NXD Economics of Compounding
The NXD Protocol acts as a corrective measure to the value leakage in the DXN ecosystem, offering minters in the Limited Mint Phase the chance to exchange dis-inflationary DXN tokens for their deflationary counterpart, NXD at optimal liquidity. By functioning as an inverse function to DXN, NXD introduces a deflationary dynamic into the disinflationary tokenomics of the DXN system.
To achieve this transformation, the protocol targets both sustained income and increased transaction volume, specifically to amplify the benefits for NXD:
Compounding ETH Income: The DXN Protocol generates necessary revenue, enabling and enhancing a cycle of deflation through the DXN Staking Vault, which provides a constant and growing stream of income, while burning NXD and improving the ROI.
Compounding Trading Volume: The Fee-on-Transfer 5% (FoT) mechanism taps into trading volumes to prevent the outflow of value as participants exit and imposes fees on community LPs to boost NXD liquidity. This process leads to the burning of NXD tokens, the compounding of DXN, and an increase in the liquidity of the NXD/DXN UniV2 LP.
FoT Across LP Networks: The NXD Protocol can impose FoT on all external LPs. This creates a network effect of economic compounding through FoT volumes generated across these LPs.
UniV2 LP Volume: Trading activity within the locked UniV2 LP pair generates a 0.3% fee that is reinvested into the LP, enhancing the DXN Price Floor.
Perpetually rising Price Floor: Besides being a deflationary asset, NXD also has a price floor in DXN derived from the NXD/DXN Univ2 LP that’s funded by the team. A price floor results from combining a capped supply token, locked liquidity and deflationary tokenomics. This price floor will be exponentially increasing and will provide risk management strategies for future protocol integrations.
These strategic levers are designed to decrease the NXD supply and elevate its price floor, thereby enhancing the ROI and intrinsic value of the NXD token for the benefit of its minters and holders.
The following section outlines an overview of the implementation of these different value levers into the NXD Protocol aiming to exponentially increase the intrinsic value of the NXD token.
DXN Staking Vault (DSV) distributes ETH to:
Buy & Burn NXD 50% through the NXD/DXN UniV2 LP
Buy & Stake DXN 30% through the DXN/ETH UniV3 LP
15% ETH is transferred to the NXD Staking Vault benefitting NXD Stakers
Buy & Burn DXN 5% through the DXN/ETH UniV3 LP
NXD Staking Vault (NSV):
Stake NXD to earn ETH from daily DXN auctions through the DXN Staking Vault
Receives 15% of the daily ETH rewards from the DXN Staking Vault
Triggers ETH distribution smart contract from the DXN Staking Vault using the TWAP Oracle from Uniswap
NXD LP Technology:
NXD/DXN Univ2 LP Locked Liquidity (5,000 NXD & 5,000 DXN UniV2 LP provided by the NXD team)
NXD Fee on Transfer of 5% (non-whitelisted transfers) through the NXD/DXN UniV2 LP
NXD Price Floor in DXN from the Locked Liquidity NXD/DXN UniV2 LP
NXD LP Protection Measures:
The team has introduced several protection measures to prevent the NXD/DXN LP from being gamed by malicious actors trying to circumvent DXN liquidity by alllowing for an FoT Network of LP’s.
No Dev Fee from the System’s ETH Value Flows
There’s no dev fee incurred inside the system’s ETH revenue streams as the team aims to retain all value creation inside the NXD Protocol. This means that all ETH earned by the NXD Protocol flows back to its participants through compound & burn strategies, yield sharing and deflationary LP technology.
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