The Avalanche Foundation (the “Foundation”) was established with a clear mandate: to ensure the long-term economic sustainability and growth of the Avalanche ecosystem. 

Delivering on that mandate requires more than programs and grants; it requires a rigorous, evidence-based understanding of how the ecosystem's economy actually works.

Today, the Foundation is publishing its economic research agenda. This document reflects the work already underway across the Foundation's research team, and sets out the questions, frameworks, and priorities that will guide the next phase of that work. We are publishing it openly because we believe the community deserves visibility into how the Foundation is approaching the hardest problems in blockchain economics.

"The Foundation has been doing serious work for some time. The connection between ecosystem output and AVAX value accrual is the central problem we are working on. This is how we are approaching it: systematically, empirically, and in public. This agenda is the beginning of an important body of work." - Matias Antonio, Chief Investment Officer, Avalanche Foundation

Measure, Capture, Distribute

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The Foundation's economic research is organised around a simple sequence: measure the value the Avalanche ecosystem creates, capture that value at the protocol level, and distribute it in a way that maximises AVAX value accrual.

The reasoning behind this sequence starts with a basic fact about blockchains: value created by ecosystem activity does not automatically accrue to the token that secures the network. Applications, users, and builders generate real economic value every day, but unless the protocol has a deliberate mechanism to capture some of that value, it simply passes through the network without strengthening it. Measurement comes first because a protocol cannot design a capture mechanism for value it has not properly identified.

The central hypothesis driving the research: Gross Chain Product ("GCP") growth is the backbone that generates capturable protocol value in the form of surplus and income. That value, properly routed, accrues to AVAX and supports the ecosystem. This matters because security in a proof-of-stake network is not something a protocol ships once; it is a cost paid continuously, and the credibility of that security depends on the economic weight behind the token doing the securing. Stronger AVAX economics support validator incentives and network security. Robust security and healthy economics attract the activity that grows GCP further.

Making those distributions work requires different capture mechanisms, which is why the "measure" step looks at more than one lens on value. Where GCP measures production, Gross Chain Income (GCI) measures income, including income that originates outside the onchain economy but flows to people and balances inside it. Seen together, they turn a vague question (how much is the ecosystem worth?) into a set of concrete, near real-time, auditable numbers, and they make the capture question sharp: of all this value, how much actually accrues to AVAX today, and how much could? A more thorough explanation of GCI, and how the Foundation measures it, will follow soon from Eric Lu's research.

The most important gap in that chain today is the connection between ecosystem value and AVAX value accrual. Closing that gap is the organising objective of this agenda.

"When you define how to measure economic output on a blockchain, you change what people optimise for. That is not a small thing. The GCP framework is the foundation this research agenda is built on, and we think it is important that this work happens in public." - Eric Lu, Lead Economist, Avalanche Foundation

Research Streams

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Measure, capture, and distribute are not abstract steps. They are being actively investigated across three connected areas of research.

Measuring and Capturing Value: Tokenomics and Protocol Revenue Capture

The first stream investigates how Avalanche creates economic value at the protocol level. Today, the Foundation's protocol revenue is predominantly transaction fees from the Primary Network, a narrow base relative to the value being created across the ecosystem. This work asks how that base can be measured properly and expanded, through fees, MEV, application and L1 revenue sharing, and other protocol-native mechanisms, without damaging the activity that generates the value in the first place.

Capturing value is only half the equation. Once revenue reaches the protocol, it has to fund something, and the network's security is the first and most fundamental claim on it.

Sustaining What's Captured: Validator Economics and Long-Term Staking Incentives

The second stream investigates how Avalanche can sustainably incentivise validators to stake for the long term as the finite issuance budget declines. Validator security is not a feature the network ships once; it is a cost the network pays continuously. Today that cost is funded primarily through emissions. As the supply budget is drawn down, fee revenue will need to take its place, and this stream investigates what that transition looks like in practice.

Beyond security, captured value has other claims on it too, which raises the final question in the sequence: once value is measured and captured, how should it actually be distributed?

Distributing Value: Ecosystem Capital Allocation

The third stream investigates how captured value should ultimately be distributed to maximise AVAX value accrual, including burns, validator-directed revenue, and other mechanisms. The Foundation is not currently running a public grant program.

Introducing Economics of Blockchain

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The Economics of Blockchain is the Avalanche Foundation's public research series and the ongoing home for this work. Each piece published in the series connects explicitly to this research agenda - advancing the central hypothesis, answering one of the research questions, or documenting what the evidence shows and where it points next. 

This agenda is the beginning of an important body of work. Updates, findings, and new research will be shared through the series as the work develops.

You can read all published articles here. 

Disclaimer: This document reflects the current state of the Foundation's economics research agenda and is subject to revision as the work develops. It does not constitute investment or legal advice.