Six research teams will receive funding from the Avalanche Foundation through its first Call for Research Proposals. Over the coming year, the teams will work on two unsolved questions in blockchain economics: how cryptoassets get priced and valued, and how validator economics connect to network security. According to the Foundation, the results are intended to shape how Avalanche is built and governed.
Most of this concerns the chain itself. Avalanche users have a stake in it because the projects cover fees, staking rewards and the costs that L1s pay to the Primary Network. The Foundation says its own research into how value is measured, captured and distributed across a blockchain economy is already in progress, and the program brings independent academics into that effort.
“Our research agenda already has real momentum, and this program is designed to accelerate it,” said Matias A., Chief Investment Officer at the Avalanche Foundation. “Bringing in researchers of this calibre means we can tackle the hardest open questions in blockchain economics faster. I’m looking forward to working with them, and to putting their findings to work on Avalanche.”
The selection process
The Foundation received more than 175 proposals. Roughly 90 advanced to full committee review, and six won funding. The selection committee members, with titles as listed by the Foundation, were:
- Emin Gün Sirer, Founder and CEO, Ava Labs
- Matias A., Chief Investment Officer, Avalanche Foundation
- Eric Lu, Lead Economist, Avalanche Foundation
- Campbell Harvey, Professor of Finance, Duke University, and Research Associate, National Bureau of Economic Research
- Fahad Saleh, Emerson/Merrill Lynch Professor, University of Florida, and Cryptoeconomics Advisor, Columbia University CDFT
- Agostino Capponi, Professor of Industrial Engineering and Operations Research, Columbia University, and Director, Center for Digital Finance and Technologies
Committee members assessed the submissions independently and did not coordinate. Proposals were scored on relevance, concreteness, novelty, method, actionability, feasibility and team strength. Where a member had a prior professional relationship with an applicant, that member stepped away from the proposal. The Foundation says it made the process public because decisions on research funding should hold up to scrutiny.
What the six teams will study
The researchers are based at Stanford University, the University of Oxford, Imperial College London, Nanyang Technological University, HKUST (Guangzhou), Stevens Institute of Technology, Renmin University of China and the University of Saskatchewan. Their doctorates come from schools including Stanford, MIT, Princeton, Duke and Columbia.
Ruizhe Jia, Stanford University, with Xinmeng Zeng, David Dai and Jipeng (Tony) Liu. If a trading venue or lending market does well on a Layer 1, does the chain underneath benefit? This project from the Stanford Assistant Professor follows who pays trading and liquidation fees and where those funds land. The committee pointed out that most studies judge a blockchain by its own transaction fees, whereas this one counts application revenue as a central source of an ecosystem’s value.
Lin William Cong, Nanyang Technological University, with Zhiheng He, Renmin University of China. The question here is how staking should figure into token valuation. The team models it as a feedback loop linking liquidity, network security and platform productivity, and treats staking yield as something the network produces internally instead of a fixed interest rate. The principle it sets out to test: rewards paid in new tokens may fit a young network, while rewards paid from fees fit a mature one. The committee said this gives a capped-supply network like Avalanche a way to reason about when to make that change.
Fayçal Drissi, University of Oxford and the Oxford-Man Institute, with Zachary Feinstein, Stevens Institute of Technology, and Basil Williams, Imperial College Business School. This team treats a proof-of-stake network as a small open economy in which validators, token holders and builders act as distinct economic agents, then compares reward designs based on inflation with those based on fees. Linked networks are included in the model, such as Avalanche L1s running alongside the Primary Network. Early results indicate that beyond a certain threshold, funding security through new issuance can reduce the very activity that pays for it.
Lin William Cong, Nanyang Technological University, with Yonggang Wen and Wilfried Ariel Mulyawan, Nanyang Technological University. Because AVAX supply is capped, rewards from new issuance are set to decline over time. This project uses a model calibrated to live Avalanche network data to test whether the fee L1s pay to the Primary Network under ACP-77 could fund a shift to fee-based validator security. According to the committee, the model is designed to assess validator reward and fee policies directly, using the L1 ecosystem as a live laboratory.
Enchuan Shao, University of Saskatchewan. On Avalanche’s C-Chain, transactions are ordered by priority fee, yet those fees are burned instead of going to validators. Shao, an Associate Professor of Economics and former Bank of Canada economist, is asking whether the ordering rule holds when validators have no direct incentive to enforce it. Reviewers saw two uses: checking how closely the current system tracks real demand for faster settlement, and testing alternative fee designs, including options L1s can already choose.
Lin William Cong, Nanyang Technological University, with Siguang Li and Xuechao Wang, HKUST (Guangzhou). Capital locked up by validators could be put to work elsewhere. This project sets out a framework for the return validation must offer to stay competitive, grounded in what capital actually requires instead of advertised staking rates. For any change to rewards, its practical test is whether stake remains spread across many independent operators or gathers in a few large ones.
Professor Cong is named on three of the six funded proposals, each with a different set of collaborators and a different research question. The Foundation says every one was chosen independently on its own merit. It calls him one of the most widely cited researchers on tokenomics and says his 2021 paper, “Tokenomics: Dynamic Adoption and Valuation” (Review of Financial Studies), was cited widely in this round’s proposals.
Timeline and roundtable series
A few of the papers could take as long as a year. The Foundation plans to post updates on each proposal as the work moves forward. Around 170 proposals were rejected, and each applicant was contacted individually.
Over the next few months, the Foundation intends to launch the Economics of Blockchain Roundtable, a video series about open questions in blockchain economics. Early episodes will introduce each funded team alongside guests from the selection committee, covering what the team is researching, its planned approach and what the results could mean for Avalanche. Episode dates will be announced ahead of time.
Under the Foundation’s disclaimer, awarding a grant does not mean it endorses any particular findings, and it may change or end the program at any time.