An Avalanche infrastructure fund uses its capital to stake AVAX tokens in order to run validators (infrastructure) on the Avalanche network. Validators play a crucial role in the consensus mechanism of the Avalanche blockchain by validating transactions, securing the network, and participating in the consensus protocol. Validators are given rewards for staking the network’s token and correctly participating in the network. (Paying 6.41% in AVAX as of 03/15/2024).
By owning the network space, the fund can lease space out to DApps on the Avalanche network. DApps require validators in order to run efficiently. We will own those validators and then lease the network real estate to the dApps that need them. Doing so will provide multiple sources of return to the portfolio
How is an Avalanche Infrastructure Fund different from buying AVAX tokens and putting them in your wallet?
Simply buying and holding AVAX tokens does not involve directly staking the network or supporting network applications. When you purchase AVAX tokens from an exchange, you become a token holder, and your potential for earning rewards is limited to the possible appreciation of the token's value. A 506(c) fund structure provides the operational security that investors are accustomed to, rather than going through the web3 ecosystem.
