Features & Benefits of Avalanche L1s

Avalanche L1s are autonomous. Their creators can define their execution logic, set their own fees, manage their state, handle their networking, and ensure their security. They operate independently from other Avalanche L1s and the Primary Network, effectively enabling the greater Avalanche network to scale while delivering the benefits of lower latency, higher transactions per second (TPS), and lower transaction costs.

Scalability Through Multi-Chain Systems

A blockchain has a limited capacity for computation and data storage. Therefore, the transactions it can process in a given time frame are limited. We can use the analogy of a highway to visualize this concept. A highway can only handle a certain number of cars at a time. If too many cars try to enter the highway at once, traffic congestion will occur and they have to wait to enter the highway.

In order to scale horizontally and to offer more blockspace, a subset of validators can opt-in to validate an additional blockchain in parallel with the Primary Network: we call this an Avalanche L1. The idea is similiar to building many highways in parallel and create additional space for cars to drive on. This allows for more transactions to be processed in parallel, and therefore increases the overall throughput of the network.

This parallel processing of transactions enhances scalability. One chain's congestion or increasing fees won't impact other chains. Going back to our highway analogy, we can think of the scaling through multiple chains as building many short highways in parallel.

The beauty of this approach is its simplicity. It doesn't require any new untested innovations. The challenge, rather, is optimizing how Avalanche L1s interoperate and making switching from one Avalanche L1 to the other easy.

Independence From Other Avalanche L1s

Separating the ecosystem into different chains creates independence from another. If congestion builds on one chain due to high network activity (e.g. an NFT drop, high volatility in token prices, new game launched), other chains are unaffected. With just a single chain, this congestion affects everyone, including parties that have nothing to do with the cause of the activity increase.

While the unified, or monolithic, blockchain design does offer certain advantages (like unified liquidity, fewer bridges, and potential for enhanced user experience via co-location of dApps), it also introduces notable drawbacks. Validators must have powerful, costly machines to support a diverse array of applications, increasing centralization due to high operational costs of running a node. Lack of modularity can halt all on-chain activities during network disruptions, potentially causing significant financial losses. Additionally, each new dApp competes for the same block space as all others, leading to overcrowding.

Coming back to our highway analogy, we can imagine a scenario where congestion build up on one highway. The other highways are not directly affected. Some cars may choose to take a different highway and the traffic bottleneck may decrease.

Customizability

The creator of an Avalanche L1 can customize it to meet their needs. This can happen in numerous ways, including introducing a custom own gas token, using a different Virtual Machine (e.g. a WASM or Move VM), or limiting access to the Avalanche L1. This is very hard to do in a single-chain system because it would require a majority of users to agree.

In our highway analogy, let's think of some travelers having a very unique requirement: They would like to travel by boat instead of a car. While technically possible to build a water lane on a single highway system, this would be challenging. However, when these custom requirements are met in a Avalanche L1, it's easy to do.

Other Multi-Chain Systems

Avalanche isn't alone in the multi-chain landscape. Other blockchain systems utilizing a similar architectural approach include Cosmos, Polkadot, and Polygon CDK.