Source: U.S. Wall Street Journal

Ever since the SEC took a stand regarding the DAO project, there has been an uneasy anticipation of the next step in TGE legislation. That begged the question, if we went ahead with our TGE as planned without any alterations would that be sustainable? Also, legal experts we had consulted warned us about the inevitable change coming to the TGE landscape quite soon. This created the unwanted risk of tokens being stuck in a grey zone where contributors are left to guess how much they resemble securities or not and what implications would rise out of these uncertainties.



Since the X8 project has been a long term enterprise we cannot afford any cracks in the foundation that the project will build upon, be they ever so small. We recognized that we couldn’t just stand by. Having consulted all the different sources we chose to totally remake X8X, the fintech token. We have studied the Howey test together with our advisors and the various implications it has on different token concepts.

After the analysis we were able to redraw and prepare our X8X token concept from the beginning so that the token strictly performs the role of a utility token and satisfies all elements of the aforementioned test accordingly. In other words, X8X is now a utility token that can pass legal scrutiny, which it could not do in the previous proposal from the perspective of the security definition.



The relationship between X8C and X8X had to be altered in a manner that precludes the emergence of passive income flows in the business design. We did this by redefining X8X as a token that will enable all X8X holders the highest quality access to X8C. Our CEO, Gregor Kozelj came up with the objective and systematic relationship between the two tokens. One day in a meeting he wrote on our white board the equation HODL(X8X)^2=NO FEE(X8C), which mathematically can be also seen as  X8X = √X8C.


This makes X8X a premium entry ticket and a fee waiver for the fastest access to X8C. This simple but nonlinear relationship also satisfies the criterion where benefits of token holders don’t grow in direct proportion with the amount of tokens someone holds. Because of absence of fees in the business design there is no passive revenue distribution from the business to contributors either. The X8X utility token will also be instrumental in performing the KYC procedure in X8currency operations. This feature will be explained in a future blog post.



X8C in essence remains unchanged – a 100% cash-backed token designed to preserve value. However, it will be available directly without any fee whatsoever to X8X holders regardless of how many times they will want to use the stable currency’s entry/exit directly with the issuer. This simply means that the X8currency product will be offered at full fair value, which creates ultimate flexibility for how clients will be able to use it.


One of the results is that, because of the absence of fees, reallocation into X8currency will pay off more quickly and will open an opportunity for users to use X8C for shorter amounts of time. X8X utility token holders will also be able to take advantage of the benefits of the X8currency more frequently and adjust their crypto portfolios more actively during smaller intermediate trend changes in the crypto market.



The transition between the proposed concepts for the X8X token also brings about important changes in the nature of X8X, which make this utility token more dynamic. In the previous design of the X8 project tokens the X8currency set out to charge a 1% new issuance fee and 30% of ARM AI earnings. This introduced what is basically a fixed fee schedule. These fees were supposed to drive the buyback process of the X8X fintech token and as a consequence drive the price of X8X higher.


However, this meant that X8X token was ultimately an indirect receiver of benefits from the demand for the safe haven X8currency. Furthermore, these effects would be created after new capital would enter into X8C. Such design would not be able to directly reflect the fact that contributors value a stable currency’s benefits differently at different levels of uncertainty in crypto markets.



The new design of the X8X token changes this. As an example, when the level of fear in the crypto market is very high, market players might want to pay more than 1% to access the benefits of a stable currency. That is true because they can save more when prices in the crypo market are falling by greater percentages. In the new design prices of the X8X utility token will be able to reflect that quickly and without any lag.


This further opens up possibilities for using the X8X utility token as a proxy for shorting the crypto market. Because the X8X token will now be the first receiver of the safe haven inflows, X8X contributors will be able to capitalize on growing fear. Even if they don’t decide to access X8currency with their X8X tokens, X8X contributors will be able to price in a premium in such circumstances very quickly and directly by themselves, making the X8X token a much more active vehicle appropriate for active traders.



This new design moves the X8X token well away from being a security. It becomes purely a utility token, yet it does not compromise on how much upside it can achieve for all holders. Since the entire pricing power is handed over to the holders of X8X, this token has the ability to quickly reflect the changes of demand and supply forces in the X8currency market, which also becomes more attractive. X8currency simply becomes the best possible version of itself, while X8X contributors will hold all the entry tickets for the amazing benefits available of this improved X8currency system.




David Prezelj
David Prezelj

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