Why does Jax.Network have two coins?
The Jax.Network, unlike most other blockchains, has two native digital tokens, JAXNET coins, and JAX coins. Read up on why we have chosen to design our protocol this way and what characteristics each coin has.
Most traditional blockchain networks will have one native digital token that is mined and transacted on the network, for example, the Bitcoin blockchain has Bitcoin, Ethereum has Ether and Stellar has Lumens.
The Jax.Network blockchain, however, is unique in the sense that it has two native digital currencies that are being mined on its network: JAXNET coins, which are mined on the beacon chain, and JAX coins, which are mined on the shard chains.
The Jax.Network principles
Before we can get into the details regarding the unique aspects of the two coins on the Jax.Network blockchain, we would like to first share the principles Jax.Network has in mind, which has lead to the outcome of our protocol:
- We state that there is a need for a global payment system in a globalized world. Why would you have global trade when you can only be paid with traditional local currencies?
- We state that currencies hold value when they have transactional purposes. In other words, money will be inflated if there are no transactions done with it.
- We state that a cryptocurrency should not be cheap to produce in order to control money supply and also maintain a good level of security.
In short, our principles have lead us to the design of a cryptocurrency that better reflects the characteristics of a transaction network that is suitable for day-to-day payments.
Below we outline the important characteristics of each coin and why Jax.Network have chosen to design our protocol to be governed by two currencies instead of one.
JAXNET Coins
As mentioned, JAXNET coins are coins that are mined on the beacon chain on the Jax.Network blockchain. The beacon chain is responsible for adding new parallel chains or ‘shards’ to the network in a timely and coordinated fashion. The date of creation of the new shard is stored in the beacon chain ledger. When miners collectively agree that the network is overloaded and needs data space due to increasing demand for transactions, a new shard can be created.
On the beacon chain, the reward mechanism works very similarly to Bitcoin. A reward of 20 JAXNET coins is available per block, which is mined approximately every 10 minutes. Because there is a fixed reward per block that is mined on the beacon chain, JAXNET coins are then speculative in nature and can be used as a reliable store of value. Similarly to Bitcoin, it is a cryptocurrency that would be treated more like an asset rather than one that is suitable for day to day payments.
The value of the JAXNET coins reflects the entire value of the network, that is why we expect this value to grow over time, along with adoption. JAXNET coins are therefore great for speculation, meaning investors and speculators can bet on the adoption and growth of the network, which will lead to an increase of value in their coins.
JAX Coins
JAX coins on the other hand are coins that are rewarded to miners for mining blocks on the shard chains in the Jax.Network blockchain. Shard chains are the backbone of the Jax.Network value proposition since they secure transactions mainly for transaction purposes. For example, any time you buy a cup of coffee, that transaction will be processed on shards. And since new shards are created every time miners agree the network is overloaded, it allows for continuous scaling.
The superior scaling of the network because of sharding and the robust security provided by Jax.Network’s very own merged mining technique makes the network very suitable for mass adoption and day-to-day payments.
We argue that the value of JAX coins will be stable, without the need for a peg on a ‘basket of assets’ or fiat currency like other so-called stable coins in existence e.g. USDT. This is because the reward for miners on the shard chain is proportional to the computing power they contribute to the network. Therefore, there is an economic incentive to strictly follow the law of supply and demand for the coin, since miners produce coins only to make a profit. As demand increases, miners add more computing power to the network in order to increase their expected profit. Inversely, as demand decreases, miners contribute less computing power to the network so as to not inflate the value of their JAX coins. This means that the mining and minting of new JAX coins will be stable over time.
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