With the rapid transformation of the WAX digital economy, in order to ensure that the WAX blockchain operates more efficiently and that on-chain virtual currency growth is consistent with on-chain activities, the WAX blockchain token economy also needs to be improved and upgraded. Today, let’s dive into the improved WAX token economics.
How Current Tokenomics Work: A Brief Review
Before we dive into the upgraded tokenomics system, let’s review how the current system works:
1. Staking and voting: Users obtain CPU/NET by staking WAXP. By staking WAXP, users can not only obtain CPU/NET blockchain resources, but also vote for guilds or proxies to receive WAXP rewards. Participate in this process every week to maximize the rewards you receive.
In the existing model, WAXP will be increased by 5% every year through the static inflation mechanism. The distribution ratio of these WAXP is as follows:
(2%) Top 21 Block Producers and Producer Candidates: Block producers are decentralized entities in the WAX ecosystem, and they are crucial.
(2%) Active participants: Users who pledge WAXP to obtain CPU/NET resources and actively vote for the WAX Guild (block producer) can receive staking rewards.
(1%) WAX Labs Proposals and Savings: Fund innovative proposals that have the potential to help the WAX ecosystem thrive.
2. WAX DeFi on Ethereum: By participating in WAX DeFi activities, users can get a share of the WAX blockchain network economic activity fees (from the market and DApps).
WAX DeFi Changes and Important Upcoming Deadlines
As WAX continues to develop, the WAX DeFi ecosystem is about to undergo major changes. Please note: The last WAX DeFi reward distribution will take place on December 20, 2023. Additionally, markets and DApps will stop charging the 2% network fee on December 19, 2023. All network fees collected after December 19th will be systematically burned, in line with our commitment to building a sustainable token economy.
These deadlines are very important and must be remembered if you are a WAX DeFi participant. In addition, there are three points that everyone needs to pay attention to: 1. We strongly recommend that you receive the final DeFi reward after December 20, 2023. 2. The destruction of WAXG rewards can distribute the pool rewards of the Piggy Bank pool proportionally. 3. It is recommended that WAX DeFi participants initiate the unpledge process of WAXE-ETH Uniswap liquidity pool tokens through the WAXDeFi website. After completing this step, you can retrieve your WAXE and ETH directly on Uniswap.
The cross-chain bridge that facilitates the conversion of Ethereum WAXE into WAXP of the WAX blockchain will continue to operate. In addition, the cross-chain bridge that converts WAXP to WAXE at a 1:1000 ratio will also continue to be available, although the service will be discontinued in 2024.
The WAX team has created a new Uniswap WAXP-USDT pool to provide initial liquidity and is an alternative pool to the WAXE-ETH Uniswap liquidity pool, allowing for easier access to the WAXP and WAX NFT ecosystem. We invite the WAX community to participate in this new Uniswap liquidity pool, contribute additional liquidity to it, and receive rewards from the Uniswap Liquidity Pool program.
The above changes mark a major shift in WAX token economics and the WAX DeFi ecosystem, which also means that the WAX ecosystem is moving in a leaner and more efficient direction.
Upgraded WAX Blockchain Token Economics
In order to adapt to the evolving blockchain environment, we have updated and upgraded the WAX blockchain token economics:
Operating costs are tied to blockchain utilization: WAX blockchain token economics shift from a static inflationary model to a more dynamic model. The new WAX PowerUp mechanism links operating costs to transaction rates, charging transaction fees to offset static inflation and create a balance between on-chain operating costs and transaction volume.
Pay-per-transaction WAX PowerUp mechanism: Once a user has exhausted the blockchain resources obtained by staking WAXP, the WAX PowerUp mechanism activates the pay-per-transaction option. Obtaining resources through staking is ideal for DApp operators and advanced users who are familiar with the WAX blockchain resource model. Ordinary users will gradually transition to a pay-per-transaction system. The WAX PowerUp mechanism is similar to other fee-based ecosystems such as the EVM chain. The difference is that the WAX mechanism uses advanced WAX technology to ensure low transaction costs. In addition, through CloudWallet Boost, ordinary users can still enjoy a certain number of free transactions every day.
Variable inflation model: Transaction fees collected through the WAX PowerUp mechanism will have an impact on the inflation rate of the WAX blockchain, prompting the WAX blockchain token economics to complete the transformation to a variable inflation system. If there are enough fees, the inflation rate can drop to zero; if there are not enough fees, the inflation rate can rise to as high as 5%. If expenses exceed operating costs, the burn mechanism is triggered, causing deflation.
These updates aim to tightly align the operational costs of the WAX blockchain with its activities to achieve the goal of zero or negative inflation.
Upcoming enhancements
Our vision for WAX doesn’t stop there, we will be rolling out additional enhancements aimed at:
Simplifying WAX Blockchain Resources: We are abstracting the transaction fee calculation mechanism to make it simpler and easier to use.
Improving the account creation process and improving RAM utilization: Our goal is to eliminate CloudWallet’s fee barriers while reducing operating costs for block producers, making the WAX ecosystem more convenient and efficient for all users.
We are committed to providing the community with an enhanced and upgraded WAX token economic framework. Linking operational costs to on-chain activities lays the foundation for a balanced digital economy. With a user-centric approach and underlying deflation mechanism, we believe that both ordinary and large-scale participants will gain a better experience.
Finally, we want to say a huge thank you for being an integral part of the WAX NFT ecosystem!
Join the WAX community.
Warm reminder: This article is for popular science purposes only and does not constitute any investment advice!