The $AVAX token serves four primary functions:

-Pay Gas Fees
-Stake and delegate to participate in the PoS consensus.
-Validators on both the Avalanche Mainnet and Subnets are required to stake at least 2000 AVAX to participate in the network consensus.
- Unit of account, medium of exchange, or store of value.

People use Avalanche C Chain because
it’s cheap, reliable, decentralized & secure →

Usage drives up C-Chain fees →

Apps migrate to subnets →

New validators lock up AVAX, lowering supply →

C-Chain utilization drops →

C-Chain gets cheaper ->

Repeat

-Avalanche is a payment network and foundation to create and secure subnets, which are sovereign blockchains on Avalanche.
-For end-users, Avalanche offers a platform with low transaction fees and quick transaction times, which can be particularly beneficial for activities like trading digital assets or participating in decentralized finance (DeFi) applications. Its support for interchain compatibility also makes it easier for users to interact with multiple blockchain platforms.
-The more users delegate their $AVAX to validators, the more secure the network is.
-The ecosystem gains more value with each new subnet and user.                                                          
-More Transactions on the Avalanche network, the more tokens are burned. This mechanism hopes to capture scarcity while offsetting inflation.

Value Accrual to the $AVAX Token 

- AVAX is the native token of the Avalanche blockchain and is used to secure the network through staking, pay for fees, and provide a basic unit of account between multiple subnetworks created on the Avalanche platform.

- The Avalanche network burns all transaction fees, lowering the effective supply. Over 4.1 million AVAX have been burned since mainnet launch. Fee burning has grown exponentially with increased network usage.

- Avalanche's "Subnet" technology allows for horizontal scaling by isolating high-traffic dapps, reducing the load on the main C-chain, and lowering gas costs for all users. However, this results in short-term reduced AVAX fee burning via the C-chain.

Value Accrual to the Avalanche Protocol 

- Validating a subnet requires validating the C-chain. Validating a subnet requires staking a minimum of 2,000 AVAX. As more subnets launch, more AVAX will be staked.

- The feedback loop of increased usage driving higher fees and subnet creation, requiring more validators and staking, can lead to a reduction in overall AVAX supply availability over time. This scarcity could drive up valuation.

The business model for Avalanche:

Revenue comes from:
Transaction fees are paid by users of the network. 100% of transaction fees are burned to manage inflation for AVAX).

Revenue is denominated in:  
$AVAX, the native token of the Avalanche platform.

Revenue goes to:
Validators who approve transactions and provide economic security, which is paid via new issuance of AVAX tokens (inflation) — which can be offset by the burned tokens, making the network deflationary during periods of high on-chain usage.
Stakers also receive inflation for staking and securing the network. The percentage varies depending on the current level of staking participation but is currently around 7.5% annually.