On top of that, there is an inherent auction mechanism, thus validators prioritize transactions with higher fees for inclusion in a block, which can drive up the cost of transactions during peak times.In short, Ethereum is slow, expensive and non-customizable.These challenges have prompted users and developers to explore alternatives like Avalanche, which promises faster transaction throughput, quicker finality, and greater flexibility in blockchain design.

As you may know, each blockchain has three main layers on top of the other: the consensus layer on top, followed by the execution and the application layer. The consensus layer is used to guarantee that all nodes on the network agree on the current state of the network and on the authenticity of transactions. The execution layer is used to execute the transactions on a Virtual Machine, and the application layer is used to develop applications on the blockchain with a certain programming language. Avalanche’s first innovation is a novel consensus layer that improves scalability. Its second innovation is to let developers customize the execution and application layer.

Customization is done thanks to the concept of Subnets, or subnetworks, which are essentially clusters of validators working together to achieve consensus on the state of a set of blockchains. Each Subnet can define its unique set of rules, from token economics to execution and application layers, offering unparalleled flexibility and control to its creators.

To enable all of these customizations and subnet creations, Avalanche has created multiple chains. First of all, the Contract (C)-Chain, is a high-throughput, EVM-compatible smart contract platform. But the long-term plan for network scalability has always centered around Subnetworks (Subnets), which enable projects to build applications and use cases within their own custom, sovereign blockchain environment networks (Subnets) -- all administered by the primary network’s Platform (P) Chain. The three overarching benefits of Subnets is that they isolate performance and enable customization, but most importantly allow for native message passing and interoperability.

Source: Avalanche Docs

In a pioneering project, Citi has chosen the Avalanche blockchain to test the tokenization of private markets via the “Spruce” subnet. This collaboration highlights Avalanche's robustness, efficiency and scalability, ideal for managing the complexities of private asset transactions. The initiative aims to improve automation, increase transparency and standardize processes. Citi’s tests focused on private assets, given the collective $10T AUM markets remain riddled with manual operations, lack of transparency, and limited standardization.

Onyx by J.P Morgan, Apollo Global, and WisdomTree collaborated under the Monetary Authority of Singapore’s (MAS) and Finma’s Project Guardian, showcasing a proof-of-concept (PoC) that marked a pivotal step toward revolutionizing the asset and wealth management industry. The PoC demonstrated the possibility of including tokenized alternative investments (“alts”) alongside liquid assets in discretionary client portfolios and leveraged a variety of protocols and infrastructure partners, including an Avalanche Evergreen Subnet. The results of this collaboration were quite astonishing: Onyx’s solution demonstrated how a wealth management firm with 100,000 client portfolios could automate its monthly rebalancing process from 3,000+ operational steps to a few clicks and savings of ~24bps per annum. Finally, it showed that tokenizing private alternative funds represents a $400 billion annual revenue opportunity for fund managers and distributors.

Its commitment to innovation, demonstrated through its unique consensus mechanism and supportive partnerships, positions Avalanche as a key player in the blockchain ecosystem, capable of transforming not just the financial industry but a multitude of sectors worldwide.