What is HEX?
Currently if you want to invest a cryptocurrency like Bitcoin in order to grow your holding over time, you need to pass your Bitcoin to a third party, trust that they trade it well, trust that they will not run away with your coins, and trust that they will send back your principal and earnings after the investment period. This goes against the crypto mantra “not your keys, not your coins”. If you have to trust someone else with your keys or your tokens, then you don’t actually have sovereignty over your holdings. One need not look far to see and hear all the horror stories of people scammed by cryptocurrency “investment” opportunities.
The Solution: HEX
There is room in the market for a token that better solves the want for investment growth that follows the secure and trustless pattern of proper cryptocurrencies. That is where HEX comes in. HEX (formerly called “Bitcoin Hex”) is a new cryptocurrency designed at the contract level as an investment instrument that functions similarly to a Certificate of Deposit (CD). The currency is inflationary at a rate of 3.69% per year, and holders of the currency have the option to stake their tokens and earn shares of that interest. In short, it is a cryptocurrency with trustless growth that encourages and rewards long-term investment. Most importantly, you don’t need to give anyone access to your coins. You keep your keys, and you keep your coins.
How It Works
When you hold HEX, you can interact with the smart contract to Stake some or all of your tokens to the staker pool. You set up how many HEX you want to stake and how long you would like to Stake to last. While your HEX is in the staker pool, it earns a share of the 3.69% inflation, proportional to the size of your stake and its length (the longer you stake, the greater your portion of shares). At the end of the Stake, you send a signed transaction to the smart contract to end your stake, returning your HEX and any additional HEX earned during the stake from the staker pool. If you end your stake early (“Emergency Unstake”), you pay a penalty which is put into the staker pool payouts, and is distributed to other stakers (along with the standard 3.69% inflation). If you end your stake later than your scheduled end date, your stake suffers a 1% penalty each week until you end it (with a 2-week grace period); that penalty is also distributed to the staker pool. So, the payouts from the staker pool for stakers are made up of the 3.69% inflation, along with any early or late stake penalties incurred by other stakers.
Any HEX that are staked cannot be sent or traded and are locked to the contract until the stake is ended. So, the downside to staking is that you do not have the option to transact with your HEX. Of course, the fewer people stake, the larger the share of the staker pool for those who do stake. So, if 50% of HEX in circulation are staked, those stakers actually will be earning a greater share of the inflation; their stake might actually grow at a rate of 7.38% (depending on how long they stake relative to other stakers).
Why is that cool? The game theory involved in that balance means that the tradeable supply (that is, HEX that is not staked at any given moment) will be fluctuating based on where traders see greater advantage. The trading price of HEX will likely increase when the tradeable supply is lower, incentivizing fewer stakes; when fewer people stake, that then increases the available supply, lowering the price, but making the growth of staked HEX increase since the stakers will receive a greater share of the pool.
If you want a deeper dive, check out this Google Document, prepared by members of the community, to give a more detailed overview.
Ok, So How Do I Get HEX?
If you hold any Bitcoin, you can actually get involved with HEX for free! When the HEX smart contract launches, 10,000 HEX are available to be claimed for every Bitcoin in circulation at the moment of launch. A snapshot of the Bitcoin blockchain will be taken shortly before launch; if you hold Bitcoin at that snapshot, you are eligible to claim the HEX for your Bitcoin holdings during the 50-week launch period. You do not lose your Bitcoin; all you do is to create and sign a message from your Bitcoin wallet that contains the Ethereum address where you would like your HEX minted to (check back here before launch for detailed tutorials). That signed message proves ownership of the Bitcoin; you then paste the signed message into the HEX claim interface, and it will immediately mint and send the HEX to your Ethereum address. There is a 20% speed bonus available that decreases over the course of the 50-week launch period that will increase the HEX you are awarded the sooner you claim after launch. Additionally, if you visit StakeHEX.com (this website) before claiming and make your claim through our affiliate link, you are awarded a further 10% bonus HEX. So, bookmark this site and make sure to come back before you claim if you want to be eligible for the 10% StakeHEX.com bonus. If you hold 1 Bitcoin at the snapshot and you claim right after launch, you will receive 10,000 HEX + 2,000 HEX (20% Speed bonus) + 1,200 HEX (10% StakeHEX.com bonus).
If you wait to claim later in the launch period, the 10,000 HEX-per-bitcoin is gradually diminished for the claimer and instead distributed into a “We Are All Satoshi” pool. So, if you claim in week 25, you will only get 5,000 HEX per bitcoin; the other 5,000 is already set to be distributed to stakers at the end of the launch period, on BigPayDay. Why is it called the “We Are All Satoshi” pool? Because any Bitcoin that is not claimed (such as the Bitcoin at Satoshi’s idle addresses, for example) will have its HEX distributed on BigPayDay, a day in the week after the 50-week launch period, to any stakes open that day. If you want a share of that payout MAKE SURE TO HAVE YOUR HEX STAKED on that day in the week after the launch period; it will be paid out on day 352 after HEX launch, “BigPayDay”.
One other thing to note: when you claim your HEX, 90% of the HEX is automatically staked for 50 weeks; you can increase the length of that auto-stake to greater than 50 weeks if you want. The other 10% is yours to stake, trade, hold, or give away to friends.
What If I Don't Hold Bitcoin? Can I Buy HEX?
If you don’t hold Bitcoin at the snapshot, you can still purchase HEX by way of an Ethereum transform. Each day, the “We Are All Satoshi” portion of HEX that is removed from future BTC claimers also has its HEX duplicated and placed in a daily transform pool called the “Adoption Amplifier”. Each day during the 50-week launch period, you can send ETH to the smart contract and the Adoption Amplifier HEX for that day is distributed to everyone who sent ETH that day, divided proportionally based on how much ETH was sent by each person. So if 10 people participate on a given day and each send 100 ETH, they each will get 10% of the Adoption Amplifier pool for that day. If 10 people sent 100 ETH and 10 people send 50 ETH, then the first 10 all receive 6.67% of the HEX, and the other 10 (who sent 50 ETH each) receive 3.33% of the HEX. The “exchange rate” is purely dependent on how many HEX are created based on the We Are All Satoshi amount for the day and how many ETH are sent to the contract that day.
There is a StakeHEX.com bonus available for the Adoption Amplifier as well. If you set up your daily transforms through our affiliate links on StakeHEX.com (this website), you receive a 10% bonus on your HEX payout. So if your share from ETH sent to the transform pool would earn you 500 HEX, you will receive a 50 HEX bonus, for a total of 550 HEX; just make sure to bookmark StakeHEX.com. You can sign up below or on the home page for launch reminder notifications to ensure you don't miss it, and make sure to visit this website each day after launch that you want to participate in the Adoption Amplifier transform pool so that you don't lose out on the 10% StakeHEX.com bonus.
Other Launch Period Bonuses and Penalties
In addition to the Speed bonus, 10% StakeHEX.com affiliate bonus, and We Are All Satoshi pool bonus, there are two other bonuses that can be taken advantage of during the 50-week launch period:
Critical Mass: Each day, the percentage of claimed Bitcoins out of total claimable is multiplied into the payout pool.
Virality Bonus: The percentage of claimed Bitcoin addresses out of total eligible addresses is multiplied into the payout pool.
So if 10% of total claimable Bitcoin are claimed, and 20% of total eligible Bitcoin addresses have claimed their HEX, the amount multiplied into the pool is (1 + 10% + 20%), 130%; that is, a 30% bonus added to the payout pool for staked HEX.
There are two possible penalties that apply to claims during the launch period:
Silly Whale: If a claiming BTC address has more than 1000 BTC in it, a 50% penalty is applied to all the BTC above that threshold. The amount penalized increases linearly to a maximum of 75% at 10,000 BTC and above. If you hold a lot of Bitcoin in few addresses, make sure to split it up into more addresses to keep the addresses lower than 1000 BTC each before the launch snapshot.
Gox Me Not: BTC addresses that are known to be held by bad actors, like Mt. Gox, are restricted from claiming. The full list of restricted addresses is not available yet.
The Origin Address
As with most new cryptocurrency launches, there is concern about how much of the token is going to the developers/founders and if there is a risk of a massive founder dump, killing the project. HEX is not immune to these concerns, but it does answer them effectively. The short answer is that a founder dump, even if it happened, could not kill the currency: its functionality is not dependent upon the Richard Heart post-launch; everything is programmed into the smart contract. The longer answer shows us that, actually, the origin address ending up with a larger amount of HEX could benefit the currency overall.
First, what goes to the origin address? All bonuses in the launch period (e.g. speed bonus, virality bonus) are given to the person who earned the bonus, and a duplicate of the bonus is distributed to the origin address. A duplicate of the We Are All Satoshi bonus is also distributed to the origin address. Lastly, the ETH that is sent by Adoption Amplifier participants is sent to the origin address. That all happens at the same time as everyone else: slowly over the course of the launch period. That discomfort you feel? Understandable, but let’s see if it’s actually justified:
Let’s walk through a few scenarios regarding the origin address of the contract and what would happen based on different potential actions by the founder, Richard Heart.
- The origin address ends up with a large amount of HEX, sells it all at once, and Richard then abandons the project entirely. What happens? Well, as far as the promise of HEX is concerned long term: nothing changes. The smart contract is deployed, HEX can be staked, traded, sold, same as if the founder didn’t dump and didn’t abandon the project. Nothing about HEX and the game theory that makes it work changes. The only difference is the founder misses out and HEX is made available to a wider range of people early on at a lower price (that is, an opportunity for greater adoption by more people). Even without the founder around, (much like Satoshi to Bitcoin), HEX still works.
- Another possible scenario, the founder of HEX ends up with a large amount of HEX and trades some of it but doesn’t abandon the project: Everyone (including the founder) benefits from him staying active and vocal about the project. It is possible that earnings from trading would be used to promote the currency (but no promises can be made of that, as HEX is not a security, and “promising work” would risk making it fall under that umbrella according to the United States SEC). Guess what? HEX still works.
- The founder of HEX ends up with a large amount of HEX and holds onto it (keeping available supply lower) and uses the ETH from the Adoption Amplifier to sell instead. Well, theoretically the price of ETH could drop, but HEX would be unaffected. Similar to scenario two, possible the earnings from the ETH would be used to further promote the project. HEX still works, and goes sky-high.
It’s clear that something resembling scenario three is best for everyone, including the founder. Even in scenario one, long term everyone still wins except for the founder, who misses out. In scenario two? Long term, everyone again wins.
There is very little that Richard Heart could do after launch to kill HEX, because the game theory works and the contract is unchangeable. There is, of course, much he could do to help the project post-launch, and having HEX and ETH at his disposal will make that more possible (though not promised… HEX is not a security). There is little to fear in a founder dump even if it were to happen; on the contrary, the founder stands to gain most by remaining dedicated to the project, just like the rest of us.
Interesting, What Is The Tech?
HEX is being launched as an ERC-20 token on the Ethereum blockchain. You can visit the main HEX website for more details about the smart contract or visit this community Google Document for a more detailed look into how it works, and this community Staking Guide for ideas and information about staking. And, of course, use the button below to try out the HEX Simulator.