Important DCX Token Update from Founder, Bloaterpunch
As we are approaching Day 1, we as a team are extremely cognizant of the levers we need to pull to give Dragon’s Crossing the best chance of success. One thing that has been on our minds and that has been hotly debated internally is our tokenomics, and fundamentally, whether we even needed a token to begin with.
This was notably questioned on the Crypto George podcast I went on, Fomo or Pass. After many very long meetings discussing the matter, we’ve made the decision to completely move away from using a token, and instead, leverage stablecoin assets (ARB USDC) for our in-game transactions.
In essence, there is no more DCX token.
Below I will explain why we made this decision.
Legality:
We’ve retained outside legal counsel who have advised us that the DCX token, if reviewed by the SEC, would likely be considered a security. While the risk is relatively small due to our size and presence in the market today, if we are as successful as we hope, the risk becomes significant. At its core, we want to do the right thing and take actions that enable long-term success.
Sell Pressure:
With a stablecoin model, there isn’t a sell-wall we have to worry about. In a token model, even with a completed mint, if there is less seasonal participation than anticipated, there would be significant sell pressure for a token with nothing to offset. It would likely be a race to $0 for DCX token
DCX Price Problems:
With a token, we set the seasonal price entry fee in DCX. Unfortunately, this also means we can’t lower it because we’re trying to offset the sell pressure (mentioned above) with the income from the seasons. If we lowered the price, which is in DCX, we would suddenly fall far below the circulating tokens emitted to the Sages and Team.
This means, if price speculation caused DCX to quadruple in price, the season entry fee would become unaffordable for new players entering the ecosystem. It would create a chilling effect which is the exact opposite of what we want to incentivize.
Price Manipulation:
I’m extremely skeptical about the behavior and effect of a team selling (or dumping) tokens on the community through the DEX as the DCX price goes up. The team would hold unlocked tokens in an operations wallet. There are protocols we could establish, but it creates potential conflicts as our incentive is to sell as many tokens as possible into the community, backed initially at least, by community speculation.
A token does not favor the community:
Even with the best intentions, a token can be used in very problematic ways to hurt the community. Without a token, we don’t have to worry about tokens being stolen, hacked, dumped. We don’t have to worry about the perception of the token price and what it implies about the project.
One last point that I think is extremely important and also a very powerful positive signal to the community is how the Sages (our original seed investors) are reacting to the token change. Keep in mind, originally, the Sages were promised a vesting token position. However, with the elimination of the DCX token, we committed instead to simply return a dollar figure to them. However, certain Sages feel so strongly about the mint, and about the project in general, that they requested to receive Genesis heroes, instead of their original seed compensation. These “Sage Genesis Heroes” will not affect the 2,500 public mint quantity, as they will be taken from the 300 Genesis heroes that were already set aside for team, marketing, and promotional activities. To reiterate, this change does not affect the total contemplated supply of Genesis Heroes, which is still hard-capped at 2,800 total. That 2,800 figure remains unchanged. Flu , a key early Sage, was one of the Sages that elected to take his capital in Genesis Heroes. Again, I can’t think of a more positive signal to the community.
At the end of the day, we believe taking the approach above allows Dragon’s Crossing to be successful in the long term. With respect to the ongoing incentives for the core team post-launch, we will pay team members for their contributions on an ongoing basis. With respect to past contributions, team members will only be compensated once ongoing operations are funded and Sage capital is returned with interest. So, the team has every incentive to ensure Dragon’s Crossing is successful in the long run to be compensated for those past services.
We’ve said it from the beginning, “We plan on doing things differently.” This is what different looks like. Transparency. Accountability. Keeping the best parts of Web 3 and merging them with the best parts of Web 2. As we have aggressively built the world of Horizon, the core team (other than Developers) have received $0.00 in compensation over the last 15 months, but we are confident that the launch of Dragon’s Crossing will be successful.
For players participating in seasonal play, the change from utilizing a DCX token to USDC on the Arbitrum blockchain will have no meaningful impact on gameplay. The only difference is that now the price will be more transparent and fixed for particular actions like participating in a season, summoning a Rift hero or identifying skillbooks. We believe our players will appreciate the simplification and price transparency with this change.
In summary, it wasn’t an easy decision, but we believe it is the right decision. We appreciate your support as we make this significant change. Thanks again for your trust and ongoing support.
