Ava Labs and Amazon's partnership could “expand the pie” for blockchain

The Amazon Web Services (AWS)-Avalanche “cooperation,” as it was carefully described last week, should almost immediately make it easy for developers to establish nodes on the Avalanche blockchain, including via “one-click node deployment.” 

Eventually, too, it might make it simpler for everyday businesses — i.e., non-crypto-related enterprises — and even individuals to establish their own subnets like smaller, private, layer-2 blockchains.

But perhaps the outstanding message from the Jan. 11 announcement is that the blockchain revolution isn’t just about cryptocurrencies. It’s also about things as prosaic as storing documents more securely and sensibly so they can be quickly retrieved during emergencies. It encompasses decentralized finance (DeFi) and nonfungible tokens (NFTs), but it’s also about bringing “scalable blockchain solutions to enterprises and governments,” including such humdrum but important use cases as compliance management, Ava Labs, creator of Avalanche, said last week.

In a webinar on Jan. 12, which included both Ava Labs and Amazon Web Services representatives, Ava Labs vice president John Nahas, explained, “Crypto products or crypto infrastructures have been very geared up until this point to cater to crypto-native people. [...] We need to expand the pie here. We need to expand the developers, the companies, the people who are going to be utilizing this technology in a mass-market way to bring in more people into this ecosystem.”

A ‘fake partnership’?

The Avalanche community generally welcomed the Amazon Web Services news, but others took issue with some of the language and claims, like Ava Labs CEO Emin Gün Sirer’s assertion that “This is a big deal. It's not your grandfather's ‘AWS partnership announcement.’”

Was this really a “partnership,” some questioned, or just a hyped-up “use of services” agreement? Maybe Amazon Web Services was really more “tech aggregator” than collaborator? Hadn’t other layer-1 chain developers, like Casper Labs, already “partnered” with the tech colossus to allow developers to directly deploy node infrastructures or design private networks via Amazon? Indeed, developers had been invited to “set up your own managed Ethereum node” on Amazon Managed Blockchain back in May 2021, no?

In a tweet, Alejandro Pastore, CEO of Pastore Capital, described the announcement as a “fake partnership between @avalancheavax and @amazon” where Ava Labs “sold us a service rental disguised as an association with Amazon.”

Be that as it may, the Jan. 12 webinar presented three Ava Labs managers, including president John Wu, appearing beside AWS global tech lead for Web3 Shai Perednik and Bradley Feinstein, Web3 lead at Amazon Web Services. Feinstein specifically used the word “partnership” to describe the new Ava-AWS association and no one present objected. AWS and Ava Labs will hold another joint webinar together in February and a jointly sponsored hackathon in May, they announced.

More important, perhaps, is a larger question: What, if anything, does this association mean for blockchain evolution generally?

Catalyzing innovation

“It appears that Avalanche will get the best shelf space on AWS among blockchain platforms,” Matthew Sigel, head of digital assets research at VanEck, told Cointelegraph. Businesses looking to launch blockchain-based applications from their AWS environment will get the best support and pricing if they choose Avalanche, Sigel further noted, adding:

“On a Twitter Spaces with AWS and Avalanche reps, AWS committed to marketing, education and discounts for businesses launching Avalanche subnets within AWS.”

The collaboration could have some positive industry spin-offs too, in Sigel’s view, catalyzing “meaningful innovation in the space.” Businesses may now find it easier to launch permissionless blockchains faster and easier if Amazon Web Services becomes an active presence in this market.

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Nor is Amazon the only tech giant moving in this direction. “Recall that, in November, Google Cloud launched what looks like a similar partnership with Solana,” Sigel said. Given that so much computing has moved to the cloud, it’s “positive to see this kind of commitment from the big providers.”

“The main news here is that we are seeing Amazon Web Services supporting the Avalanche blockchain ecosystem,” Sarson Funds analyst Evan LaMontange told Cointelegraph, allowing Avalanche's custom subnets to be integrated into the AWS marketplace. It will be allowing both individuals and institutions to launch subnets that can operate as self-sufficient blockchains. systems. He added:

“This has sparked a new vision of scalability, allowing entities to easily spin up their own standalone blockchain systems.” 

Others doubted the new collaboration rises to industry-level significance, however. “It certainly means that launching/running AVAX nodes is easier on AWS,” Freddy Zwanzger, Ethereum ecosystem lead at Blockdaemon, told Cointelegraph, but “there are already other blockchain nodes/templates available from different cloud or hosting providers.”

Of course, any improvements with regard to running blockchain infrastructure is positive, Zwanzger added, “but our institutional customers expect from us, as an institutional infrastructure provider, best-in-class service” which includes specialized setups.

Elsewhere, Howard Wright, vice president and global head of startups at AWS, called the firm’s teaming up with Ava Labs “a seminal moment,” an inflection point where blockchain technology becomes “commonplace and used in our marketplace by developers.”

Some of the Twitter commentary suggested the announcement was designed principally to pump the price of the AVAX token. “It's not the first time it has happened in this market,” noted Pastore in his 15-part Twitter thread. “This market is full of manipulation,” adding:

This is how the price of the $AVAX token reacted.A pump of almost 50%. Probably nothing. It looks like they achieved their goal with the marketing campaign and fake partnership.7/15 pic.twitter.com/NSQAK4rG3E

— Alejandro™ (@Pastore1314) January 15, 2023

On the other hand, almost all coins had a boost after the announcement, and that probably had more to do with favorable interest-rate news than anything specific to the crypto world. Comparing AVAX’s price movement with Bitcoin (BTC) and Ether's (ETH) over the seven-day period of Jan. 10–17, Cointelegraph found that AVAX was +34%, but BTC and ETH weren’t that far behind at +24% and +19%, respectively. 

An unusual tripartite structure

Launched in September 2020, the Avalanche blockchain has some unique elements. It actually consists of three individual blockchains: The X-Chain used exclusively to send and receive funds, the P-Chain for staking and validator activities, and the C-Chain for smart contracts and DeFi applications.

“Avalanche blockchains even use different consensus mechanisms based on their use cases,” notes CoinMarketCap. It's not like BTC or ETH where all nodes validate all transactions. This division of labor arguably boosts transaction speed.

In fact, Avalanche claims to be the fastest smart contracts platform in the industry as measured by time-to-finality. It also has the most validators securing its activity of any proof-of-stake protocol, according to Ava Labs.

Others, too, acknowledge its strengths. “Avalanche offers near-instant finality and penny-per-transaction costs,” commented Sigel. “Ethereum settles much more slowly at a higher cost.” Ease of use could also differentiate Avalanche from other chains moving forward, given that AWS may make it easier to launch an Avalanche subnet, he added.

Working with governments

Ava Labs seems keener on supporting government entities than some other chain developers. In November 2021, it announced a “strategic alliance” with Deloitte to build a blockchain-enabled “disaster recovery platform” to enable state and local governments to more easily demonstrate their eligibility for federal emergency funding.

Government is still an “under the radar” area for blockchain applications, said Ava Labs senior vice president Nick Mussallem at the webinar, while noting Ava Labs’ “partnership” with Deloitte to work with communities and government agencies like FEMA on blockchain applications that reduce administrative costs:

“It [the blockchain] helps accelerate recovery by organizing the documentation that's needed to demonstrate eligibility [for funding]. It simplifies the retention by storing and linking all the related documentation securely on Avalanche.”

‘Subnets serving as appchains’

The blockchain world is changing and Amazon is looking to get on board. At least that’s the signal Ava Labs was sending last week. 

“AWS recognizes how blockchains are evolving, with subnets serving as appchains, and wants to be one of the hosting providers for the many subnets that people are about to launch,” said Sirer.

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Maybe Ava Labs went a tad too far in claiming a “partnership” with Amazon — which is like the moon claiming a partnership with the sun. But Ava Labs should be applauded for looking beyond use cases aimed exclusively at crypto natives while drawing on AWS’s flexibility, scale and authority to enable developers to build subnets for use by everyday businesses and government agencies, among others.

If blockchain technology is ever to achieve mainstream status, after all, it will be built subnet by subnet — including use cases as mundane as document retention and the like.