Originally published on Mar 6 2021 on our previous Medium account.
Hello from all the team at SwapDEX. In our last article, we touched on the importance of moving to our own chain and the difficult choice we made to delay the intended soft launch to prioritise launching on our own chain opposed to launching on the Ethereum network. This pivot was made due to the crazy state of gas prices — you may be desensitised to it, but it is not OK to have to pay upwards of $50 to make a simple trade. When making this difficult decision, we prioritised our future users and the long-term success of the platform over any short-term price considerations.
In today’s article, we will explore what being on our own chain means for the project and we will touch on some of the exciting opportunities it presents for holders of the SDX token. We will mention some of the technical details here, but we will delve into most of the juicy technical details regarding the chain in a future article.
SwapDEX Smart Chain
If the headline wasn’t obvious enough, our new chain will be called the SwapDEX Smart Chain (SSC). It is currently in development with progress well under way. The genesis hash, which is the first block on the chain, has been mined by our dev and work is currently focussing on configuring the consensus mechanism for the chain before we then move onto testing.
The SSC is a fork of Go Ethereum, which is commonly known as Geth, with some extra special seasoning from our dev to make the chain bespoke to our platform. It will use the Proof of Stake (PoS) consensus mechanism which aligns with our decentralised ideals in that it allows any user to become part of the network by running a masternode to help keep the SSC blockchain alive throughout its lifetime for many many years to come. Those who do not want to run a masternode will still be welcome to generate revenue by staking their SDX.
The SSC will have a number of impacts on the SwapDEX platform and the SDX token:
- The most obvious impact is that transactions on SSC will not be paid in Ethereum for gas, rather gas fees on SSC will be paid using the SDX token.
- Moving the platform onto SSC will greatly reduce transaction costs, making the platform attractive for users who want to trade at respectible gas fees.
- SDX will be required to run a masternode which will both increase demand for SDX and also lower the total liquid SDX in active circulation.
- As volume increases on the platform, the masternode and staking returns will increase, making the SDX token more attractive.
- The SDX token will be used as a governance token for the community to vote on decisions that impact the chain and wider platform.
One of the key ways a holder of SDX will be able to generate income is through running one or more masternodes for the SSD. We are still working out the finer details and will provide these specific details in another article very soon, but in short, users will stake a set number of SDX tokens to run a masternode. These masternodes validate transactions on the chain. The masternode will have to be active 24/7 to be entitled to the full rewards for running a node so there will be an option to run nodes on a Virtual Private Server for a small fee (under $5 per month per node).
Another way holders of SDX can generate passive income is through staking their SDX on the platform. This is a simpler approach with the only requirement being your wallet must hold at least 1 SDX to be able to stake, with no maximum limit on the amount that can be staked. Staking rewards will be distributed to holders commensurate to the amount they have staked against the total amount staked. The more you stake, the higher the rewards. You can stake and unstake instantly at any time with no penalty.
These options mean everyone in the SwapDEX ecosystem has a choice of how they want to earn and the ability to generate income just by holding SDX.
Governance and the Community Fund
Looking at the governance side of our SSC and the SwapDEX platform as a whole, the SDX token acts as a governance token, giving SDX holders a say and a vote in major decisions for our chain and our platform. Any holder of SDX will be able to put a proposal up and votes will be weighted to the number of SDX tokens held during a vote period. This means larger investors can have a larger input on the direction of the platform.
In order to fund many initiatives going forward, part of the gas spent on transactions on the SSC will go into the Community Fund. The funds held here will only be spent when voted on and approved by SDX holders. The beauty of this fund is it will be driven by and decided on by the community. To give a general idea, possible examples of initiatives that could be proposed and voted on include:
- New DApps, Apps or tools for the platform or the chain, such as an Android and iPhone app for the exchange.
- Partnerships and marketing initiatives with new projects launching on SSC.
- Additional dividend payments to SDX holders paid from the fund.
In addition to the Community Fund, there will also be a Team Fund which the SwapDEX team has direct control of without needing to put items up for a vote. While this fund will be controlled by the SwapDEX team, it will be used, in a similar fashion to the Community Fund, for initiatives to bring additional real world use cases to the SDX token. The ultimate goal of this fund will be to enhance the number of ways users can engage with the platform in order to further strengthen the token by bringing in a diverse range of users. For example, one future project planned to come out of this fund is Soccer Index, a real-time soccer gambling DApp that will operate on SSC and is likely to use SDX to fund wagers.
Once a block on the SCC has been completed, the SDX earnt by the block will be distributed to the groups we have discussed above. The figures below are not yet set in stone, however the tentative plan is for block rewards to be distributed as follows:
- 40% to masternodes
- 10% to SDX stakers
- 40% to SwapDEX Community Fund
- 10% to SwapDEX Team Fund
New Token Rollout
We have had some queries about how our new token will be distributed once it is ready so we wanted to touch on this briefly. Once the new chain is finished, we will require a new token to be distributed. This new token will replace the current SDX token. Once it is ready, it will be airdropped it into current holders’ wallets on a 1:1 basis based on wallet balances at the time of distribution. This means you are welcome to trade your heart’s content in the meantime. Currently, Uniswap remains the only exchange we are listed on.