Subnetting is the process of dividing a larger network into smaller and more manageable subnetworks, each validated by a particular set of nodes. These subnetworks—on the Avalanche blockchain platform they’re officially known as Subnets—provide several benefits, including improved network performance, enhanced cybersecurity, and simplified network management.

Avalanche’s Subnet architecture enables a wide variety of users, from individual builders and teams to institutions and government agencies, to launch customized blockchains tailored to their specific needs. These Subnets seamlessly integrate with the larger Avalanche network and benefit from its high level of security, while remaining safely isolated from mainnet traffic. This innovative approach enables Avalanche Subnets to achieve virtually unlimited scalability while maintaining interoperability among subnetworks.

In April 2023, Ava Labs, a developer on the Avalanche network, unveiled the latest advance in its unique subnetting technology: Evergreen Subnets. These new Subnets have been designed specifically for financial institutions looking to leverage the power and flexibility of blockchain technology to facilitate various types of mission-critical tasks. Here’s a closer look at Evergreen Subnets and their potential to revolutionize the financial services sector.

The Need for Specialized Subnets

There is no doubt that the financial world stands to gain from adopting blockchain technology. The advantages of blockchain in this sector are many. Firstly, blockchain offers enhanced security for sensitive data. Encryption and immutable transactions generally make financial processes extremely resistant to tampering or fraud. This increased security helps prevent unauthorized access and maintain the integrity of financial records.

Apart from that, blockchain enables faster and more efficient transactions. Traditional financial systems may often involve intermediaries and complex processes that can be time-consuming and costly. With blockchain, financial institutions can streamline processes such as cross-border payments, settlements, and remittances. Blockchain-based transactions can be executed directly between parties, any time of the day or night, which can sharply reduce the time and costs associated with traditional financial systems and eliminate intermediaries altogether. 

Additionally, blockchain facilitates financial inclusion by providing access to financial services for unbanked populations. Through digital identities and decentralized applications, individuals without traditional banking services may securely access financial products and participate in economic activities.

But despite all these clear advantages, blockchains in their standard form have also posed several roadblocks for institutions active in the world of decentralized finance. Among the major challenges is the walled garden problem. Blockchains have traditionally suffered from limited interoperability, thus restricting communications between institutions that use this technology. Communications of this nature require the use of third-party bridges or intermediaries—an inefficient solution at best. 

But what if financial institutions could, in effect, knock down these “walls” separating them from other blockchains? And what if they could do this without sacrificing the security and customizations that come with having their own blockchains? That’s one of many things that Evergreen Subnets on Avalanche are designed to do. 

Evergreen Subnets and the Financial World

Evergreen Subnets are a suite of tooling, deployments, and customizations that have been engineered for the particular demands of the financial services field. In effect, Evergreen Subnets combine the advantages of public and private blockchains—the scalability and accessibility of the former, and the security and personalization of the latter. 

Features and benefits of the Evergreen Subnets include:

Avalanche Warp Messaging (AWM) - This allows a variety of native communications—asset swapping, trade confirmations, data transfer, and much more—between two chains without the need for customary intermediaries or bridges.

Custom user and validator permissions - Evergreen Subnets give financial institutions the tools to enable access based on industry-standard Know Your Customer (KYC) and Know Your Business (KYB) rules. In addition, custom blockchains can be geofenced according to regulatory requirements and the preferences of the business.

Custom gas token selection - Avalanche Evergreen Subnets also grant businesses the flexibility to select their own gas token parameters, and even provide the option of gasless transactions.

EVM-compatibility - Avalanche Evergreen Subnets have been designed for Ethereum Virtual Machine compatibility. 

Avalanche unveiled its Subnets in March 2022, with the launch of DeFi Kingdoms Blockchain (DFK Chain) to support this popular DeFi play-to-earn (P2E) RPG game. Since then, Subnets have attracted growing interest among blockchain enthusiasts representing a broad spectrum of organizations, including some of today's leading DeFi and gaming companies. 

Many DeFi pros have come to recognize that Subnets provide highly scalable solutions that retain the speed, security, and reliability of conventional blockchains. With Evergreen Subnets, the power of Avalanche's unique subnetting architecture has been brought to the financial services sector as well.

Whether a company needs a suitable environment for its research and development initiatives or is looking to launch a live blockchain to power their everyday transactions, Evergreen Subnets supply the tools and resources that can streamline the design process, comply with all applicable regulations, and maintain the level of data security that the financial sector requires. 

The release of Evergreen Subnets is merely the latest stage in the ongoing evolution of the Avalanche smart contracts platform and its cutting-edge blockchain technology. Employing a novel and highly energy-efficient proof-of-stake consensus mechanism that can scale to handle global demand and finalize transactions in less than one second, the Avalanche platform has been designed to be eco-friendly and sustainable. The Avalanche community consists of more than one million members from all across the world, and the number continues to expand steadily.

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