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- Why Should BENQI Users Care About Avalanche's New Economic Research Agenda? Welcome to Freshman Questions, a BENQI educational series designed to make Avalanche and decentralized finance easier to understand for new users. 🔺 What makes a blockchain economically successful? Is it the number of transactions? The amount of capital invested in its ecosystem? The number of applications being built? Or the price of its native token? These are all important indicators. But they don't necessarily answer a more fundamental question. When a blockchain ecosystem creates economic value, how much of that value actually accrues to the protocol and AVAX, the token that secures it? That's the question at the center of the Avalanche Foundation's newly published Economic Research Agenda. The Foundation is examining how Avalanche creates economic value, how that value can be captured at the protocol level, and how it should be distributed to maximise AVAX value accrual and support long-term growth and security. For BENQI users, this may sound like a topic for economists. But it has practical implications for anyone holding AVAX, staking through BENQI, using sAVAX, or participating in Avalanche DeFi. Because understanding where economic value comes from—and where it goes—is essential to understanding productive finance. First, What Is Avalanche Trying to Understand? Avalanche has been expanding into new areas of financial and economic activity, including: Institutional finance. Tokenized assets. Payments. Private credit. Decentralized lending. Custom Avalanche Layer 1 blockchains. Each new application potentially adds economic activity to the ecosystem. But there's an important distinction. Economic activity on Avalanche doesn't automatically translate into economic value accrual for AVAX. Imagine a company builds a successful financial application on an Avalanche L1. The company attracts users. It generates revenue. It processes millions of dollars in transactions. That's valuable activity. But how much of that value reaches the underlying Avalanche protocol? How much contributes to validator incentives? How much creates demand for AVAX? And how much remains within the application itself? These are the types of questions the Avalanche Foundation is investigating. Rather than assuming that more activity automatically benefits the network, the Foundation is developing ways to measure the relationship. What Does "Measure, Capture, Distribute" Mean? The Foundation organizes its research around three steps. Measure → Capture → Distribute It's a simple framework for understanding a complicated economic system. 1. Measure: How Much Value Is Avalanche Creating? The first step is understanding economic activity. The Foundation’s research includes Gross Chain Product (GCP) and Gross Chain Income (GCI). Think of GCP as an attempt to measure the economic production occurring within the blockchain ecosystem. GCI provides another perspective by examining income, including income that originates outside the on-chain economy but flows into on-chain participants and balances inside it. These are research frameworks, not simple equivalents of GDP or guaranteed measures of token value. The goal is to move beyond hyped headline statistics and develop a clearer picture of the economy Avalanche supports. The most important gap today is the connection between ecosystem value and AVAX value accrual. Closing that gap is the main organising objective of the economic analysis developed. 2. Capture: How Much Value Reaches the Protocol? Imagine a blockchain ecosystem generates substantial economic activity. Applications earn revenue. Users exchange assets. Financial institutions process transactions. But what portion of that activity contributes to the economics of the network itself? Today, the foundation says Avalanche's protocol revenue is predominantly transaction fees from the Primary Network. The Foundation is studying how that base could be expanded to capture more of the value created across the ecosystem. Potential areas include fees, MEV, application and L1 revenue sharing, and other protocol native mechanisms. The challenge is capturing value without discouraging the activity that created it. 3. Distribute: Where Should That Value Go? Once economic value reaches the protocol, another question emerges. How should it be used? Should some value support validators? Should some contribute to AVAX burns? What mechanisms best support long-term network security and sustainability? The Foundation is researching these trade-offs. The goal isn't simply to generate more economic activity. It's to understand how that activity can support long-term economic sustainability and AVAX value accrual. Why Does This Matter for AVAX Holders? AVAX serves several important functions within Avalanche. It is used for staking and network security. It is used to pay transaction fees on Avalanche’s Primary Network, including the C-Chain. And it plays a role in the broader economic structure of the network. For long-term holders, understanding these functions is important. Because there is a difference between: Avalanche becoming more widely used and That usage creating additional economic value for AVAX. The two can be related. But they aren't identical. The Foundation's research is focused on understanding and potentially strengthening that connection. For AVAX holders, this creates a useful framework for evaluating ecosystem growth. Instead of asking only how many applications are launching, users can also ask: How much economic activity are those applications generating, and how does it support the network? Why Are Validator Economics So Important? This is where the research becomes particularly relevant to BENQI. Avalanche is a Proof-of-Stake network. Validators help operate and secure the network. To encourage participation, the system provides staking rewards to eligible participants. But those rewards have an economic cost. The Foundation points out that Avalanche's validator security is currently funded primarily through token emissions. And AVAX has a capped supply. As the finite issuance budget declines over time, Avalanche needs to understand how network revenue could contribute more substantially to sustaining validator incentives. This creates a fundamental economic question: How can Avalanche continue rewarding validators and maintaining network security over the long term? The Foundation isn't announcing a completed solution. It's researching the relationship between network activity, protocol revenue, staking incentives, and security. For anyone participating in staking, that's a question worth following. How Does This Connect to BENQI Liquid Staking? BENQI Liquid Staking allows AVAX holders to participate in Avalanche staking while receiving sAVAX. When users deposit AVAX through BENQI, the underlying AVAX is delegated to validators. Those staking positions can earn rewards. Meanwhile, users receive sAVAX representing their share of the liquid staking pool. As rewards accrue, the amount of AVAX backing each sAVAX can increase. That means BENQI users are directly connected to Avalanche's staking economy and the economies of network security. And the Foundation's research is examining the long-term sustainability of that same economy. Consider the relationship: Avalanche economic activity ↓ Protocol revenue and economic incentives ↓ Validator sustainability ↓ Staking rewards and network security ↓ The underlying staking activity represented by sAVAX The research could eventually influence how users evaluate the long-term economics of staking and the relationship between network activity, protocol revenue and staking incentives. But it doesn't mean staking rewards are about to change, and it doesn't guarantee that future protocol revenue will increase sAVAX returns. Those outcomes depend on future research, proposals, implementation, and actual economic conditions. The immediate benefit is better understanding. What About BENQI Markets and Productive Finance? The Foundation's agenda also connects with BENQI's broader Productive Finance conversation. BENQI Markets allows users to supply supported assets and borrow against eligible collateral. Those activities create their own economic relationships. Suppliers provide liquidity. Borrowers pay to access it. Interest rates respond to market conditions. This is different from Avalanche's protocol-level revenue and validator staking incentives. But the same fundamental questions apply. Where does economic value come from? Who pays for the service? Who receives the resulting income? What risks are involved? Consider a user supplying assets to a lending market. The potential yield isn't generated simply because the assets were deposited. It comes from economic activity involving borrowers. Similarly, Avalanche's long-term network economics depend on understanding the activity that creates value and the mechanisms that distribute it. This is an important lesson for DeFi users. Not all yield has the same source. And understanding the source is essential to understanding the risk. Does Avalanche's Research Change How We Measureably Evaluate Ecosystem Growth? Yes. Consider the announcement that Avalanche builders raised more than $500 million over the previous year. ( link) That's an indicator of investor interest and resources available for continued development. But funding alone doesn't prove that the network has generated wide-spread adopted economic value. A funded project still needs to launch. It needs users. It needs sustainable activity. And the question is how that activity contributes to the wider ecosystem and ultimately to AVAX value accrual and solid participatory adoption. The Foundation's research provides a framework for asking what happens after the announcement. Instead of focusing only on capital raised, users can examine economic production, protocol revenue, validator incentives, and value distribution. That could make ecosystem analysis more meaningful. Growth matters. But understanding how growth becomes sustainable economic value matters just as much. What Should BENQI Users Watch for Next? The research agenda isn't a finalized change to Avalanche's tokenomics. It's a program of investigation. The Foundation has identified three main research areas: Tokenomics and Protocol Revenue Capture How can Avalanche measure and capture more of the economic value created across its ecosystem? Validator Economics and Long-Term Staking Incentives How can validator incentives remain economically sustainable as the finite token emission quantities decline? Ecosystem Capital Allocation How should captured value be distributed through mechanisms such as burns, validator-directed revenue, and other mechanics ? These are the developments BENQI users should monitor. Not because they guarantee higher yields or a higher AVAX price. But because they help explain the long-term economic environment in which AVAX staking and DeFi operate. Why This Matters BENQI's products allow users to participate in several layers of Avalanche's economy. Liquid Staking connects AVAX holders with network security. sAVAX makes staking positions transferable and potentially useful across supported DeFi applications. BENQI Markets connects capital suppliers with borrowers. Ignite makes it easier to launch and run Avalanche validators. Each product helps capital perform a useful function. The Avalanche Foundation's research asks a related question at the network level. How can the economic value created across Avalanche contribute to the sustainability of the ecosystem itself? That is a natural extension of the Productive Finance conversation: understanding how capital creates value through measurable economic activity. The Bigger Picture Avalanche has become more than a network for trading digital assets. Its ecosystem already includes financial institutions, tokenized assets, payments, lending markets, and specialized blockchains. That expansion created new opportunities. It also created new measurable economic questions. How much value is being produced? Where does that value accumulate? How should it support the network? And what makes the entire system sustainable? The Avalanche Foundation's research agenda represents an effort to answer those questions systematically. For BENQI users, it offers a useful reminder. Productive capital isn't simply capital that earns yield. It's capital participating in a solid economic system where the resources of value, incentives and risks can be understood sufficiently and sustainably. Staking rewards matter. Lending yields matter. Liquidity matters. But so do the economic structures that make those activities possible. As Avalanche grows, understanding those structures may become just as important as understanding the applications and use-cases built on top of them. Next Step If you hold AVAX or sAVAX, take some time to explore the Avalanche Foundation's Economic Research Agenda. Start with its three central questions: Measure: What economic value is Avalanche creating? Capture: How much of that value reaches the network? Distribute: How can that value support long-term sustainability? Then connect those questions to your own BENQI activity. If you hold sAVAX, understand where staking rewards come from. If you supply assets to BENQI Markets, understand where lending interest originates. If you borrow, understand the costs and risks of accessing liquidity. And if you're interested in Avalanche's long-term future, follow how the Foundation's research develops. Because the next stage of productive finance isn't just about putting more capital to work. It's about understanding how the economic system supporting that capital can remain productive over time. 🔺 Got another Freshman Question you'd like us to cover? Let us know! BENQI🔺
- Working with @bailsecurity as our new audit partner 🤝 A team that takes security as seriously as we do. Details of the audit to be announced in due course 🔺 BENQI🔺
- $500M Raised by Avalanche Builders: What Does Avalanche Ecosystem Growth Mean for BENQI? Welcome to Freshman Questions, a BENQI educational series designed to make Avalanche and decentralized finance easier to understand for new users. 🔺 What happens when more than $500 million is raised to build on Avalanche? The obvious answer is that developers have more money to work with. But there's a much more interesting question. What happens when that funding turns into applications, financial markets, infrastructure, and users? In October 2026, Avalanche announced that builders across its ecosystem had raised more than $500 million over the previous year. The funding spans projects developing financial services, payments, private credit, and blockchain infrastructure. For AVAX holders, this announcement at the close of Q3 speaks to the growing momentum across multiple industries that became apparent during the Summit where 1,128 people attended from 580 different companies including 71 different investors. The striking thing about the Summit was that no one sector was more overrepresented than another. The diversity of the Avalanche ecosystem showed how compelling the opportunity to build on Avalanche has become. For BENQI, this empowerment raises another obvious question: Do more builders create greater demand for the staking, lending, borrowing, and validator infrastructure already available on Avalanche through Benqi ? To understand these product and revenue opportunities, we first need to understand what all this ecosystem funding actually means. Why Does Developer Funding Matter? Blockchains don't grow simply because more people buy their native tokens. They grow when people build useful things on them. Applications. Financial markets. Payment systems. Infrastructure. Services that give users reasons to interact with the network. But building those products takes resources. Developers need engineers, security audits, infrastructure, business development, and time to turn an idea into something people can use. That's where funding comes in. When investors commit capital to companies building on Avalanche, they're supporting the development of products that may eventually bring more activity to the network. Funding is an input into ecosystem growth—not the finished result. A company raising $20 million doesn't immediately mean $20 million has entered a particular sector such as Avalanche DeFi. It means the company has secured resources to pursue business. Whether that translates into meaningful on-chain activity depends on what happens next. Who Is Raising Money on Avalanche? Avalanche's announcement highlighted several projects representing different directions of ecosystem development. Iris — $43 million Iris secured funding to scale ALVA's onchain financial services and Avalanche L1 infrastructure for telecom operators. Kite AI — $33 million Kite raised capital across two rounds, including investment led by PayPal Ventures, to develop infrastructure for AI-agent payments on its Avalanche L1. Tare — $13.25 million Tare raised seed funding to build private credit infrastructure on Avalanche, with investors including @AvalancheFDN and Janus Henderson. Valinor Digital — $25 million Valinor secured funding to expand its on-chain credit platform, including institutional credit facilities operating on Avalanche. Avalanche also reported more than $400 million raised across over 30 additional companies. What's interesting isn't simply the size of the raises. It's the variety and diversity of applications being developed. Payments, institutional credit, financial services, and infrastructure have different users and different business models. But they all point toward an ecosystem that has expanded beyond its original crypto-native use-cases. This point was brought out and highlighted during the Q3 Ecosystem call. The $500 million announcement can be understood as an indicator of developmental capacity and investor interest that built on adoption already underway. Could More Builders Create More Demand for AVAX? Potentially. AVAX plays several roles within the Avalanche ecosystem, including paying transaction fees on the C-Chain and participating in staking for network security. If more applications bring users and transactions to Avalanche, demand for network services may increase. Some businesses may also need AVAX for validator operations or other network-related functions. But there's an important distinction between network usage and token-price appreciation. More ecosystem funding doesn't automatically translate into more AVAX purchases. Not every application uses AVAX in the same way. And even increased network activity doesn't mean a higher AVAX price necessarily and sufficiently. A more useful question might be: Are funded projects creating sustainable activity that uses Avalanche infrastructure? That is what connects developer growth with the network's long-term economic development. This connection found new advancement under the Helicon upgrade. Stay tuned for more information on the impact of this technical upgrade. This is where BENQI’s network relevancy shines through. Where does BENQI fit into this growing Avalanche Ecosystem? BENQI provides several types of infrastructure that become useful when people want to put digital assets to work. BENQI Liquid Staking allows AVAX holders to stake while receiving sAVAX, a liquid representation of their staking position. BENQI Markets provides lending and borrowing infrastructure. Ignite helps make Avalanche validator deployment more accessible. These products address different needs. But they share a common purpose: Helping capital become productive within the Avalanche ecosystem. And as more applications are built, the range of potential users and integrations for that infrastructure can expand. Why Could More Applications Make sAVAX More Useful? Imagine an AVAX holder who wants to participate in staking. Traditionally, staking requires committing AVAX to the network's staking process. BENQI Liquid Staking offers another approach. Users deposit AVAX and receive sAVAX. The underlying AVAX participates in Avalanche staking, while sAVAX represents the user's liquid staking position. As staking rewards accrue, the amount of AVAX backing each sAVAX can increase. But here's where the implications of ecosystem growth becomes even more interesting. sAVAX can potentially be used by applications beyond BENQI itself. A lending protocol may support it as collateral. A decentralized exchange may provide liquidity for trading it. A DeFi strategy may incorporate it into a broader financial position. We've already seen this principle with Aave V4's Avalanche deployment, which includes an AVAX Correlated Market supporting sAVAX as collateral. That's a concrete example of one ecosystem project creating utility for an asset issued by another. Now consider what happens if more funded developers build more financial applications on Avalanche. Some may eventually integrate existing assets such as sAVAX rather than creating entirely new financial primitives. Others may build tools that help users manage staking positions or access liquidity. These possibilities illustrate why a growing developer ecosystem can matter to liquid staking. More useful applications can create more potential uses for existing on-chain assets. What About Lending and Borrowing? As financial activity expands, users may need additional ways to access liquidity. Consider a company developing an on-chain credit application. Or a protocol supporting tokenized financial assets. Or an investor holding digital assets who wants liquidity without selling. These situations can create demand for lending and borrowing infrastructure. BENQI Markets already provides mechanisms for supplying supported assets and borrowing against eligible collateral. That flexibility is relevant as Avalanche supports a broader variety of financial activities. Why This Matters The $500 million announcement is important because it shows investors are committing substantial resources to businesses building within the Avalanche ecosystem. And the range of projects matters. Financial services. Private credit. Payments. Institutional infrastructure. These are areas where blockchain technology is being explored for applications beyond speculative trading. As those businesses succeed, Avalanche will support a broader and more active traditional financial ecosystem. That may create opportunities for existing infrastructure providers, including BENQI. Liquid Staking can help AVAX holders keep their staking positions usable throughout DeFi. BENQI Markets can provide lending and borrowing services for supported assets. Ignite can help prospective validator operators participate in Avalanche infrastructure. More funding creates the potential for more applications. More successful applications can create demand for more financial infrastructure. Next Step Watch which projects launch. Look for genuine user adoption. Explore how new applications interact with existing Avalanche infrastructure. And if you're interested in putting your own AVAX to work, start by understanding BENQI Liquid Staking and how sAVAX can remain usable while the underlying AVAX participates in staking. For developers and infrastructure operators, explore how BENQI Markets and Ignite may support your particular use case. Got another Freshman Question you'd like us to cover? Let us know! BENQI🔺
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