Avalanche subnets can now let validators stake and earn rewards with the subnet’s own native token, due to the implementation of the Banff upgrade today.
The upgrade provides subnet creators with more customization and control over their ecosystems. Subnets are application-specific blockchains within the wider Avalanche ecosystem. Each subnet can have its own purpose, its own set of validators and its own level of security. Subnet validators must also validate the main Avalanche blockchain.
The key difference following Banff is that subnet validators — for participating subnets — won’t necessarily need to stake AVAX tokens to earn rewards. They will only need to stake the subnet’s native token.
This change won’t immediately apply to all subnets. In order for a subnet to operate in this way, the subnet creator has to change it into an elastic subnet — a one-time transformation that forces the creator to relinquish the ability to modify the subnet in the future.
The Banff upgrade is a hard fork. Validators will need to upgrade to the latest version or face being marked as offline and see diminishing rewards.
The upgrade also gives subnet creators the ability to remove validators from a subnet before their Staking period ends.