of different scenarios. For example, imagine an NFT weapon earned in OTG serving a purpose in a future fantasy RPG built on a separate Avalanche L1 or tokens from a racing game integrating into a larger metaverse. This interoperability fosters richer player experiences and longer lifecycle value for digital assets.
Catalyst for Mainstream Adoption
Gaming is a cultural gateway. A compelling game could draw in many users who might never interact with DeFi or enterprise blockchain solutions. Once they join the Avalanche ecosystem, they discover financial products, NFT marketplaces, or even tokenized real-world assets. In this sense, gaming can serve as a powerful onboarding channel, converting casual players into broader Web3 participants.
By meeting the demands of a title like OTG, Avalanche has effectively proven that it is a leading platform for next-generation gaming. Coupled with Avalanche9000’s technical upgrades and economic incentives, it sets the stage for a future where immersive, community-driven, asset-rich games become a staple of the Avalanche network.
Enterprise Adoption
As 2024 draws to a close, Avalanche’s roster of enterprise and institutional partners has grown from promising early movers to include some of the world’s largest financial institutions, technology companies, and public agencies. The results speak to Avalanche’s ability to offer a secure, scalable, and compliant environment for tokenizing traditional assets, streamlining cross-border commerce, and modernizing public services.
Where early experiments focused on niche tokenization efforts or pilot projects, today’s partnerships represent a wholesale embrace of blockchain at the institutional and infrastructure levels. Collectively, these alliances now encompass billions of dollars in assets, hundreds of millions of end-users, and strategic integrations that place Avalanche at the heart of global finance, commerce, and governance.
Across the network, Avalanche has attracted a range of household names and industry leaders. By December 2024, the cumulative value of tokenized funds, institutional liquidity pools, and enterprise-grade deployments secured on Avalanche surpassed several billion dollars in total locked value (TVL). This figure includes global asset managers, multinational payment processors, and enterprise service providers who trust Avalanche to run mission-critical applications.
Some prominent examples include:
- BlackRock’s BUIDL Fund
One of the world’s largest asset managers, BlackRock, has tokenized its USD Institutional Digital Liquidity (BUIDL) Fund — exceeding $500 million — on Avalanche. This marks a turning point, as BlackRock’s presence provides substantial on-chain liquidity and serves as a high-profile validation of Avalanche’s suitability for large-scale institutional products. Additionally, Securitize has launched a groundbreaking "sToken" to provide institutional investors with liquidity from real-world assets (RWAs) while maintaining yield. Developed in partnership with Elixir, the token utilizes Ethereum’s ERC-4626 standard for yield-bearing vaults. This innovation allows holders of Securitize-issued RWAs to convert their assets into Elixir's deUSD, a decentralized dollar token, without sacrificing returns. The program enables these composable tokens to be utilized across the DeFi ecosystem while continuing to generate income from assets like BlackRock's tokenized Treasuries. This development highlights the rapid advancements in blockchain-based tokenization, with major financial institutions exploring its potential to transform asset issuance, transfer, and utilization.
- Franklin Templeton’s Tokenized Money Market Fund
Franklin Templeton, managing $1.5 trillion+ globally in traditional markets, brought a $420 million U.S. Government Money Fund onto Avalanche. This bridging of a blue-chip financial product into the blockchain domain lowers operational frictions for institutional participants, offering them the best of both worlds — traditional stability and on-chain accessibility.
- Grayscale Avalanche Trust
Grayscale introduced the Grayscale Avalanche Trust, offering a regulated, compliance-first avenue for accredited investors to gain exposure to AVAX. While the trust’s AUM may fluctuate over time, its existence shows there is undeniable institutional interest and opens the door for more liquidity inflows from legacy capital markets.
Impact on Liquidity and Market Depth
The infusion of institutional-grade assets and liquidity providers helps stabilize markets and foster predictable pricing, narrowing bid-ask spreads and improving risk management tools for traders, lenders, and borrowers. Multi-billion-dollar funds also encourage secondary market formation, enabling 24/7 global trading, fractional ownership, and expanded collateral options for DeFi protocols. Taken together, this depth and quality of liquidity position Avalanche as a liquidity hub for both crypto-natives and TradFi entrants.
As these institutions integrate, service providers (compliance specialists, analytics platforms, custodians, etc.) are increasingly incentivized to build on Avalanche, further enhancing infrastructure reliability and user experience. This synergy creates a positive feedback loop: top-tier integrations attract high-quality service providers, which in turn support more sophisticated institutional participants, reinforcing Avalanche’s network effects.
Use Cases in Action
RWA Tokenization at Scale
Securitize’s tokenization of $1B+ in RWAs through Elixir’s deUSD program is only the beginning. Over the past quarter, additional issuers have followed suit, pushing the total RWA pipeline on Avalanche well past the billion-dollar mark. These on-chain representations of bonds, private loans, and real estate portfolios aren’t mere proofs of concept; they offer real yield opportunities to DeFi users, unlock new forms of collateral for lending platforms, and enable institutional participants to leverage blockchain’s instant settlement and global reach.
Government-Level Transformations
The California DMV’s decision to digitize 42 million car titles — an asset class representing tens of billions of dollars in vehicle value — on Avalanche highlights the platform’s capability to handle massive public-sector databases. By reducing administrative overhead, mitigating fraud risk, and streamlining transferability, Avalanche demonstrated its readiness to tackle real-world, large-scale data challenges. Beyond California, other state and municipal agencies have reportedly begun evaluating similar integrations, potentially transforming how society handles asset registries, real estate deeds, business licenses, and more.
Quantifying Efficiency Gains
While the immediate economic value of improved administrative processes can be hard to measure, the downstream impact of digitizing millions of titles is immense. Reduced processing times, fewer errors, and less dependency on paper-based systems can save taxpayers and government agencies millions of dollars annually. Over time, these efficiencies may enable dynamic pricing models, more competitive insurance markets, and improved accountability and transparency in vehicle financing and leasing sectors.
J.P. Morgan’s Kinexys Project EPIC
As part of a privacy and composability exploration by J.P. Morgan, AvaCloud—a managed service on Avalanche—was selected to participate, reflecting Wall Street’s interest in advanced blockchain functionalities. Such initiatives can catalyze the integration of enterprise-grade identity and compliance solutions on Avalanche, making it safer and simpler for large financial institutions to operate on-chain.
Multi-Billion Payment Ecosystems via StraitsX and Alipay+
Payment leaders with user bases exceeding a billion users collectively have begun leveraging Avalanche for cross-border, stablecoin-powered settlements. These tie-ins potentially unlock billions in annual transaction volumes, offering merchants and consumers near-instant transfers at minimal cost. The downstream economic impact is profound: lower friction in emerging markets, expanded remittance services, and new lines of revenue for merchants and payment processors.
Quantifying Global Market Reach
Consider that Alipay+ and GrabPay collectively serve roughly 1.3 billion people across Asia, with merchant networks in the tens of millions. Even if a fraction of these users interact with Avalanche-based payments, the absolute number of on-chain transactions could eclipse the activity seen in many smaller blockchain ecosystems. Each incremental integration, whether it is from a multinational beverage company tokenizing premium malt beer for brand engagement or a major sports franchise launching a loyalty program, adds layers of economic utility and brand recognition.
Plus, with tokenized mutual funds, stablecoins representing various fiat currencies, and an array of securitized assets online, Avalanche provides a continuous, global marketplace that never closes. Institutional traders can rebalance portfolios at any hour, global retail investors can access previously restricted asset classes, and fractional ownership allows smaller players to participate in historically gated markets. These expanded market dynamics increase capital efficiency, drive innovation in financial structuring, and potentially lower overall capital costs for businesses seeking funding.
Conclusion
A combination of technical upgrades, ecosystem incentives, and real-world integrations characterizes Avalanche’s journey through Q4 2024 and beyond. The Avalanche9000 upgrade, headlined by ACP-125, is one of the biggest moments in Avalanche’s history. By aligning transaction fees with market realities and lowering the barrier to L1 chain deployment, Avalanche positions itself as a platform where speed, scalability, and affordability all come together.
Retro9000’s grants program complements these technical improvements by fueling a thriving developer ecosystem, ensuring that the multi-chain vision is not just aspirational but operational. In parallel, gaming’s meteoric growth demonstrates Avalanche’s readiness to host complex, high-performance applications that can attract and retain mainstream user bases. This even expands into enterprise adoption, from digitized DMV titles to tokenized money funds.
Taken together, these advancements help to solidify Avalanche’s standing as a blockchain platform that’s not only technologically competitive but also strategically aligned with user needs, developer innovation, and institutional confidence. As Avalanche9000 goes live on mainnet, the stage is set for an era in which Avalanche continues to develop and improve.
Disclaimer: This report was commissioned by Ava Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.