The Worldwide Asset eXchange (WAX) is a blockchain protocol that enables the creation of an unlimited number of marketplaces. Each marketplace can be operated by businesses or individuals to buy, sell, and trade video game assets.
Every year 400+ million gamers purchase more than $50 billion worth of virtual items worldwide. The problem is that a vast majority of these gamers are charged exorbitant cross-border transaction fees for their purchases unless they use a centralized trading platform.
WAX wants to provide a solution by building a decentralized marketplace for virtual goods on the blockchain with reliable low-cost settlement. They hope that this will greatly improve market liquidity and price discovery, thereby expanding the market.
WAX is being developed by OPSkins, the world’s largest trading platform for virtual gaming assets, to connect 2 billion gamers around the world to a sophisticated virtual goods exchange. A decentralized exchange will make more trading possible and help grow the already sizable $50 billion USD video game market.
WAX Pricing, Market Cap and Trading Volume
WAX has a limited supply of 1.85 billion tokens. 64.75 million tokens were sold in an ICO event held in December 2017. All contributors received 10 times the number of tokens they purchased, which means half the total supply (625 million tokens) is already in circulation. Here’s a breakdown of the distribution:
– 30% was set aside to encourage new developers to join the marketplace
– 20% is retained by the WAX team for development purposes
– 15% was set aside for early contributors and advisors
The price of WAX was first listed at $4.60 right after its ICO ended in December 2017, but it quickly tumbled to less than ~$0.05 over the next few months. WAX’s market cap was initially listed at ~$360 million USD. It reached ~$1.3 billion USD at its peak in January 2018, but it now hovers between $100-$200 million USD.
The WAX team giving ICO contributors 10 times the number of tokens they bought is most likely the reason for the significant drop in WAX’s value.
How WAX Works
The WAX protocol is primarily focused on the transfer and exchange of virtual goods and services in the rapidly growing gaming industry. It is also flexible enough to be used in a variety of other industries. To meet the high throughput demand of the gaming industry, WAX uses a Delegated Proof of Stake (DPOS) consensus algorithm that was originally created by BitShares.
Confirming nodes in WAX are called “Guilds.” WAX token holders can submit proposals to become a Guild and users vote on the submitted proposals by staking their tokens.
Guilds are responsible for confirming and signing blocks of transactions, promoting network health, and assigning Transfer Agents to purchased listings. As an incentive, the network awards Guilds with a percentage of the fees on transfers, lists, and contracts.
Token holders that want to become a Guild must submit a proposal with details on the game they will service, the percentage of fees they will share with pledged users, and how they will monitor Transfer Agents. Each Guild must focus on a single game or server. For example, a Guild may be formed for a popular Minecraft server and players on that server will be encouraged to support the proposal.
To encourage users to make pledges, the network rewards them with a percentage of their chosen Guild’s earned fees proportionate to their delegated stake amount. If users lose confidence in a Guild, they can move their stake to another proposal or Guild.
The WAX platform will initially support 64 Guild positions and users can pledge up to 8 votes. Each vote must be for a different proposal or Guild to ensure votes are cast across several Guilds, and to prevent users with large token holdings from having too much influence.
In addition to Guilds, there are three other types of accounts on the WAX platform:
Users – User accounts have a private key and corresponding address for creating and signing transactions. Users can hold WAX tokens and digital goods. Most user accounts will be proxied by a listing site like OPSkins.com or an exchange, but a user account can interact directly with the WAX platform.
Transfer Agents – Agents who handle the in-game transfer of virtual goods between users. They must stake WAX tokens to get the position and can only serve one Guild at a time. Transfer Agents earn a percentage of the fees for settlement execution services.
Contracts – Contracts are code on the platform that can be executed by external agents. The platform supports a set number of pre-created smart contracts. These include contracts for proposals, listings, ratings, disputes, transfers, and settlement execution.
WAX vs. Other Decentralized Exchanges
WAX is unique among existing decentralized exchanges because it was specifically designed to support the needs of the online video game asset trading market. Here is a comparison chart of WAX and other well-known decentralized trading platforms:
WAX is the utility token of the WAX platform. It supports all functionality on the WAX platform, including:
Listing Items – The prices of goods listed on the platform are listed in WAX and when a user wants to buy an item, they have to pay using the token. If an item is listed in a different currency (through an external site linking to the platform), then the listing agent must convert to WAX using the exchange rate at the time of purchase.
Settling Transfers – All settlements on the platform are conducted using WAX tokens. The token is divisible to 18 decimal places, making it ideal for micro-settlements.
Transaction Fees – A small amount of WAX is required as a fee for completing transactions. The fee, like Bitcoin fees and Ethereum Gas, is used to incentivize Guilds to add transactions into blocks.
Proposing and Voting for Guilds – The number of votes a user can distribute to Guilds is equivalent to the number of tokens they have in reserve. The reserve must remain constant if the user wants to retain their delegated votes.
Buying, Storing and Selling WAX
WAX can be acquired from a number of major cryptocurrency exchanges including Bittrex, Bithumb, Huobi, HitBTC, Bancor Network, Kucoin and Changelly.
WAX is an ERC20 token, which means it can be securely stored in any Ethereum wallet. Popular web-based wallets include MyEtherWallet, Jaxx, MetaMask, and Exodus while hardware wallet options include the Trezor and Ledger Nano S.
Liquidity of WAX
The WAX platform has a lot of potential. Convincing gamers to use it as their main marketplace for trading virtual goods won’t be easy, but the platform will see tremendous adoption once OPSkins integrates WAX into its system and creates a simple API for developers.
Giving contributors 10 times the amount they purchased during the ICO hasn’t done WAX’s valuation any favors, but the tokens still have fairly good liquidity.