Following on from our AMA, we wanted to tackle another of your questions. We were asked why we have deviated from our original revenue model. You’ll be pleased to hear that we haven’t. In this article, we’ll recap what the Digitex Futures revenue model is, discuss DGTX tokenomics, and what the Digitex Treasury exchange token sales could mean for token holders.
Let’s Recap on DGTX Tokenomics
As you know by now, Digitex Futures offers traders a commission-free futures exchange. Now, we know that the words “commission free” often make people suspicious. After all, nothing in life is free! So naturally, most traders’ first question to us is, “so how do you make your money?” The answer is simple. Through DGTX tokenomics.
We use our own native DGTX currency for all transactions and operations inside the exchange. All account balances are denominated in DGTX and profits and losses paid out in DGTX. Traders need to purchase DGTX to be able to use our exchange. This creates a constant demand for our exchange token, allowing us to cover the operating costs of the exchange by minting and selling a small number of new tokens each year.
In fact, DGTX has already consolidated its place in the top 100 cryptocurrencies on CoinMarketCap and created tremendous value for DGTX holders. Even in the worst bear market possible, we’ve gone against the flow and hit all-time highs when all major currencies were tanking. DGTX has already proven its worth as a major altcoin time and time again.
The Revenue Model of Token Issuance
We follow a revenue model of token issuance in a community controlled way. So, rather than just giving the team a license to print money and wipe off value from the exchange token through inflation, we will mint a small number of exchange tokens every couple of years based on a community vote.
This is done so that we can bring more users onto the exchange, through effective marketing, and fund development, always in a controlled way to offset a temporary drop in exchange token value from inflation with rising demand for DGTX as more traders flock to our commission-free exchange.
We created one billion tokens in our ICO last year and the first scheduled minting of new DGTX as per the whitepaper is scheduled for 2021. This new round of DGTX issuance will be governed democratically by all DGTX exchange token owners.
The benefits of adding more users to our exchange are multiple and far outweigh the temporary effects of inflation. For example, a substantial increase in people holding DGTX tokens not only makes the token price rise but it also makes our democratic token issuance voting system more robust.
The more participants there are in the voting ecosystem, the better it will be since it ensures fairness and will allow us to make sounder decisions as a collective.
The Downside to Minting New Tokens
Nothing in life is perfect. And there’s a slight downside to minting new tokens, as well. This is, of course, inflation. Any increase in DGTX supply will, of course, devalue the current price of the token, just as printing more national fiat currency would devalue it.
However, through decentralized governance by blockchain, DGTX exchange token owners are in control of the inflation cost incurred. You may wonder then, why would DGTX token holders ever vote to increase the supply if it would devalue their tokens?
Because by doing this, they will be funding the exchange and onboarding more traders to a commission-free exchange. We all know that more traders mean greater liquidity and demand, which in turn serves to push the DGTX price up even higher in the long term.
We Have Not Deviated from the Token Issuance Model
As Adam answered on Friday:
“We haven’t changed the revenue model. It is still token issuance but we have decided that 200 million DGTX tokens set aside for the market makers is too many. We have a responsibility to make sure these tokens are used in the best way possible and we have concluded that 10 percent of the supply, which is 100 million DGTX, for market makers is fine.
We can use those extra 100 million DGTX in a more efficient way to fund marketing and development that will, in turn, create increased token demand.”
So as you can see, the token issuance model is still the same and it’s important to emphasize again that we are not minting any new tokens for the Treasury.
All the tokens launched are coming out of the 100M DGTX that were originally allocated to automated market makers, which we know can still do an excellent job with 10% of the total supply of tokens.
Possible Postponement of Token Issuance
As already mentioned, the first minting of DGTX tokens since the ICO is scheduled for 2021. However, as we projected during the treasury release announcement, if the DGTX price continues to rise steadily over the next two years, we could potentially delay the need to issue more tokens well beyond the envisioned 2021 date.
This would have the obvious advantage of reaching all the milestones in the Digitex roadmap, growing as a community and an exchange, and keeping the value of the token strong with no inflation for the next few years.
Let’s take an example from one of the projected scenarios in the Treasury explanation article:
If the token price goes up to $1 in the next two years the Digitex Treasury could sell its 100 million DGTX for as much as $55 million over the next two years, which could put off token issuance for years past the planned date of 2021.
This would give us all the necessary funds for developing, building out, scaling up, and marketing our exchange to new users, countries, and markets.
Every token issuance that Digitex carries out will be voted on by the community through decentralized governance by blockchain. But, if the exchange had enough funds to provide a highly liquid trading platform and fulfill all our goals, it’s more than likely that the community would vote against issuing more tokens.
A Final Recap
The Digitex Futures exchange is not changing our revenue model with the creation of the Digitex Treasury. We’re also not minting any extra exchange tokens that will lower the price. We are simply allocating 100M exchange tokens that we had set aside for market makers (while still leaving the market makers with a healthy 10% of supply) and locking them into a smart contract called the Digitex Treasury.
This is a way to make the best possible use of the DGTX that we minted and to become a serious player as an exchange. It’s a method of financing us into the future and putting off minting of additional DGTX exchange tokens until much later on–even as far away as 2026.
We hope this has cleared up your question on our revenue model! If you have any doubts at all, don’t hesitate to give us a shout through Telegram as always and we’ll be happy to chat with you there.