Understanding the DXN Token Release Mechanism
Among many crypto tokens available and not only in the XEN ecosystem, the DXN token stands out with its unique release mechanism. In this post, I'll look into the DXN token release for the first 10 years, visually illustrate it using graphs and tables and analyze the release decrease year over year for the first 10 years.
This is what DBXEN litepaper (https://dbxen.gitbook.io/dbxen-litepaper/dbxen-functionalities) says:
The total supply of $DXN tokens is 5,010,000 tokens. The DXN token is the reward token distributed to those who use the DBXen. DXN distribution is divided into one day long cycles - the first cycle reward pool being 10,000 DXN tokens. A new reward distribution cycle starts after 24 hours have passed since the previous cycle and at least one XEN burn is completed - this means that gap cycles can exist that do not contain any new $XEN burns, respectively do not distribute/unlock rewards. In this case, in the eventuality that multiple consecutive gap cycles pass, the distribution will resume with the reward amount that should have normally followed once a burn is made. The reward pool decreases by 0.2% per cycle, which means that after roughly 62 years of constant protocol usage the entire supply of 5,01 mil. DXN tokens will be unlocked. DXN tokens staked inside the protocol by users accumulate native token fees that are accrued every time a new XEN burn is made.
So, to simplify, the DXN token release starts with 10,000 tokens and with each passing day, the number of tokens released decreases by 0.2%.
The decrease is not arbitrary but follows a specific mathematical formula:
New Cycle Value=Previous Cycle Value×(1−0.002)
This formula ensures a 0.2% decrease in the token release every day and while this might seem minuscule at first, the compounded effect over time results in a significant reduction. So, let's visualize it:
Visualizing the DXN Token Release
To better understand this release mechanism, I've plotted the DXN token release for the first 10 years.
The x-axis represents the years, while the y-axis represents the number of DXN tokens.
As evident from the graph, there's a steady decline in the number of tokens released each year and that by the end of the 10th year, 99.93% of all DXN tokens ever created will be minted out.
Note: The annotations on the graph represent each year, making it easier to track the token release year over year.
You can see the live interactive graph and the code used to produce this graph at:
https://jsfiddle.net/jarosciak/o8ca0Lmf/
Year Over Year Release Decrease (first 10 years)
One of the intriguing aspects of the DXN token release is the year-over-year decrease. For many people it's not immediately visible, how quickly we go from 10 thousand tokens down to only 6 per day at year 10.
Here is the table to illustrate the change:
You can see the code that calculates above table here:
https://jsfiddle.net/jarosciak/zfpgvnj7/
Conclusion
Based on the DXN token's steady decrease in token release ensures scarcity and potentially driving demand, and that's also the main reason for this article, to illustrate the DXN release mechanism and its implications, so the investors as well as Xenians can make informed decisions.
As an example, in the cycle that ends at the end of 10th year, there'll be only 6.7 DXN distributed to all XEN burners participating in daily auction. That same amount of 6.7 DXN can be purchased today for only 10 dollars.
I hope this deep dive provided valuable insights. Stay tuned for more analyses and updates!