Avalanche Etna Upgrade introduces Avalanche L1s to the Avalanche network, enabling the creation of sovereign L1 networks with minimal dependency on the Avalanche Primary Network.
L1 validators pay a dynamic monthly fee (initially set at approximately 1.33 AVAX/month) and are exempt from validating the Primary Network, fostering economic inclusivity. Any new networks created post Etna are Avalanche L1s.
On the other hand, Subnets were created before Etna upgrade. Subnet validators must validate the Primary Network by staking at least 2,000 AVAX and validate one or more Subnets.
Subnet validators can be converted to L1 validators, and after conversion, only L1 validators can be added.
For more details, please reference