In the past few days, Ethereum supply has been in decline since October 8. According to ultrasound.money, the dashboard is currently reporting a deflationary asset. Nearly half of Ethereum’s block space has been consumed by a new project called XEN Crypto which is causing network issuance to fall and gas price to rise.
As a result, XEN Crypto has contributed to nearly 4,500 ETH being burnt, worth approximately $6 million, compared to a market cap of $1.8M.
I. What Is XEN?
Founded by Jack Levin from the Fair Crypto Foundation, XEN is an ERC-20 token built on the Ethereum blockchain. Simply put, XEN is the same as Bitcoin, no intrinsic value, just the value settled by its community. It is based on the overarching principles of Bitcoin, such as decentralization, self-regulation, transparency, and trust through consensus with the lowest barrier to entry through.
The barrier to entry in most cryptos is difficult honestly, because you have to get into the whole of cryptocurrency, stablecoins, Ethereum or Bitcoin. You have to create a wallet then go to an exchange and get to figure that stuff out so it can be daunting and really overwhelming. For instance, cryptocurrency wallet like Metamask wallet with some ETH in it, to have simple cryptocurrency that you can buy things with. That's all you need to interact with this XEN protocol, to get XEN tokens. Because you are going to mint these, so if you have a little bit of gas fee, that’s all for going to take so that low bear to entry Jack’s talking about.
Another problem that should be mentioned about most of the current cryptocurrencies is that most of them are manipulated by big players, whales. The well-known cryptos are overbought and subsequently sold off, we may know as “pump and dump”. The unknown cryptos are often left undiscovered for a long time by general investors while suffering from pre-mining and whale accumulation by the founding teams. Many cryptos have whales, they have pre-mining, things that people can get involved in before this has launched. So, it really fills these people’s bags before it’s even launched. That’s something rare with XEN’s uniqueness.
II. What Makes XEN Unique?
Let’s go back in history to 2010 when Bitcoin came to be technically fair because no one had Bitcoin. You want Bitcoin, you have to work for it and specifically talking about the mining operation that converts the computer energy and electric energy and time into a production of Bitcoin. Satoshi did an experiment and he was mining before anybody else was mining. It’s fair because it had no value and then the world ultimately gave it value.
So, fairness comes from the fact that most of the crypto launches the new projects were not technically fair. Because somebody could push one button and mint a trillion coins or tokens for themselves (XRP for example) and then they try to sell it on the open market by promising some sort of work that they are going to do to give that token value. That is what Bitcoin and blockchain actually was meant to solve the absence of the centralized financial and economic control over the cryptocurrency.
Many millionaires have been created by cryptocurrency, but there have also been many losers. The crypto-industry’s reputation has been tarnished by a string of pump and dump schemes, rugs, hacks, and failed projects. Not everyone knows how to earn without getting rekt, and most lose money. But now it’s time for a change because XEN is a crypto you don’t need money on.
- New concept of proof.
XEN is neither a Proof of Stake (PoS) nor Proof of Work (PoW) token, though it is a Proof of Participation (PoP) consensus. PoP is not a technical term, unlike PoW or PoS, whoever participates in XEN creation has full rights of ownership through self-custody. XEN smart contract uses a fair system of new token distribution. All participants are subject to the same immutable rules secured by blockchain.
There is no pre-minting, hidden doors, admin keys, or origin wallets. It's fair for everybody to have the same opportunity. In addition, XEN has no fixed supply and no initial supply either, its tokenomics focus on the mass adoption of the crypto with peer-to-peer value exchange.
So, with XEN crypto, there is no pre-mining of any kind, Jack has no XEN, no one has any XEN. And there’s no pre-sale, no whitelist, or any sort of allocation to investors and for marketing or any sort of other means, because it does not exist. You can mint with many wallets and that’s how the protocol works, you can pay a million dollars for gas and mint a lot. But it’s still no pre-mint, somebody always has to work for it similarly to how Bitcoin came to be.
Since that point, Ethereum became the dominant programmable sandbox for smart contract design. Most projects start by minting the tokens out of no value and then trying to sell them to the people. But XEN is trying to do things differently, it does not promise anything, anybody can participate and meet them for themselves within the parameters of that protocol. So that is what makes XEN fair because there’s no entity that can all of a sudden dump a bunch of XEN that they have minted from zero effort.
One more ambition is that XEN will be launched on multiple chains. To answer why the token should be in other blockchains instead of one chain. Let’s imagine XEN as a concept, really blockchain agnostic. It could even run on Solana, Polygon or pretty much anywhere. Assuming the code is the same code in details and principles then it does not matter what blockchain it is running on. By doing that, XEN can reach the variety of population that this otherwise would be unreachable.
III. XEN Game Theory
The game theory would be to find the sweet spot, which is very hard to find, making XEN more interesting. Being the first to mint tokens on the first day is the best option, as the rewards will be the greatest when you’re early. Every additional person who joins the XEN network after you means that more rewards will be minted for everyone. The catch is that if someone continues minting every day in large quantities, he will dilute other participants. This will keep other people minting XEN to maintain their share in the global network. They will need to extend the waiting time to keep minting more.
After eight years, XEN’s difficulty adjustment will make it very hard to mine the new tokens, and everyone will be left with the tokens they minted. To stop minting them halfway means losing to everyone else. Continued minting means more gas fees. Find your sweet spot for what you want to do with XEN and your best strategy for profit maximization.
There’s this dichotomy where every additional user creates more tokens for others because the global rank automatically raises, but on the other hand, there needs to be constant minting to keep peace with others who will surely mint more. It’s like a race where everyone starts the same, but not everyone can win. Whales will have lots of ETH for the gas to mint from multiple addresses every day, while average people will do some minting here and there. However, it is possible that the whales will avoid the trouble of minting and will instead purchase from the market, from small minters like you. If a whale has no bot, then this is what’s going to happen. No whale will sit and hit buttons the whole day. Finding the perfect game theory for yourself means taking into consideration all these points.
Things change, though, if XEN is launched on other chains where gas prices are very low. Minting will increase exponentially, diluting everyone who’s not minting. At that moment, the price of XEN may fall, and if it’s not supported with more new addresses minting XEN, it may not raise again. People will start getting bots to do all the minting activity for them and mint XEN as much as their gas allows them to. It’s hard to say what will happen on other chains, but XEN launches on Ethereum and it’s to be seen if it will expand further.
IV. Where Does XEN Get Value?
XEN is a token minted for free, and its value stems from adoption growth, the amount of gas spent on the transaction, and the time between the claim and the mint. What rank you have and how long you wait to mint determines the quantity of your XEN. The difficulty to mint increases together with the number of people joining the network. Similar to Bitcoin, the minting difficulty is time adjusted.
XEN’s initial inflation is very high due to the Early Adoption Amplifier (EAA) bonus and the Reward Amplificator (AMP). From a highly inflationary token, XEN will turn into a disinflationary one as more time passes by. At the end of year 8, it will arrive at a flat yearly emission rate that will be used to pay for the APY rewards to the stakers.
There is a relationship between price, number of users, and time. The long-term growth rate in users had a considerable effect on their long-term price. In Bitcoin, price changes tend to be highly correlated with changes in number of addresses, nodes, active addresses, unique addresses, and transaction activity. If applied to XEN, it means that the network effect has a potential to send XEN to follow the parabolic curve of other world scale networks.
You could also mint some XEN at the beginning, when the inflation rate is at its highest in a very short time span, and to offset the risk of dilution, buy from the market from time to time. Keep in mind that due to the network effect and disinflationary nature of XEN, it should increase in value over the years, so you’ll probably be paying a higher price. XEN activity will raise the demand for gas while also raising the price of ETH, so the price of XEN and ETH should follow each other.
V. How Much XEN Can You Mint?
The final formula to receive XEN is the LOG base2 of the current Global XEN rank minus your rank, multiplied by days you have specified during the first interaction with the smart contract by two amplification factors, AMP and EAA.
- AMP shorts for a reward amplifier, a time-dependent part of XEN mint reward calculation. It starts at 3,000 at Genesis and decreases by 1 every day until it reaches 1. It means that users have 2,999 days (over 8 years) since Genesis to receive more reward.
- EAA stands for early adopter amplifier, which depends on current Global Rank. EAA starts from 10% and decreases in a linear fashion by 0.1% per each 100,000 increases in Global Rank. It means that EAA will drop to 0% when the protocol reaches 10 million involved wallets.
- APY is yield on XEN staking reward. APY starts at 20% on Genesis and decreases by 0.1% every 90 days until it reaches 2%. It took 1620 days or over 4 years.
Let’s assume that the XEN protocol has been running for 60 days with 1 million engaged wallets. In this case, AMP should be 3000-60=2940, EAA should be 10%-(0.1%*1,000,000/100,000)=9%. Your current rank is 1,000,001 and the maturity is 30 days. The global rank after 30 days is expected at 1,001,001. In result, there are 1000 new users after you. At the maturity date, you may claim 958,090 XEN. At the time of writing, you have to spend around $3-$5 to mint XEN. 30 days later, you expect to get 958,090 XEN, assuming the price is $0.00003 (a half today's price), your return still is positive.
VI. Some Thoughts On XEN Crypto
The value of XEN is linked to its difficulty to be minted, which is very similar to Bitcoin. The value is created by the market forces of all participating parties. As more market participants get involved in generating XEN, the total amount generated is more scarce and valuable. The only way to mint more XEN in the future, will be by extending the time one has to wait to receive the mint.
XEN rewards are loosely based on a game theory with several variables that have an impact on the outcome. To mint new XEN, users must claim their rank. As a result, when reaching a point of saturation, which can be called an Equilibrium, the amount of reward is equivalent to the cost to mint (gas fee), then the community interest perhaps will no longer be strong enough to continue mining.