The XION Token, Powering Proof of Abstraction
A closer look at the XION token, powering the future of Web3 mainstream adoption through Proof of Abstraction, a novel consensus mechanism aimed at increasing chain security through abstraction.
Introduction
In this post, we introduce Proof of Abstraction powered by the XION network's native token, exploring its significance to the network, its utility, and distribution. The token economics of the XION token are designed to encourage participation, collaboration, and growth of the ecosystem, while ensuring continued decentralization and resilience of the network. In the following sections, we outline the key aspects of XION's token and how they contribute to the overall health and robustness of the network.
The Importance of Token Economics
A well-conceived token economic framework and distribution strategy is vital to the long-term sustainability and success of a network. By allocating resources efficiently and fairly among key stakeholders, XION aims to create a thriving ecosystem that aligns the incentives of all participants with the network’s long-term objectives. Its token distribution prioritizes decentralization and resilience by preventing the concentration of power and influence in the hands of a select few. By carefully planning its token distribution based on these principles alongside strong token utility, XION establishes a solid foundation for a flourishing, self-sustaining ecosystem.
Overview of the XION L1 Blockchain
XION is the first walletless L1 blockchain for crypto abstraction. It enables developers to build, launch, and scale consumer-ready Web3 products from the ground up. XION's Chain Abstraction is an innovative infrastructure solution that aims to abstract away the complexities associated with blockchain technology, making it more accessible for mainstream adoption. By integrating complex functionalities such as accounts, signatures, fees, and interoperability directly at the protocol level, XION eliminates significant barriers to entry for new users and circumvents the fragmentation challenges faced by developers in other ecosystems.
XION has already demonstrated significant usage and adoption since launching its testnet, with the creation of more than 4 million Meta Accounts, the smooth processing of ~90 million transactions, and an ecosystem of over 200 projects. It is also supported by industry leaders including Multicoin, Animoca Brands, Circle Ventures, Hashkey, Spartan, Arrington Capital, and more.
You can learn more about XION through the following links:
XION Utility Token Whitepaper: Proof of Abstraction
https://xion.burnt.com/xion_token_whitepaper
Proof of Abstraction is a novel consensus mechanism powered by the XION token to enable increased security through abstraction. It is developed to address the tradeoff between security and accessibility inherent in traditional Proof of Stake implementations. It does this by aligning a new incentive mechanism with core protocol-level abstraction infrastructure, through the XION token.
The XION token is a utility token that serves multiple functions across the layer one network and its ecosystem. These include:
Network Usage Fees: The XION token can be used to pay for transaction fees on the network. In addition, XION’s parameterized fee layer enables users to transact using any token, such as USDC. The accumulated fees are then swapped to XION and used to offset network inflation. You can find more information about this novel design in the whitepaper: xion.burnt.com/whitepaper
Staking Security*: As a stake-based network, XION relies on validators to maintain its integrity and the XION token provides strong economic security. XION token holders can delegate their tokens to validators or stake their tokens to run their own validator nodes. In addition, instead of calculating inflation against all tokens, the XION network calculates against only staked tokens. This vastly reduces the token’s overall inflation, leading to much more sustainable economics of the network. The staking of the native token is crucial to the network’s economic security. The greater the amount of tokens staked, the harder it is for a bad actor to overtake the network given the increasing cost to acquire over 1/3rd of voting power.
*To ensure ample network security through staked tokens, strategic backers will be able to stake locked tokens. However, the staking rewards will be locked. The core contributing team will NOT be able to stake any locked tokens.
Governance: The XION token holders can actively participate in network governance by proposing and voting on proposals. In traditional PoS networks, governance decisions often become concentrated among participants who have accumulated the most tokens, regardless of their actual contributions to the network's goals. Proof of Abstraction addresses this issue by incentivizing participants who actively advance the network's primary objectives, thereby enhancing their decision-making power. This creates a positive feedback loop that reinforces valuable contributions and improves overall network governance. It aligns developers with end-user needs, distributing the XION tokens (and therefore power) based on active contributions rather than purely token holdings.
Collateral & Liquidity: The XION token can be utilized as native liquidity and collateral within the ecosystem and can facilitate peer-to-peer transactions across applications and accounts within the XION ecosystem.
Cross-Chain Fee Settlement: The XION token can be used by users on XION to interact with other chains, underpinning a unified cross-ecosystem experience, all without users needing to hold the native gas token of those destination chains. The users initiate a transaction from their XION Meta Account, using the XION native token, and this triggers a transaction on a smart contract account on the destination chain, paid for in the XION token.
XION Token Supply and Distribution
Ticker: $XION
Maximum Supply: 200,000,000
Initial circulating supply: 25,559,333 (12.78%)
Lock-Up: 87.22% (174,440,666 $XION) of the XION tokens are locked at TGE and will unlock over time as described below. The distribution of the XION tokens is strategically designed to support the long-term development, security, and growth of the network.
Ecosystem Incentives & Project Incubation: (23% - 46,000,000 $XION)
23% of the token supply has been allocated to facilitate XION ecosystem growth through a variety of initiatives. In addition to initial liquidity provisioning, these tokens are used to incentivize and reward developers and other stakeholders who build applications, services, and tools on top of XION’s infrastructure with the aim of attracting a diverse range of talent and encouraging innovation within the XION ecosystem.
Vesting Terms: 1.15% (2,300,000 $XION) is unlocked at TGE, with the remaining 21.85% (43,700,000 $XION) unlocking monthly over 48 months after TGE.
Team: (20% - 40,000,000 $XION)
20% of the token supply has been allocated to the core contributors of the XION network. These contributors have been responsible for the network’s inception, its core technological innovation, security, growth, and the operations of various XION products. They continue to support the continued innovation, growth, and decentralization of the network.
Vesting Terms: NO tokens are unlocked at TGE. Subject to a 1-year cliff, 5% (10,000,000 $XION) unlocks followed by 3 periods of vesting every 8 months thereafter.
Protocol Development & Foundation Treasury: (15% - 30,000,000 $XION)
15% of the token supply has been allocated to the continued development of the XION network. These tokens are used to fund ongoing research, development, and improvements to XION’s infrastructure. These funds are used to support the work of developers, researchers, and other technical contributors who are responsible for maintaining, upgrading, and optimizing the protocol. These funds are also allocated towards the foundation’s operational expenses and other relevant expenditures into the continued development and decentralization of the XION network.
Vesting Terms: 1.5% (3,000,000 $XION) is unlocked at TGE, with the remaining 13.5% (27,000,000 $XION) unlocking monthly over 48 months after TGE.
Strategic Backers: (26.81% - 53,611,000 $XION)
27% of the token supply has been allocated to strategic backers of the XION network. These backers have been instrumental in providing funds for development, marketing, and other initiatives as well as bringing valuable expertise, networks, and resources to accelerate the project's growth and adoption.
Vesting Terms: NO tokens are unlocked at TGE. Subject to a 1-year cliff, 6.7% (13,402,750 $XION) unlocks followed by 3 periods of vesting every 6 months thereafter.
Community & Launch: (15.19% - 30,389,000 $XION)
15% of the token supply has been allocated to launch events and the community’s continued growth. The community is a key component of the network's long term success as well as its progressive decentralization, and tokens will be used across a variety of initiatives to continue growing XION’s presence worldwide.
Vesting Terms: 10.13% (20,259,333 $XION) is unlocked at TGE, with the remaining 5.06% (10,129,666 $XION) unlocking monthly over 48 months after TGE.
Looking Ahead
The upcoming launch of the XION token marks a significant milestone in the XION ecosystem's journey towards continued decentralization. A sustainable economic foundation is key to building a long-lasting ecosystem, and XION’s design places significant emphasis on this aspect in order to deliver on its vision of making Web3 accessible to everyone.
As the project moves forward, it is essential to exercise caution and rely on verified sources for information regarding XION. The Foundation will share more details about XION's governance structure in the near future, continuing to ensure a transparent path towards further decentralizing the network.
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