You’ve probably heard about the Digitex Futures exchange by now since we’re certainly causing a stir throughout the crypto community! But what is DGTX and how is it distributed? Check out this article to find out.
Expectations may be high, but there is no denying zero fee trading is going to be a game changer for the landscape of crypto trading as a whole. Here we will break down how the DGTX token helps to make commission-free trading possible.
What Is DGTX?
DGTX is the base currency of Digitex Futures. The token is an ERC-223 protocol token built on the Ethereum blockchain. To use the exchange and take advantage of trading with zero fees, traders must use the token to buy and sell futures contracts.
Within the ecosystem, all transactions are denominated in DGTX. That means your profits, losses, margin requirements and account balances are all based in DGTX. A trader might be trading on the price of Bitcoin against the US dollar but he’s winning and losing DGTX tokens and his account balance is denominated in DGTX tokens.
This compulsory use of DGTX will create a huge demand for the token from traders attracted to commission-free, non-custodial futures and spot trading in highly liquid markets.
How Is It Distributed?
For the ICO at the start of this year, Digitex minted 1,000,000,000 (one billion DGTX tokens). So how did the exchange divide all those tokens? Well, the numbers are pretty simple:
1000M Total Supply
- 50M DGTX (5%) Referrals
- 100M DGTX (10%) Team (current and future)
- 200M DGTX (20%) Digitex Market Makers
- 650M DGTX (65%) DGTX Token Sale
Now, let’s get into the numbers. The first thing you should know is the ICO sale already happened, and the 650M DGTX sold out in a record time of 17 mins, raising just over $5m.
A special thanks to the Digitex community for making that possible! These funds are being used to build the futures exchange software platform and to cover the marketing and operational costs of running a disruptive, cutting-edge blockchain project that will revolutionize futures trading.
Digitex Market Makers – 200M DGTX (20%)
200 million DGTX were held back for the Digitex automated market makers. These are trading robots that provide liquidity on Digitex’s futures markets by placing lots of bids and offers, meaning that other traders can get in and out of positions easily.
Our trading robots follow the spot price of the underlying instrument, keeping the bid/offer spread tight on our futures markets and breaking even over time. Watch the Malta live demo to see an example of how the market makers will perform on the BTC/USD futures market.
Having such a large percentage of the total supply of DGTX means that Digitex is an extremely well-capitalized exchange. All potential trading losses are denominated in DGTX, meaning Digitex Futures is better capitalized than most other exchanges in the world to deal with volatile events and market crashes.
The market makers will not become active until the Beta version of the Digitex Futures exchange goes live at the end of this year. Therefore, the 200 million DGTX that were held back are still untouched and you can view the balance on etherscan.
Team (Current & Future) – 100M (10%)
100 million DGTX were allocated to the team. These tokens were locked into a vesting smart contract that releases the tokens gradually over a three-year period. Six months after the ICO on July 15, 2018, 25% of the team’s vested DGTX tokens were released and a further 6.25% of their tokens are released every three months until January 2021.
Having their tokens locked into the project for three years incentivizes the team to create a stable, sustainable product that provides ongoing demand for their tokens.
You can view the team’s vesting smart contract balance on etherscan:
And you can also check out the fully audited vesting smart contract code on Github.
Referrals – 50M (5%)
50 million DGTX were allocated to those helping to promote the ICO and build brand awareness of Digitex Futures inside and outside of the crypto community. These refer to influencers, community members, supporters, and the like. Once again thanks to those who continue to support the innovative idea.
Calculating DGTX Market Cap
In October, the DGTX token broke into the top 100 cryptocurrencies by market capitalization. With 1 billion DGTX in circulation and trading at a high of $0.16, the DGTX token reached a market capitalization of $160,000,000 ($0.16 x 1 billion)!
However, Coin Market Cap calculates a token’s market capitalization slightly differently. Instead of multiplying the current token price by the total supply of 1 billion tokens, CMC multiplies the current price by the current circulating supply, which is exactly 731.25 million. This is because CMC doesn’t count the team’s 100m DGTX or the market makers’ 200m DGTX as being part of the current circulating supply.
Therefore, CMC calculates our market cap by multiplying the current token price by 731.25m instead of 1 billion. Even with a market cap of $112m, we became the 61st most valuable cryptocurrency in the world according to CMC — although if it were calculated by 1 billion, we technically would have been a top 50 coin. Depending on how you crunch the numbers, you get a different variation of rankings.
Token Issuance Revenue Model
The DGTX token is an integral part of how Digitex can operate indefinitely and sustainably without charging any transaction fees on trades. Zero-fee trading is made possible by creating a small number of new tokens each year to cover the costs of running the exchange.
A smart contract that is governed democratically by all DGTX token owners controls how many new DGTX tokens are issued and when. These newly issued DGTX tokens are then sold transparently in a well-publicized token sale and raised funds cover the ongoing development, marketing and support costs of Digitex Futures.
This revolutionary new revenue model replaces transaction fees, which penalize the most active traders and liquidity providers, with an inflationary model that spreads the costs proportionately across all participants of the exchange.
Why will DGTX token owners voluntarily vote to issue new DGTX tokens each year and therefore devalue the current DGTX tokens they own? Because by doing so they are funding the futures exchange for another year which will increase demand for DGTX from traders who are attracted to commission-free, non-custodial markets.
Traders must own DGTX to use the exchange, so a popular exchange with liquid markets will drive huge demand for the token. DGTX token owners must balance the single-digit inflationary cost of creating and selling new tokens with the benefits derived from that cost, which is another year of demand for the token from an exchange that can operate with zero trading fees.