WAX Tokenomics AMA with Lukas Sliwka, Lead Engineer at WAX.

There were a few updates added to WAX Tokenomics Model yesterday. Here’s an excerpt from the article explaining brief summary of updates —

https://medium.com/wax-io/coming-to-wax-a-new-wax-tokenomic-model-cd0616a069e9

We’ve made some updates to the WAX Tokenomics model that improves its value to the WAX Community:

-The main change is that we added a Liquidity Pool. Those who deposit a combination of WAXE and ETH into the Liquidity Pool will earn Liquidity Pool Rewards (WAXE-ETH).
-WAXG will be given to those who deposit into the liquidity pool as Liquidity Pool Mining Reward
-The Distribution Pool and the PiggyBank Pool in the WAX Economic Activity Pool smart contract are now each 50%
-An updated WAX Tokenomic Process Flow diagram that shows the Liquidity Pool, and explanation of each step
-An additional graphic showing how to participate in WAX Tokenomics
-The WAXP-ETH Bridge and WAXE Token will be released before the end of the year
-Development progress: The development team has completed the WAXP-WAXE back-end bridge and we are now working on adding a user-friendly UI into the new WCW. They are currently working on the Liquidity Pools for WAXE-ETH.

Lukas Sliwka, Lead Engineer at WAX, opened the channels for AMA with WAX Community to help community with all the concerns, issues or explanation they wish to get for better understanding of the model. Here are the questions and answers summary asked by the community.

So sometime before EOY (End of Year) we’ll be able to get WAXE to earn WAXG?

Yes, the release roadmap that we are planning is as follows:
1. Release ability to convert(burn) WAXP to ERC20 WAXE while also releasing Liquidity Pool(s) with LP WAXE-ETH and LP Mining Rewards: WAXG tokens
2. Release WAX Economic Activity Pool: including PiggyBank and Distribution Pool and corresponding rewards emmision
3. Release Governance via WAXG

Follow up question — Those are in phases? means is that possible to swap WAXP to WAXE sooner then Governance via WAXG?

yes

What’s in it for a WAXP holder who doesn’t want to use the ETH side?

You can continue collecting your Genesis Rewards if you wish and continue participating in the NFT ecosystem that we are building. We will also be creating additional mechanisms in addition to NFTs so you have a choice.

To be clear there is nothing in the new DeFi model that is forcing anyone to use it; its your choice if you want to participate.

Opinion shared by Rob (EOS Detroit) : the ETH bridge and functionality will drive down WAXP circulating supply and if it pumps WAXP will follow it as well. So it reduces inflationary pressures on the WAXP system, expands the user base (ETH eyeballs), and gives WAXP holders optionality to convert and sell their tokens if they like the price of WAXE.

correct, the new model does create two deflationary mechanisms reducing supply: 1. WAXP token holders burning WAXP to WAXE 2. Economic Activity distribution will also burn 20% of fees in WAXP

So no new ways to profit directly without ETH stuff, but a possibility of WAXP being appreciated just because the ETH part is working for its users. Right?

You will not be able to profit directly from owning Ethereum tokens like WAXE, LP WAXE-ETH or WAXG without actually participating in the DeFi ecosystem on Ethereum. WAX Community will benefit indirectly by having a deflationary mechanism being introduced and possible WAXE and WAXG possible price movement that will make WAXP more valuable.
It all comes down to where the liquidity is and who is the de-facto king of finance. Ethereum is that place and by creating instruments that exist and trade in that ecosystem while tying them to WAX is massively beneficial for our projects.
I think about this as follows: Lets say you have a company in a country like Poland; and that company trades on Polish stock exchange. All is well but it is very limited to that market and the number of investors on that Polish Stock Exchange. Then imagine the same company being listed on NSDAQ. You get massive lift just by being listed.

November or December? or are waiting a good time for alts?

There will be three phases:
1. Release ability to convert(burn) WAXP to ERC20 WAXE while also release Liquidity Pool(s) with LP WAXE-ETH and LP Mining Rewards: WAXG tokens
2. Release WAX Economic Activity Pool: including PiggyBank and Distribution Pool and corresponding rewards emission
3. Release Governance via WAXG.
We are now working on phase 1 and I want to release as soon as possible.

I am not going to commit to a date so you can crucify me later; So I am going to say by the end of the year but I want this out much sooner than that depending on security audits, etc.

WAXP to WAXE bridge is completed on the back end. WAX Cloud Wallet UI for this is being implemented and we are working on implementing WAXE-ETH Liquidity Pool(s) along side the Mining Rewards emitting WAXG. All has to come out together.

Will all this be manageable via cloud wallet or will there be other interfaces as well?

You will be able to interact with WAXP to WAXE bridge smart contracts directly if you want and not use WAX Cloud Wallet. WCW will make it super convenient and easy.

I think you should make a video explaining the new tokenomics. I’d estimate maybe 10% of the community actually understands the article.

Maybe, to be honest doing Video is not my thing but maybe arranging a Q/A session and answering specific questions on this topic would be good. I understand and acknowledge that this is very complex.

here are several layers to this; technical implementation and how things work between two different blockchains is already difficult to understand. Then you have business reasons

Why did you add another ERC20 token?

We are adding no one but two tokens ERC20 WAXE and ERC20 WAXG. There will also be Liquidity Pool ERC20 WAXE-ETH and possible other Liquidity Pool related tokens if we decide to have multiple Liquidity Pools.

The article does a good job explaining what they are and how they interact.

However, if I were to summarize the big WHY we have ERC20 tokens and DeFi it would be this WAX and WAXP play in a very small ecosystem with very little liquidity. WAXP is a protocol token designed to facilitate WAX Blockchain business activity like NFT business. In order to raise WAXP value we must securitize WAX Blockchain economic activity in a form of financial instruments that can exist and trade in Ethereum tapping to its liquidity and ever innovating DeFi ecosystem.

Will we be able to earn wax fee only through the liquidity pool ERC-20 WAXE-ETH token?

There will be two different pools: Distribution Pool that will be accessible to stakers of LP ERC20 WAXE-ETH. Piggy Bank Pool will be accessible if you burn your ERC20 WAXG. These two instruments will also be available on DEXs over time I would imagine.

Is it correct that I need an amount of ETH that equals the value of my WAXE to participate in the wax blockchain revenue and to earn WAXG?

Yes. DeFi systems live and die by their liquidity and market makers. So rewards are designed to benefit Liquidity Pool Providers.

Damn… I am sure it makes sense but for hardcore believers like me who have all their crypto in WAXP it is basically an exclusion from al the direct benefits… Of course WAXP can benefit as well but not happy

Well you are still entitled to your GBM rewards; that does not change. Also, you can focus on growing NFT activity on WAX Blockchain because then this will increase fees collected which will then increase deflationary burn and distributions on Ethereum which in turn will increase appetite to convert WAXP to WAXE to participate which in turn will cause additional deflation while driving demand for WAXP which in turn will drive the price up. So its all connected.

Lukas, what is the proportion of the rewards from liquidity pool between WAXG and the liquidity pool token ERC-20?

80% of all collected fees on wax blockchain will be allocated for distribution. 20% will be burned. 50% of that 80% will go into PiggyBank Pool and 50% of that 80% will be allocated to Distribution Pool.

About WAX

WAX has created a suite of blockchain-based tools upon which dApps, marketplaces, and native non-fungible tokens (NFTs) are built. These tools include services to support e-commerce operations such as the WAX Cloud Wallet, SSO and OAUTH, a native RNG service, and a developer portal. The resulting technology reportedly represents a blockchain architecture with 500 millisecond block times, is fee-less for customers, and leverages voting rewards to incentivize participation in the selection of block producers and proposals.

About Ledgerwise

Ledgerwise is a top tier validator for DLT projects. We are running enterprise-grade infrastructure combined with world-class Tech to secure the partnered networks. Our 2+ years experience with EOS Metal and Attic Lab operations helps us with a good understanding of staking and governance, also, how infrastructure and decentralization are essential for the security of the network. We are among the very few Block validation services coming out from Indian Blockchain Space. We are currently a Standby WAX Block Producer.