The rise of autonomous AI agents in financial markets threatens to create a severe shortage of blockchain transaction capacity, Avalanche Treasury Company CEO Bart Smith warned on Wednesday. Speaking at the Avalanche Summit in New York, the former trading firm executive predicted that the idea of infinite blockspace will soon be put to the test.
Smith argued that even conservative estimates for widespread AI adoption and activity will be enough to consume the current capacity of major Layer 1 networks. This will create a new competitive landscape where the underlying technology of blockchains like Avalanche, Solana, and Ethereum will become critically important.
The coming scarcity of AI blockchain capacity
The core of Smith’s warning is that the digital real estate on blockchains, known as blockspace, is a finite resource that is about to see an unprecedented demand surge. As AI becomes more integrated into financial services, autonomous agents will execute a high volume of transactions on-chain.
“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 stated during an interview. “There’s not enough block space. And block space is not infinite anymore.”
This perspective challenges a long-held assumption in some crypto circles that scaling solutions would always keep pace with demand. Smith’s comments suggest a future where blockspace becomes a premium commodity, with transaction fees rising as users and AI agents compete for limited capacity.
Layer 1 differences will suddenly matter
A direct consequence of this capacity crunch, according to Smith, is that the subtle technical distinctions between leading blockchains will move from theoretical debates to practical imperatives. Currently, with capacity being plentiful, users don’t need to scrutinize the architectural differences between networks.
“There are all of these nuanced differences, in a theoretical world, between Solana, Avalanche, Ethereum, other L1s,” Smith explained. He added that for most users, those differences are currently irrelevant, but as demand grows, “Those differences are going to matter.” Smith, whose company is focused on the Avalanche ecosystem, believes his platform is best suited for business uses that require high security and privacy.
This impending reality check will force developers and institutions to make hard choices based on which network can best handle their specific needs for speed, cost, and security. The outcome of this shift will likely influence the future Avalanche price prediction and those of its rivals as the market re-evaluates their long-term viability under pressure.
A new financial infrastructure
The demand for AI blockchain capacity is not happening in a vacuum. Smith also foresees a parallel shift in traditional financial markets toward extended operating hours. He said he would be surprised if markets weren’t operating 24 hours a day, five days a week by mid-2027.
He argues that the current, aging financial infrastructure is incapable of supporting such a change, let alone a full 24/7 trading cycle. The only viable path forward, in his view, is a complete overhaul built on modern technology.
“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.”
The billion-transaction-per-second challenge
Smith is not the only high-profile figure to sound the alarm on the massive infrastructure required for an AI-powered future. In February 2026, Stripe co-founders Patrick and John Collison made a startling prediction, suggesting blockchains might need to process up to 1 billion transactions per second (TPS) to adequately support AI agents, which they believe will soon dominate internet transactions.
This figure highlights a colossal infrastructure gap when compared to the capabilities of today’s fastest blockchains. As of September 2026, top performers like Internet Computer Protocol and Solana process around 1,196 TPS and 1,140 TPS, respectively. While impressive, these figures are orders of magnitude below the billion-TPS benchmark envisioned by the Collison brothers.
Even their theoretical maximums—roughly 209,708 TPS for ICP and 65,000 for Solana—fall drastically short. This disparity underscores the immense scaling challenge ahead for the entire industry. Improving Solana transaction capacity and that of other networks is no longer a simple matter of iterative upgrades but a fundamental technological race against the exponential growth of AI.
Avalanche’s positioning and institutional push
Smith’s perspective is informed by a long career at the intersection of traditional finance and crypto. Before taking the helm at Avalanche Treasury Co., he spent nearly 14 years at the trading behemoth Susquehanna, where he served as CEO of its crypto division. This background gives his warnings about the needs of financial markets particular weight.
His current venture, Avalanche Treasury Company (AVAT), is a publicly traded company on the NASDAQ. It aims to give institutional investors regulated exposure to the Avalanche ecosystem. The company’s public debut in June was met with volatility, with the stock closing down 38.13% on its first day, highlighting the challenges of bridging the gap between crypto and traditional public markets.
Other executives within the Avalanche ecosystem echo Smith’s vision. Morgan Krupetsky, VP of Onchain Finance at Ava Labs, has spoken about how blockchain technology enables data to be standardized and verified more quickly. This allows for more informed and rapid decision-making, a crucial component for the high-speed, automated world Smith describes.
Ultimately, Smith’s forecast is a call to action for the blockchain industry. The convergence of AI and finance is no longer a distant concept but an imminent reality. The networks that can successfully scale to meet this demand will not only survive but will likely form the backbone of the next generation of financial infrastructure.