xDai Chain and StakeVault — A Stable Coin on the Move
xDai Chain is an Etherium side chain and a first of its kind USD stable coin that boasts 5 second block times to make for extremely fast and cost efficient transactions, in addition to a host of other benefits. As the product of the collective efforts of MakerDAO and POA Network, xDai Chain uses a Proof of Autonomy consensus governance model which resembles Proof of Authority, but where validators are managed by a DAO instead of a centralized authority. xDai Chain is designed for fast and economic stable coin transactions, (1 xDai = 1 USD), where xDai is used to cover both payments and transaction fees, (as opposed to using an additional gas token), making it ideal for the incidental transactions of the day-to-day. In the paragraphs below, we will look at how the project architects have equipped xDai with user friendly tools to ease adoption for crypto and non-crypto users alike.
Transacting with a stable coin provides peace of mind to parties on either side of a transaction. Many times when I transact in BTC, I find myself wondering if I overpaid or got a deal based on the weekly price volatility in the Bitcoin chart, to say nothing of what I hope BTC value will be in a couple of years from now. Though in some ways I count it as a civic duty to transact in crypto and to do my part in spreading cryptocurrency adoption, I always wonder if I will look back on a given transaction and feel like the guy who ordered the pizza for what is today’s equivalent of hundreds of thousands of dollars. Having a predictable stable currency allows users to exchange value without the anxiety that historic volatility in most cryptocurrency charts naturally induces. Transacting in xDai is akin to exchanging US dollars with the added benefit of a lightning fast and affordable bridged sidechain.
xDai Chain uses an innovative multi-chain staking token STAKE to support Proof-of-Stake consensus securing the payment layer. Staking allows for block-producing validators and delegators to provide transaction consensus and receive staking rewards for honest block production. STAKE is only required for consensus providers, not by everyday xDai users. Unlike xDai, STAKE is not stable, and derives its value from demand determined by the open market. Below I will give a short primer on innovative sandbox solution to staking made possible through a partnership with the BitMax exchange. Stakers won’t want to miss this impressive update.
Key Features
xDai Random Number Generator
xDai uses the RANDAO-based Random Number Generator which enables validators the use of random numbers for validator selection. Such random seeds can also be used by contracts deployed to xDai. This unique configuration abolishes reliance on centralized services or 3rd party applications made possible by on-chain randonmness. For more information on the xDai RNG system, read here.
Inroads to Ethereum
The xDai Stable Chain is bound to Ethereum’s mainnet by two bridges that make for uninterrupted asset transfer between chains. Once tokens have been acquired on the mainnet, they are brifged to the xDais Stable chain via either the Dai-xDai bridge to facilitate transactions, or the DPOS bridge for staking tokens. From there, users can bridge transacted/staked tokens back to the mainnet easy as one-two-three.
“Pre-Staking” StakeVault on BitMax
“StakeVault is a pre-staking initiative launched by BitMax.io to provide sandbox infrastructure for PoS projects to test token-economic design before launch of staking. During the pre-staking period, projects will be able to leverage the unique infrastructure of BitMax.io Staking program and apply the token-economic designs in a real market environment where token holders and liquidity of the token can both effect network stability and stake ratio.”
As quoted above, StakeVault is a recently announced offering powered by BitMax. It will allow for projects to tweak staking programs and algorithms while token holders participate in simulated staking. The rewards participants earn, however, are not simulated, as projects benefit from fine-tuning their infrastructure on the go with this unique exchange-powered incentive platform.
Staking participants lock their tokens in the simulated staking sandbox on BitMax which they can unlock at any time. The rewards are offered at 36.4% APR and are distributed daily, and the program will continue for 3 months, offering every 1000 STAKE placed in StakeVault the opportunity to earn 1 STAKE/day in rewards. When public staking begins, users may continue to use StakeVault, or may choose to migrate to the xDai user interface. Rewards for public staking on xDai are described here.
- Earn STAKE rewards via StakeVault
- BitMax announcement, including a launch sweepstakes.
xDai Stable Chain Quick Hits:
- 5 seconds block size and absurdly low transaction fees (500 tx for $.01?!).
- An ideal stable coin real world commerce. 1 xDai = 1 US Dollar.
- A single token for transactions and gas costs.
- The on-chain decentralized Random Number Generator.
- DPOS (delegated Proof-Of-Stake) based consensus. Public POSDAO coming soon.
- STAKE token for democratic community consensus and incentive modeling.
- xDai Validator Organizations offering robust community support.
- A rapidly expanding ecosystem designed to support stable P2P transactions, micro transactions, conference currencies, and community currencies.
- DApp and toolset compatibility for smart contract activation through other Ethereum-based chains like Ethereum, Ethereum Classic, etc.
Summary
Where Maker Dao has been embattled with various challenges, especially over the last few months, xDai Stable Chain has seemingly made all the right moves. For a token pegged as a stable currency, the roll out of xDai has similarly been a glowing model of stability. As Etherium continues to build its momentum in decentralized finance, the success and availability of stable coins will be central to the DeFi cause, making for either the success and growth of ‘killer’ DeFi apps, or their ultimately being left behind by traditional financial institutions which seek to adopt blockchain tech to further entrench their hold on existing power structures. My calculus is simple, the growing DeFi sector of the cryptocurrency market has too much to gain not to bet on a few winners emerging from the crowded space, and while they may lack the extensive resources of legacy banking institutions, they are not encumbered by significant regulatory blockades, and the spinning wheel of death that arises when an old-world mentality meets an ambitious army of tech-savvy youths. Based on the extensive and strategic listings on the plus side of the column for xDai, I would be surprised not to see the Stable Chain continue to earn its place at the elite stable coin winners’ table.
Additional Use-Case Link Reading
Platform for Prediction Markets
Stable prices remove fluctuating transaction fees, allow for more participation
