NEX reflection token for passive income generation

Mint Your CryptoBum Now for a 40% Fee Share on Marketplace Transactions!

In little over 100 days after the XEN Crypto launch, Jack Levin and his foundation created XENFTs and are about to launch the Staking XENFTs. At the same time, the preliminary design of the NEX reflection token was released to the public to gather public opinion and improvement suggestions. We’ve already covered the reflection token that Mr. Levin talked about at the beginning; here, we’ll cover the updated design of NEX and the economic mechanics.

What is a reflection token?

Users receive reflection tokens as a result of their blockchain activity. The reward is usually paid out of the transaction fees, providing users with passive income distributed trustlessly through a smart contract. A reflection token creates a mechanism where users are incentivized to hold on to the token for a long time rather than selling it out. Having the possibility to continuously gain passive income from the trading volume is what often makes investors buy into the token. Reflection tokens are usually deflationary, which means that their supply decreases over time. Deflation causes the value of the token to go up due to the scarcity aspect.

What is NEX

NEX is a reflection token that is allocated by a smart contract to all the users participating in the daily distribution rounds and to all those who burned XEN to create XENFTs or Staking XENFTs. The NEX supply is limited to 100 million, and the distribution period is 5 years. The allocation will be highest at the beginning and decrease by 1% every day, so those who get in early will get more NEX than those who participate later. The users will then need to choose if they want to mint NEX directly into their wallet or stake it to get yield from the NEX token trading fees, unstaking penalties, and the XEN burn.

80% of the total 100 million NEX supply will be distributed in daily auctions, and 20% is dedicated to claimable bonus mints.

Here’s the whole picture of the NEXonomics.

NEX tokenomics
NEX tokenomics

How does the NEX daily distribution work?

NEX has a daily allocation pool, and users can tap into it by burning XEN. The distribution is pro rata, meaning that when two users, one with 1B and the other with 2B XEN, burn the tokens, the one who had 1B will get ⅓ and the other will get ⅔ of the entire daily pool allocation of 10,000 NEX. 

It’s worth considering that it may not always be advantageous to take part in a round, and it may make more sense to wait until the next day even if the total allocation is smaller. It all depends on the quantity of participants, their burn, and the time of day. There are many moving parts when it comes to choosing the best strategy for collecting the most NEX with the XEN someone has at their disposal.

What kinds of assets are accepted in the NEX claim?

NEX relies on the burn function. There already are smart contracts implementing it, like Limited and Apex XENFTs and Staking XENFTs. Regular XEN burns and Collector class XENFT burns are also eligible for NEX distribution.

Bonus mint distribution

20% of the total NEX supply is dedicated to the Apex XENFT holders and the top monthly XEN burners. The allocation going to the Apex holders varies depending on the class. It’s vested exponentially over 5 years and can be claimed at any time.
  • Xunicorn 6%
  • Exotic 29%
  • Legendary 32%
  • Epic 19%
  • Rare 13%
  • This allocation takes into account the number of XENFTs in each class, so even if Xunicorn has a 6% allocation and is the most expensive XENFT of all, it must be remembered that there will always be 100 Xunicorns, and the 6% will be divided among this small number of addresses.

    Passive income

    NEX’s passive income is the reason anyone would want to burn XEN. XEN is inflationary at the beginning and disinflationary over time. There’s going to be a static 2% inflation after 8 years. This means that by minting XEN, you take advantage of the very high inflation in the initial phase of the process. NEX, on the other hand, has a capped market cap, and the yield to users is not coming from inflation. The yield is paid from three sources:
  • The daily trading volume of NEX
  • Daily burning rounds of XEN
  • Penalties for unstaking NEX
  • Passive income is given solely to those who stake NEX for a period of time and who hold on to their term. When a user decides instead to mint NEX to the wallet, no yield is given and a penalty of 70% is imposed on his NEX holdings. This penalty is distributed to other NEX stakers. The stakers also get an allocation from the 0.2% transaction fee from the daily NEX volume. The other stream of passive income is provided from the daily XEN burns, where 70% of the total XEN in the pool is burned and 30% is converted to NEX to be distributed to the stakers. With these three streams of passive income, XEN is a valuable product that can sit in a wallet for years and still provide a steady flow of money without the risk of a rugpull.