FENIX is a blockchain Certificate of Deposit that rewards users with yield for holding it. It’s XEN Crypto‘s supply burner following the same first principles of crypto like self-custody, transparency, trust through consensus, and decentralization. Equitable distribution of rewards for delayed gratification, higher yields for bigger and longer stakes, and keeping the promise are what FENIX is all about.
What is FENIX
FENIX is an ERC-20 smart contract on Ethereum that is going to launch around June and then will follow the launch on other chains where XEN Crypto exists. It uses the XEN Crypto token as fuel for supply creation. It’s possible to create new FENIX only by burning XEN. The supply of FENIX starts at zero, and there are no admin keys or pre-allocations to anyone. Instead, it’s the entire XEN community participates in the creation of the supply by burning XEN in a 10,000:1 ratio. Once the asset is converted, it can be staked.
Staking gives benefits in the form of yield coming from penalties, inflation, and bonuses. FENIX is an inflationary token with an inflation rate equal to the golden ratio, or 1.61%. Inflation is created by the stakers and it goes entirely to the stakers on a pro rata basis.
The FENIX inflation rate is lower than that of XEN. XEN inflation is in a hyperinflationary phase now, but it’s going to reach a flat 2% rate after 3000 days from launch. This means that FENIX inflation will always be lower than XEN’s, given that XEN’s burn rate won’t be higher than its inflation, which may be possible.
FENIX rewards the early adopters
Being early in a crypto project is usually very rewarding, and many crypto investors have generated wealth this way. FENIX has special bonuses for those who interact with the protocol in the early phase. The bonus is called the Adoption Reward and is given to anyone who stakes FENIX. The reward comes from the process of burning XEN to create FENIX. Each time it happens, two equal mints are created: one going to the staker’s wallet and the other to the pool to be distributed to the stakers every 13 weeks. The reward pool needs to be flushed every 13 weeks, and anyone can do it to start the distribution of FENIX.
FENIX staking and penalties
Staking for passive income gain is the main purpose of the protocol. XEN Crypto can already be staked and generate staking APY, which began at 20% and gradually decreases over time to achieve a flat 2% inflation rate. The maximum staking period is 1000 days; there are no penalties for unstaking early, and users can always get 100% of their principal back.
Staking XENFTs adopt the NFT token to make tradeable stakes that cannot be ended before maturity.
FENIX does it differently because it uses longer time frames and disincentivizes people to unstake by applying penalties. Penalties are essentially given for not keeping up with the promise of the stake term. The maximum length is 55 years. This is an extremely long time and was created with the thought of creating generational wealth.
Unstaking in the initial time period would mean losing some of the principal, but when 71% of the staking term passes, the stake breaks even, meaning that you can withdraw your principal at zero loss. If the stake is closed after the maturity date, then the user gets 100% of the principal and all the generated rewards.
A late end stake penalty is given when a stake passes maturity and is not ended on time. It’s subject to a slow bleeding that lasts 180 days, and at the end, nothing remains. The penalty curve, however, is rather graceful and does not redistribute over 50% of your rewards and principal until day 143. After that, the loss of the stake is very rapid.
The owner can trigger the deferral function when he’s not ready to receive the tokens for whatever reason, but after the maturity date, deferral can be triggered by anyone. Deferral could be applied to delay unstaking for tax purposes.
The FENIX protocol encourages creating one big and long stake rather than many smaller and shorter ones because the user simply gets a higher yield. When a stake is created, it is always a good idea to time the pool’s reward distribution. If the distribution happens every 13 days, then timing the maturity of the stake around this time is the best approach.
Here are my notes from this space. https://t.co/aDkQWb95YL pic.twitter.com/1hQVq061uj— Joe Blau (@joeblau) February 14, 2023
The yield generated from FENIX staking depends on the size of the stake and the length of the investment. Your equity stake in the rewards pool shares depends on these two factors, so bigger and longer stakes give a better yield. Stake duration is capped at 20075 days (55 years).
The sum of the time and size bonuses calculated upon starting a stake is called the Staking Total Bonus. This total bonus generates a compound growth curve rewarding larger and longer stakes.
Shares: Your shares are your total bonus divided by your shareRate. The shares represent your equity in the staking pool.
The shares distributed to FENIX stakeholders are determined by factors such as stake size and duration, how early someone is to the project, penalties from other people who did not meet the contract’s minimum term, and the end of stake time.