Components of the Avalanche protocol were first conceived in a 2018 document by the pseudonymous “Team Rocket.” Development of the Avalanche Network was overseen by Ava Labs Inc. (“Ava Labs”), a Delaware corporation headquartered in New York, which was founded by Cornell University Professor Emin Gun Sirer and graduate student MaoFan Yin to formalize the Avalanche Protocol. Ava Labs administered the original network launch and token distribution. Although Ava Labs and the associated Avalanche Foundation continue to exert influence over the direction of the development of Avalanche, the Avalanche Network is decentralized and does not require governmental authorities or financial institution intermediaries to create, transmit or determine the value of AVAX. Smart Contracts and Development on the Avalanche Network Smart contracts are programs that run on a blockchain that can execute automatically when certain conditions are met. Smart contracts facilitate the exchange of anything representative of value, such as money, information, property, or voting rights. Using smart contracts, users can send or receive digital assets, create markets, store registries of debts or promises, represent ownership of property or a company, move funds in accordance with conditional instructions and create new digital assets. Development on the Avalanche Network involves building more complex tools on top of smart contracts, such as decentralized apps (“DApps”); organizations that are autonomous, known as decentralized autonomous organizations (“DAOs”); and entirely new decentralized networks. For example, a company that distributes charitable donations on behalf of users could hold donated funds in smart contracts that are paid to charities only if the charity satisfies certain pre-defined conditions. In total, as of December 31, 2025, more than 600 DApps are currently built on the Avalanche Network, including DApps in the collectible non-fungible token, gaming, music streaming, and decentralized finance categories. Additionally, the Avalanche Network has been used for decentralized finance (“DeFi”), or open finance platforms, which seek to democratize access to financial services, such as borrowing, lending, custody, trading, derivatives and insurance, by removing third-party intermediaries. DeFi can allow users to lend and earn interest on their digital assets, exchange one digital asset for another and create derivative digital assets such as stablecoins, which are digital assets pegged to a reserve asset such as fiat currency. As of December 31, 2025, approximately $1.2 billion was being used as collateral on DeFi platforms on the Avalanche Layer 1. In addition, the Avalanche Network and other smart contract platforms have been used for creating non- fungible tokens, or NFTs. Unlike digital assets native to smart contract platforms which are fungible and enable the payment of fees for smart contract execution. Instead, NFTs allow for digital ownership of assets that convey certain rights to other digital or real world assets. This new paradigm allows users to own rights to other assets through NFTs, which enable users to trade them with others on the Avalanche Network. For example, an NFT may convey rights to a digital asset that exists in an online game or a DApp, and users can trade their NFT in the DApp or game, and carry them to other digital experiences, creating an entirely new free-market internet-native economy that can be monetized in the physical world. Further, game developers use smart contracts to represent in-game items, currencies, and progression as digital assets that players can own, trade, or transfer across experiences. The Avalanche Network’s fast time-to-finality and relatively low transaction costs can support high-frequency actions typical of games (e.g., item crafting, marketplace listings, or tournament payouts), while transparent, on-chain rules reduce disputes about scarcity, drop rates, or rewards. Developers can also automate economic policies (such as emission schedules, sinks, or reward multipliers) and enforce them programmatically, which may help stabilize in-game economies and reduce reliance on centralized operators. Moreover, music and media applications can use smart contracts to gate access to works, meter usage, and automate payments to rights holders. The Avalanche Network’s smart contracts enable granular, real-time royalty splits among multiple contributors, such as writers, performers, producers, or labels. The network’s relatively low costs also supports low-value “micro-transactions” associated with streams, downloads, tips, or fan engagement. Many of these use-cases, such as NFTs, gaming, and music streaming apps run on non-core blockchains historically called “subnets,” which are managed by distinct validator sets, responsible for their own security, and
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