Hex Will Outperform Every Crypto
“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel.
Luckily for most of us, Hex is (likely) the most misunderstood project in the cryptocurrency space.
Since its inception in 2019, we’ve been following its development with laser-focus attention. After all, if you were a bitcoiner you could have claimed it for free. We hope you did because its price has increased by over 1,000 fold since its inception.
Nonetheless, perhaps due to its uncommon founder traits and personality, Hex got (and still gets) much hate. Unfortunately, or fortunately, if you’re a contrarian like ourselves, little effort had to be put into understanding what Hex is, how it works and its primary (and only) goal: to delay participants gratification significantly.
Today, we won’t dive too deep into Hex technicalities but will perform an honest look at some of its critics and shed some light on what (seems) to be the truth.
A brief intro to Hex
Hex is a staking contract that incentivizes peers to stake Hex to get inflation paid in Hex. Additionally, it has in-built fees and penalties that do not allow participants to unlock their stakes before they mature.
The more hex is staked, the more costly it is to acquire a “T-share”, which represents the ticket to how much yield will the stake receive. Simply put, when a user stakes hex, he destroys his coins to acquire a percentage of the future hex inflation; the more T-shares a user got, the more hex they will receive.
Therefore, the more Hex is staked, and the longer the period, the higher the yield, or APY, paid to the staker; and the more stakers, the lower the individual APY.
Essentially, Hex is a time deposit that pays subscribers additional Hex for locking-up coins. With a few particularities that make it unique and far more secure than your traditional staking or yield farming project, such as:
- Staked coins are destroyed. New coins are created when a stake comes to maturity, and the participant withdraws the staked coins + yield. This significantly reduces the attack vector on the staking pools — because there are none.
- Penalties are highly aggressive. Any participant who does not respect the rules they chose (stake length) will be heavily penalized and lose a significant portion of its initial + yield.
- Coin ownership is highly concentrated. An address called the Origin Address (OA) holds around 90% of the total Hex supply.
- Consensus is locked. Because there is no staking pool since coins are created and destroyed by the staking contract, there is no way to hack the contract. The contract logic is effectively locked in a silo that is inaccessible because there are no admin keys — which also means there is no way to mint extra coins.
Red Flag #1: Coin Ownership aka OA
The first “red flag” that people point out is that coin ownership is heavily concentrated in one address. That means the project is in jeopardy because its price performance depends on one benevolent dictator.
While this may seem an issue, it couldn’t be further from the truth. Let’s look at the chart of bitcoin to prove our point.
When was the best time to buy bitcoin? Looking at the chart above, we think around 2012, when coin concentration was much higher than today. Who controlled bitcoin in 2012 vs who owns it today? Was it more distributed or concentrated than today?
We want to point out that it was precisely when bitcoin was considerably more concentrated in Satoshi’s wallets and greatly dependent on him that it was the best time to buy.
Does this mean bitcoin was more likely to fail in 2012 than today? Of course.
Nevertheless, our mission is to identify projects with a 100x or 1,000x potential, not a 2x, 4x or 10x.
Coin concentration is excellent for price appreciation, assuming the coins won’t reach the market at some point. Like we think bitcoin’s founder won’t sell his bitcoin, we find it hard to believe Hex founder would crash Hex. It’s not an economically rational decision.
Red Flag #2: Continuous Inflation
The second “red flag” Hex sceptics point to is that it works as a “Ponzi”. Essentially, because it has inflation, it’s not worth it.
The problem is, every cryptocurrency appreciates because there is inflation.
Bitcoin has inflation. Ether, during most of its existence, had inflation. The list goes on. Inflation does not mean a token will be worth less in the future than it’s worth today. It only means the asset needs more buyers (or buying power) to sustain its price.
Inflation is not the metric that matters, but the total number of Hex sold vs the total number of Hex that is staked. Essentially, once there is a continuous flow of coins that are staked > coins that are sold, the price will move up.
Not only that, but due to how Hex staking works, it becomes harder and harder to get the same APY (measured in t-shares), meaning that participants need to lock more Hex to get the previous returns. The goal is to incentivize longer stakes — so that participants receive a better APY from the beginning.
The earlier you stake, the more t-shares you earn = higher APY.
To conclude, Hex’s long-term inflation will be around 1.6%, whereas bitcoin is about 3%. Plus, just like BTC, Hex’s total supply is limited by immutable code with no admin keys or counterparties. Bullish.
Red Flag #3: Low Volume
Another commonly misunderstood “issue” is that Hex “suffers” from low volume (and low liquidity).
While investors might think this is not great, because it means that if a Hex whale sells their coins, price sufferers higher volatility because there’s a smaller pool to absorb the impact; in fact, it also means that less money is needed to push the price up.
Taking a look at the chart of bitcoin, when did BTC/USD have a higher % gain? In the current 2019–2021 bull-run or between 2011–2013? Obviously, during 2011–2013. How about liquidity? When were liquidity and volume the highest? During the current bull, of course.
Therefore, having lower volume and liquidity means more chances for mad gains, as bitcoin’s price chart just proved.
More, however, Hex is expected to have massive dips. So far, there have been over ten drops above 50%. This means an enormous opportunity for holders to accumulate more Hex at lower prices — during consolidation periods.
Conclusion: Will Hex Outperform Every Crypto?
In short, so far it has.
Our prediction that Hex will outperform every other cryptocurrency is based on the fact that, up until now, Hex has beaten every other cryptocurrency, including bitcoin and ether.
We admit the trend could shift at any time, and a massive correction takes Hex’s ROI below bitcoin’s and ether’s. But we would need proof that such an event could happen. And the only evidence it can satisfy our predicament would be if Hex’s ROI went below bitcoin’s and ether’s.
Therefore, we conclude that Hex has not only been one of the best performing cryptocurrencies to date, but if the Lindy Effect has any meaning, it could well continue to outperform both bitcoin and ether in the next two years, give or take.
Will Hex fulfil its destiny? Or will we be forced to include it in our wall of shame?
Share your thoughts.
This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.
