WAX (Worldwide Asset eXchange) describes itself as ‘the world’s leading decentralized video game and entertainment network’. The founders of OPSkins, one of the top marketplaces for online gaming virtual assets, developed the platform. WAX was purposefully built for e-commerce. It launched mainnet in June 2019. Since its mainnet launch, WAX targeted EOS as its main competitor and launched a battle with its high decibel marketing campaign EOS to wax challenge. WAX is fully backwards compatible with EOS and it snatched some DAPPs from EOS post-EIDOS-attack and the dramatic rise of CPU price in 2019. The blockchain has done considerably well in recent times and as per blockchain activity, it is ranked at 10th spot currently. Unlike other blockchains, WAX is not trying to do so many things. NFT is the key focus area. Just a few days ago, WAX launched its new tokenomics and DeFi model.
New Inter-blockchain design
NFTs are growing really fast on WAX and the blockchain has surpassed Ethereum in terms of NFT trading activity. Amazing achievement! But monetization is an issue on WAX due to the small size of the ecosystem. It is undeniable that Ethereum has become the value settlement layer after the emergence of DeFi and inclusion will help in faster adoption. This recent blog post of WAX states that “as far as alternatives go today, Ethereum has no equal or even a close second. Every other chain today is largely irrelevant in this regard. Of course, nothing is static in the blockchain world. Another blockchain, including WAX, could serve the same functions in the future. But for now, Ethereum it is.”
WAX Ethereum Bridge – screenshot by the author
Six new components to support DeFi
In the new inter-blockchain tokenomics model of WAX, the operational functions of NFTs will happen on agile WAX blockchain but Ethereum will act as the capital vault. Ethereum is a really robust blockchain but if we look at the arbitrary gas fee, it is not very reasonable to mint and trade NFTs on Ethereum. WAX introduces 6 new Ethereum based components in their tokenomics:
WAXP to Ethereum bridge – The bridge converts WAXP (the native token of WAX) to WAXE
WAXE – It is an ERC20 token. WAXP gets burnt via Ethereum bridge to receive WAXE
WAXE-ETH Liquidity Pool – It is a liquidity pool for WAXE-ETH trading pair
WAXE-ETH Liquidity Pool token – It is the LP token received from depositing WAXE and ETH in the WAXE-ETH liquidity pool. This LP token can be staked in the WAX Economic Activity Pool to earn rewards: WAXG and ETH.
WAXG – It is the ERC20 governance token. Those, who stake their WAXE-ETH in the WAX Economic Activity Pool, will get WAXG. It can be used to vote for governance.
WAX Economic Activity Pool smart contract on Ethereum – This smart contract governs two activity pools: Distribution Pool and PiggyBank Pool (50:50). Both the pools are designed to accumulate a percentage of WAX Blockchain-derived value.
The new tokenomics of WAX seems to be a bit complicated. Here you can find a detailed guide on how to participate. The model has some uniqueness as it retains the economic value creation activity on WAX blockchain but injects the value into Ethereum DeFi ecosystem. It is very clear that WAX may get its desired business result on an immediate basis by going with the trend. There is no other possible solution to link the rapid growth of NFTs with extra-ordinary monetization capability of Ethereum DeFi to create a superior NFT market experience for the stakeholders at present. It is always important to reach a broader market. One key characteristic of WAX DeFi is that NFT transactions will drive the economy and the stakers will obtain reasonable monetary value for long term sustenance. The consumers will keep on consuming NFTs as they consumed earlier and the DeFi activity will run in the backdrop of consumer activity. Only the future will say whether such a model will be sustainable in the long run or not but blockchain interoperability is the need of the hour and one blockchain may not surely be able to absorb all kinds of activities. WAX is trying to address the issue with some quick experiments.
Note: This post was first published here for Cryptowriter in association with voice.com.