In the early morning of October 9, Ethereum Gas suddenly skyrocketed, and the Ethereum browser displayed 200 gwei. Looking for its source, it turns out that various social media and communities are constantly casting, disseminating and discussing the project XEN Crypto. Twelve hours have passed, and the enthusiasm for casting XEN Crypto has not subsided. According to ultrasound data, up to now, the number of ETH burned through XEN Crypto has reached 1092, accounting for 45% of the total burned amount of the entire network today. There are currently 140,000 casting addresses participating in XEN.

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Why launch XEN?

According to the white paper of XEN, the goal of XEN is to become an encrypted asset built by the community to realize the original mission of the blockchain: decentralization, transparency, anti-censorship, peer-to-peer value exchange, and ownership. XEN allows users to enter with the lowest threshold through its unique economic design.

The original intention of the team to design XEN is that encrypted assets are polarized, well-known assets are constantly overbought and then sold off; non-famous assets have been neglected by many investors for a long time, and are pre-mined and then sold off by the founding team and giant whales at the same time. XEN solves these two problems through fair issuance.

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Who launched XEN?

On August 13, 2022, Jack Levin tweeted about the vision of FairCrypto Foundation and XEN Crypto, which was developed by partners. The team members include computer science, communication, software and product development, marketing and investment fields. The FairCrypto Foundation's goal is to realize its vision by educating, organizing and launching blockchain projects. Jack Levin is an open source technology expert and claims to be Google's No. 21 employee (1999-2005), but according to public information from PANews, Google's No. 21 employee is Marissa Mayer, who served as CEO of Yahoo, but according to multiple sources It shows that Jack Levin is indeed an early employee of Google, but his LinkedIn has not yet shown the experience of XEN Crypto.

How is XEN produced?

XEN Crypto completed the audit and submitted the audit report through the security company CertiK on September 30. XEN adopts the PoP (Proof of Participation) mining mechanism. XEN mining participants have the ownership of the mined XEN tokens. As the number of participants increases, the difficulty of mining increases and the supply decreases. There is no need to lock or pledge any assets to obtain XEN tokens, just connect the wallet to mint. The variables and calculation formulas that affect the casting quantity are as follows:

First, open the official minting address (https://xen.network/mainnet/mint) and connect the wallet (Ethereum chain), you can see the current global ranking (Global Rank) and waiting period (Term, in days).

The global ranking (Global Rank) will continue to increase with the number of subsequent addresses participating in the casting. The waiting period (Term) means how many days you choose to receive XEN.

The waiting period (Term, in days) is limited based on the total number of interactions participating in the protocol. Specifically, the initial longest casting period is limited to 100 days until the number of addresses participating in casting exceeds 5,000. As more and more participants join the protocol interaction, the waiting period will begin to increase logarithmically. The specific formula as follows:

According to the formula, the maximum waiting period that can be selected by the 5001st address is 287.5 days, the maximum waiting period that can be selected by the 405000th address is about 370 days, and so on.

After you click to cast, the XEN smart contract will generate and provide the ranking (cRank) you are casting at the moment. cRank is a natural number that represents your relative position in the entire XEN ecosystem, that is, how many people have participated in casting before you cast.

The user's final reward (Ru) is multiplied by the difference between the user's rank (cRank) and the global rank (Global Rank)

The time-dependent reward amplifier (AMP) and early participant amplification factor (EAA) are calculated based on the chosen waiting time (T) at minting time. The detailed formula is as follows:

Note: Reward Amplifier (AMP) is a time-related constant, which decreases every day after the Genesis casting starts (when users perform casting to claim their own rankings, the AMP at that time is recorded on the chain). Early Participant Amplifier (EAA) is an additional reward rate for those who are the first to participate in XEN, which is 10% at the time of Genesis casting, and then decreases by 0.1% every time the Global Rank (Global Rank) increases by 100,000.

The current formula can be simplified as: Mining amount = 3000*log2 (global ranking − my ranking) * coin claim period (at this moment, the amplification factor AMP value is 3000, and the early participant amplification factor (EAA) is 9.9%).

The minted quantity at the moment of casting can be calculated. For example: if the current global ranking is 122517, your ranking is 122509, and the coin collection period is 100 days, then the mined quantity at the moment of your casting is 900,000 XEN. Afterwards, the number of rewards you get will continue to increase with the increase in the number of miners. The final rewards you can get are composed as follows:

According to the design mechanism, XEN has no upper limit. But because the output function adopted is logarithmic, as more and more people join and participate in casting, it will become more difficult to produce more XEN. According to the above formula, the difficulty here refers to the waiting time. This also means that each new participant will either get less and less XEN, or need to significantly extend the waiting time to get more XEN. In other words, the only way to mint more XEN in the future is to extend the waiting time for receiving XEN.

Multiple chains other than Ethereum will be launched

According to Jack Levin, founder of XEN Crypto and faircrypto.org, XEN was first launched on Ethereum and will be launched on other networks in a few days, such as Polygon/MATIC, BSC, Avalanche, Optimism, ETHW and many more chains.

On BSC it will be bXEN, on PulseChain it will be pXEN, each chain has a different supply and a different global ranking, and the XEN of each chain will not be merged, and there will be no 1:1 ratio between chains The exchange, because the gas fee required to produce tokens and the security of the chain vary.

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XEN collection mechanism

According to the contract design of XEN, when the waiting period is over, you should receive XEN tokens within 24 hours, otherwise your rewards will be punished and gradually reduced. The reason for the gradual reduction is to avoid users who use multiple addresses to mint at a certain point in time to receive it at one time, and then sell it, causing the price of XEN to drop sharply. The method of gradual reduction is in days, and the amount that can be claimed will be reduced to zero after 7 days.

XEN pledge mechanism

According to the contract design of XEN, when the waiting period is over, users can choose to pledge XEN, and the pledge period is 1-1000 days. After the agreed staking period, the user can terminate the staking of XEN at any time without penalty; however, if the staking is terminated before the end of the staking period, the system will not pay rewards in proportion to the agreed annualized rate of return.

Users can stake XEN in any number of days between 1-1000 days, and get the corresponding annualized rate of return reward. The annualized rate of return starts from 20% when XEN was created and minted, and then decreases by 1% every 90 days until to 2%, and thereafter to remain at 2% indefinitely. That is to say, the annualized rate of return of each staked XEN has been determined at the time of staking, depending on how many days have passed since the creation of XEN.

For example: If you stake 100,000 XEN within the first 90 days after the creation of XEN, you will be able to get 120,000 XEN after 365 days. Its rewards are based on a non-compounded annualized rate of return. The specific calculation formula is as follows:

Through the above combing, user participation in the XEN system can be divided into the following three processes:

1. Participate in casting and get your ranking (cRank)

2. Receive your XEN tokens after expiration

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XEN Subsequent Development Deduction

• A zero-sum game in the fund-like mode, with an unknown duration

Take a closer look at the design mechanism of XEN. In fact, its casting process implies the invitation and incentives of all employees. Because those who have already participated need more people to participate in casting in order to get more rewards, so users who have participated in casting have the motivation to invite new addresses to join. According to the chain game operation process of the previous capital disk mode, the operation of this type of mode will eventually reach a critical point, and it will start to collapse when no one enters.

One of its ingenious designs is to share the selling pressure of XEN tokens through the punishment of the waiting period and the receiving period. However, when the cycle changes and the FOMO sentiment dissipates and no one takes orders, the arbitrage space is lost. No matter how small the selling pressure is, it can cause a sharp drop .

According to the on-chain data created by Dune user @sixdegree, 27.9% of the currently participating addresses have a waiting period of 330-360 days, accounting for the highest proportion, followed by 20.7% of addresses with a waiting period of 1-30 days. In a state of polarization.

In addition, from the count of wallet transactions, 60% of the participating addresses are 0, which means that perhaps 60% of the participants are robots who come to brush wool.

According to the capital market model, the scale effect is distributed over a long cycle, and it will be difficult to trigger group FOMO. Also as Todd, a partner of Nothing Research, said: XEN, version 1.0 of the standard social experiment, creates a token that anyone can come to for free. One of the games: delayed gratification (more than 300 days): the longer you wait, the more you get; immediate gratification (1-3 days): the shorter the wait, the less you get; the common problem of social experiment 1.0 is that witch attacks are not considered. The Wool Party can have 1,000,000 numbers, and the number will be collected every day from 1 to 300 days, so the experiment will be unsustainable.

Taking history as a mirror, in 2019, Enumivo (Avocado ENU), a project that consumed CPU and RAM resources for mining through transfers, appeared on the EOS chain. At the beginning, it also caused FOMO in the EOS community group, but it gradually disappeared after reaching a critical value.

• There is room for imagination in the short-term secondary market price of XEN tokens

As mentioned above, the minting of XEN tokens leads to an increase in the number of ETH burned, which has the motivation for ETH whales to expand the scale of XEN minting. However, due to the existence of primary and secondary arbitrage, users need to participate cautiously.

• The arbitrage mechanism keeps Gas at a high level in the short term

According to XEN's casting design, users will try to choose when the Gas is relatively low for casting. Due to the mutual game between users, the current Gas is maintained at around 25 gwei.

As the difficulty increases over time, fewer and fewer XEN tokens can be minted, even extending the waiting period has little effect. At this time, non-participating community members have a high probability of buying through the secondary market instead of waiting.

But at this time, the price in the secondary market will be subject to the current Gas, participation scale, and waiting time. When the price reaches a certain threshold at which users are willing to participate in casting, there will be a large number of users in the community participating in arbitrage, and the casting will be used to sell for profit. This also means that under the premise that the XEN system does not collapse, the pallet of the XEN token price is the current Gas, which also leads to the fact that the Gas on the Ethereum chain may be in a balanced state in the short term.

The snipe and the clam compete for the fisherman's profit. No matter how XEN interprets it, the fuel tokens on the chain such as ETH are the ultimate winners.