'There’s not enough blockspace': Avalanche Treasury CEO says AI agents could crunch L1 blockchain capacity

Avalanche Treasury Company CEO Bart Smith expects the rise of AI agents in financial markets to put the idea that blockspace is effectively unlimited to the test.

"If we hit any of the low-end expectations of what agentic activity is going to happen as AI gets into financial markets, all of that's going to be on blockchains too," Smith told The Block's Gareth Jenkinson during a Wednesday interview at the Avalanche Summit in New York. "There's not enough block space. And block space is not infinite anymore."

Smith also argued that this projected demand for blockspace could also make the technological differences between Layer 1 networks like Avalanche (AVAX), Solana and Ethereum more consequential.

"There are all of these nuanced differences, in a theoretical world, between Solana, Avalanche, Ethereum, other L1s,” Smith said, adding that users currently don't need to pay much attention to those distinctions because capacity is plentiful. "Those differences are going to matter."

The former Susquehanna Crypto CEO, who spent nearly 14 years at the trading firm before taking the helm of Avalanche Treasury Co., said he believes Avalanche to be best suited for business applications involving privacy and security.

Smith also said he would be surprised if traditional markets aren't operating 24 hours a day, five days a week by the middle of 2027 and argued that the existing financial infrastructure won't be able to handle an eventual move to around-the-clock trading.

"You’re going to have to create a new infrastructure, and you’re not going to build that infrastructure the old way," Smith said. "You’re gonna build it on blockchains."