Digitex exploded onto the crypto scene just 12 months ago and quickly became one of the top performing tokens of 2018. Massive excitement around the concept of commission-free trading, coupled with highly effective viral marketing campaigns, a strong team, a fast-growing social media community and a huge waitlist of almost a million people propelled the DGTX token into 30x gains during the worst bear market on record.
We ranked as the 61st most valuable cryptocurrency on CoinMarketCap in October and we realized that Digitex was a much bigger story than any of us dreamed about when starting the project. Digitex has proved that it has all the necessary ingredients to become a massive success with millions of active users and we are dedicated to realizing that full potential.
However, there are unanticipated costs associated with the massive success that Digitex has enjoyed during 2018. Developing, marketing and supporting an enterprise standard exchange capable of handling millions of users across multiple languages throughout Asia, Europe and South America costs a lot more money than was originally raised in our ICO a year ago.
Therefore, Digitex needs to step up to the plate and come up with a plan to raise the extra funds needed to realize our true potential of becoming a major exchange that can compete with the likes of Bitmex and Okex.
As stated in our whitepaper, Digitex will not create any new DGTX tokens to generate revenue until at least 2021. This date of 2021 is set in stone and no new DGTX tokens will be created before that date. Therefore, Digitex needs to create a fundraising plan that meets our extra commitments during the next 2 years that is not based on token issuance.
Announcing The Digitex Treasury
During our ICO we held back 200m DGTX for the purpose of market making when our exchange opened. After careful analysis we have concluded that the 200m DGTX tokens held back for the automated market makers could be used more effectively than just market making.
200m DGTX is 20% of the total supply and there are no other market makers on any other exchanges that need a trading bank that large. Our market makers could do a great job of maintaining tight bid-ask spreads and providing liquidity with only 100m DGTX as their trading bank, which is still 10% of the total supply of DGTX.
Better and higher use of those extra 100m DGTX tokens would be to use them to fund the extra costs of turning Digitex into a major player amongst crypto exchanges. If we sell them gradually over the course of 2.5 years in a scheduled series of 10 quarterly, public token sales that the market knows about and expects, we can do so in a way that does not negatively affect the token price and in a way that avoids inviting whales to buy large amounts of tokens in private, backroom deals.
Therefore, we are creating The Digitex Treasury, a smart contract that will receive 100m DGTX tokens. This smart contract will lock up the 100m DGTX tokens for the next 2.5 years, releasing them gradually at a rate of 10m DGTX every 3 months. Starting on March 1st 2019, The Digitex Treasury will release the first 10m DGTX tokens which will be sold to the public in a token sale.
The Digitex Treasury will release a further 10m DGTX every 3 months until June 2021 when the final 10m DGTX are released and sold. All proceeds from these token sales will go towards developing, marketing and operating the exchange.
How Does It Work?
The Digitex Treasury works like an ongoing token sale with 10 million DGTX released for purchase straight from us every quarter until the full 100 million DGTX have been sold. This will begin on March 1.
KYC will be implemented on everyone who wishes to take part and the token sales will not open to US residents. The Treasury will fund our project with the 100 million DGTX tokens which are locked into a smart contract and released to the market quarterly–through public, scheduled, transparent token sales.
The token price at token sale is determined on the day according to market price and can be adjusted manually every hour by us. To ensure that we do not undercut our current DGTX holders who may want to sell on the exchanges, we will be selling the tokens from the Digitex Treasury at a small premium to the current market price, hence the need to adjust the price so that it is always above that of the market.
Proceeds of token sales will be spent on development, marketing, and support as we grow. This means that Digitex can fund every step of our roadmap transparently, without relying too heavily on too few investors.
By holding ongoing token sales, we will give the exchange a clear, transparent path to being fully funded with enough money to fulfill our major promise of being a top 10 exchange, and competing with the likes of BitMEX, Binance, and OKEx.
If the price of DGTX goes to $1 in the next 2.5 years in a linear way, the Digitex Treasury would then raise $55 million. Such a large raise over course of the next two and a half years would not only allow us to become a major contender, but it would also postpone the need for token issuance in 2021 for years to come. This means that there would be no inflation for current holders.
The sequence of ten token sales will have different results depending on the DGTX token price performance over the next two years. The best case scenario is a steadily rising token price over the 2-year period that enables each token sale to sell tokens at a higher price than the previous token sale.
Below are a few forecasts for how much money will be raised in different circumstances. Each example below assumes a uniform and linear price rise:
Scenario 1: DGTX price rises to $1 in next 2 years, total raise = $55m
1st token sale 3.1.19: 10m DGTX sold @ $0.10, raise = $1m
2nd token sale 6.1.19: 10m DGTX sold @ $0.20, raise = $2m (total $3m)
3rd token sale 9.1.19: 10m DGTX sold @ $0.30, raise = $3m (total raised $6m)
4th token sale 12.1.19: 10m DGTX sold @ $0.40, raise = $4m (total raised $10m)
5th token sale 3.1.20: 10m DGTX sold @ $0.50, raise = $5m (total raised $15m)
6th token sale 6.1.20: 10m DGTX sold @ $0.60, raise = $6m (total raised $21m)
7th token sale 9.1.20: 10m DGTX sold @ $0.70, raise = $7m (total raised $28m)
8th token sale 12.1.20: 10m DGTX sold @ $0.80, raise = $8m (total raised $36m)
9th token sale 3.1.21: 10m DGTX sold @ $0.90, raise = $9m (total raised $45m)
10th token sale 6.1.21: 10m DGTX sold @ $1.00, raise = $10m (total raised $55m)
Scenario 2: DGTX price rises to $0.50 in next 2 years, total raise = $27.5m
1st token sale 3.1.19: 10m DGTX sold @ $0.05, raise = $500k
2nd token sale 6.1.19: 10m DGTX sold @ $0.10, raise = $1m (total $1.5m)
3rd token sale 9.1.19: 10m DGTX sold @ $0.15, raise = $1.5m (total raised $3m)
4th token sale 12.1.19: 10m DGTX sold @ $0.20, raise = $2m (total raised $5m)
5th token sale 3.1.20: 10m DGTX sold @ $0.25, raise = $2.5m (total raised $7.5m)
6th token sale 6.1.20: 10m DGTX sold @ $0.30, raise = $3m (total raised $10.5m)
7th token sale 9.1.20: 10m DGTX sold @ $0.35, raise = $3.5m (total raised $14m)
8th token sale 12.1.20: 10m DGTX sold @ $0.40, raise = $4m (total raised $18m)
9th token sale 3.1.21: 10m DGTX sold @ $0.45, raise = $4.5m (total raised $22.5m)
10th token sale 6.1.21: 10m DGTX sold @ $0.50, raise = $5m (total raised $27.5m)
Scenario 3: DGTX price rises to $0.25 in next 2 years, total raise = $14m
1st token sale 3.1.19: 10m DGTX sold @ $0.05, raise = $500k (minimum sale price is $0.05)
2nd token sale 6.1.19: 10m DGTX sold @ $0.05, raise = $500k (total $1m)
3rd token sale 9.1.19: 10m DGTX sold @ $0.075, raise = $750k (total raised $1.75m)
4th token sale 12.1.19: 10m DGTX sold @ $0.10, raise = $1m (total raised $2.75m)
5th token sale 3.1.20: 10m DGTX sold @ $0.125, raise = $1.25m (total raised $4m)
6th token sale 6.1.20: 10m DGTX sold @ $0.15, raise = $1.5m (total raised $5.5m)
7th token sale 9.1.20: 10m DGTX sold @ $0.175, raise = $1.75m (total raised $7.25m)
8th token sale 12.1.20: 10m DGTX sold @ $0.20, raise = $2m (total raised $9.25m)
9th token sale 3.1.21: 10m DGTX sold @ $0.225, raise = $2.25m (total raised $11.5m)
10th token sale 6.1.21: 10m DGTX sold @ $0.25, raise = $2.5m (total raised $14m)
It’s also key to emphasize that we are not minting any new tokens for the Treasury. All the tokens launched are coming out of the 100 million DGTX that we allocated to automated market makers, which can still do an excellent job with 10% of the total supply of tokens.
Digitex Treasury – A Few Key Questions
1. How will it affect the price of DGTX on publicly traded exchanges?
We don’t want to make it harder for current DGTX owners to sell their tokens on publicly traded exchanges. To ensure that this does not happen, we will be selling the tokens at a premium price. You may wonder, why buy tokens at a premium price instead of using an exchange?
By offering DGTX at a premium price above the current market price, we will preserve the purpose and integrity of the DGTX markets on Mercatox and HitBTC and thus prevent people from buying DGTX from token sales and immediately “dumping” them on the exchanges for a slightly better price.
At no point will token sales ever sell DGTX below $0.05, regardless of the price on the exchanges.
The Treasury, therefore, is for traders and investors who want an instant and trustless transaction instead of dealing with a crypto exchange, which often come with trading hurdles and difficulties. This ensures that current holders can still sell their tokens at favorable prices.
2. What are the benefits of buying DGTX tokens from the Treasury rather than a publicly traded exchange?
Transacting directly with the Digitex Treasury will provide buyers with an instant and trustless transaction. Instead of having to go through an exchange and pay commission fees, they can buy directly from us with zero commission and zero slippage. The price you see is the price you get and there’s no middleman involved.
3. Why are you taking the tokens from the market maker supply?
It’s our responsibility to apply the best and most effective use to the current 200 million market maker tokens. We concluded that effective market making does not require 20 percent of the entire supply of DGTX tokens.
Re-allocating 100 million tokens from the market makers to the Digitex Treasury is a better use of tokens which will further support our ongoing development.
This will have a positive outcome for the entire Digitex community and allow us to scale more quickly for growth.
4. What kind of Revenue do we project this will make over the course of two years?
For token sale projections, please see the possible scenarios above.
5. What is the token sale schedule?
10 token sales are scheduled on the following dates: 3.1.19, 6.1.19, 9.1.19, 12.1.19, 3.1.20, 6.1.20, 9.1.20, 12.1.20, 3.1.21, 6.1.21.
6. How will they work?
There will be one ongoing token sale that starts on March 1st and lasts until June 2021. The Digitex Treasury smart contract releases 10 million DGTX every quarter and deposits them directly into this token sale smart contract.
The buyer carries out KYC and can then send ETH to the token sale smart contract which instantly sends back the correct amount of DGTX according to the token sale DGTX price.
$0.05 is the minimum price hardcoded into the token sale smart contract. As previously mentioned, at no point will any of the quarterly token sales sell DGTX at less than $0.05, regardless of what happens on the exchanges.
7. What happens if all the tokens don’t sell out?
As the token sale is essentially ongoing, 10 million DGTX are released every three months. This means that they could potentially sell out in a very short period of time, or they could roll over to the next quarter.
It is not a problem if the token sale takes three months to sell its 10 million DGTX, this is simply a mechanism for the exchange to sell tokens in a transparent way where other DGTX owners know exactly what is happening–and without inviting whales into the back door.
Digitex Treasury Main Takeaways:
We’ll be hosting a live AMA tomorrow Friday Jan 4 at 11 AM EST time to answer all your questions. We’ll also be available on Telegram around the clock as always, and generating further content on our blog to answer your questions. However, we feel that the key takeaways of the Digitex Treasury are as follows:
Possible Postponement of Token Issuance
As stated in the Digitex whitepaper, our exchange funds itself by minting a small number of new tokens each year, starting in 2021. With a steadily rising DGTX price over the next two years, the Digitex Treasury could potentially create enough revenue to postpone the need for token issuance for several years past the planned date of 2021.
If the exchange raises $50 million over next two years, we could potentially put off token issuance until 2026!
Having such funds for development, marketing, and support of the exchange until 2026 will directly lead to increased demand for DGTX tokens that will not be counterbalanced by an increase in supply caused by minting new tokens.
Token issuance will be decided by the DGTX community through Decentralized Governance by Blockchain. However, if the exchange has enough funds from the Digitex Treasury token sales it is expected that the community will vote against any token issuance proposals, if indeed any token issuance proposals are even put forward.
Commencing on April 1, the exchange will issue quarterly reports that give details about the previous quarter’s performance metrics and operational costs. This is all part of our promise to you to raise funds in a transparent way and ensure that everyone in the Digitex Community is included in the loop.
Agile Development and Marketing Can Scale Up and Down Quickly
Even with a scheduled series of 10 quarterly token sales, the revenue of the exchange could still vary wildly each quarter according to the price of the DGTX token. Therefore, the exchange needs to adapt quickly and efficiently to large increases and decreases in revenue over relatively short periods of time.
Expectations of Token Sale Length and Participation
Digitex receives constant enquiries from people who want to buy DGTX in OTC trades without the need for the buyer to deposit significant funds into a centralized exchange. We expect that such small token sales of 10 million tokens (which represent only 1 percent of the total supply) will quickly sell out.
However, if the 10 million DGTX don’t immediately sell out, that is fine too, they will simply remain offered for sale at a small premium to the current market price.
A Large Number of DGTX Is Now Locked Up Out of Circulation for Over 2 Years
When the 100 million DGTX that was originally planned for market making are transferred into the Digitex Treasury smart contract, they are locked away out of circulation for over two years.
As market maker tokens, these tokens would not have been locked away out of circulation, meaning they could have potentially been distributed as trading losses instead of being locked away in a smart contract. Therefore, the Digitex Treasury restricts the supply of DGTX in circulation, which can be positive for the price.
The Treasury Is Anti-Whales
As we mentioned before, we don’t want to rely on whales to finance Digitex moving forward and, as such, there is a 1 million tokens limit on buying DGTX from any one token sale. This is to prevent whales coming along and scooping up all the tokens in one go.
Each token sale has a total of 10 million DGTX to sell (1% of the total supply), and we want to ensure that everyone gets a fair chance of buying tokens if they want to.
Wrapping it Up
The Digitex Treasury creates a clear, transparent funding roadmap for years to come through which the exchange can openly and publicly sell tokens in a way that is expected and anticipated by the market.
It allows the exchange to move forward without the need to rely on whales in backroom deals that other DGTX owners know nothing about.
Above all, the Treasury will allow us to pursue our goals by raising funds in a scheduled and expected manner that is not seen as shady or underhanded. We’ve got a long way to go in 2019 and the Digitex Treasury will help us to get there.
Once again, do remember to join us for the live AMA tomorrow with Adam at 11 AM EST and have your questions ready!