The concept of dual-token models refers to systems based on one blockchain with two native tokens, one of them acting as a means of payment and the other as a governance token. Actually, the roles tokens play may vary depending on the project, but the base idea of this model supposes that one token supports the other and both of them are an integral part of tokenomics. This model is quite popular among the newer generations of blockchain projects. Today we will discuss some pros and cons of the dual-token model in the blockchain world and explore MinePlex as an example of its proper implementation.
What is the Dual-Token Model?
The Dual-Token Model is a two-token system used in some blockchain platforms to support the flow of liquidity, provide incentives for users, and retain them inside the ecosystem. For example, one token might serve as a medium of exchange for transactions, while the other provides its holders various benefits such as governance rights or staking opportunities.
Pros of the Dual-Token Model
- Price Stability: The dual-token model can improve the token exchange rate’s stability, mitigating the cryptocurrency market’s volatility. It gives investors a more stable investment option, as they can use the currency token for payments or hold it as an investment.
- Improved Liquidity: The currency token can be traded on exchanges, making it more liquid and accessible to investors by involving market makers, among others. It provides more opportunities for investors to buy and sell the token seamlessly.
- Clear Tokenomics, which in this context means clarity about the specific role of each of the tokens within the project’s ecosystem. It ensures that the project’s users and investors understand the value and purpose of each token, as opposed to the confusion that can arise when those roles are mixed.
- Incentivized Token Usage, which follows from the previous point. As for the utility token, it’s used to access the project’s products or services, which incentivizes its use. And this ensures that the utility token retains value and is not affected by market fluctuations.
- Improved Governance: In the case of governance tokens, they provide a means for investors to participate in the platform’s governance. It can help align the interests of the platform with those of its investors, creating a more transparent and inclusive ecosystem.
Cons of the Dual-Token Model
- Complexity: The dual-token model may seem complicated, as it requires investors and users to understand the role and value of each token.
- Token Economics: Dual-token models require careful consideration of the token economics of both tokens, which can be challenging to manage and balance.
- Slower Adoption because the dual-token model is still relatively new and unfamiliar to many investors and users.
MinePlex and its Implementation of the Dual-Token Model
MinePlex is a next-generation digital ecosystem that offers advanced payment solutions to expand blockchain’s influence and make cryptocurrency usage as easy as traditional currencies. To reach this goal, the company uses its unique CrossFi technology, which combines the stability of traditional finance and the transparency and security of blockchain technology.
The MinePlex ecosystem comprises nine products and services that offer users worldwide advanced payment solutions for everyday life. XFI coins act as entry keys to these solutions. Such design implies that the coin have utilitarian functions and are utilized directly within the project’s services.
The team made a major project update by transitioning to a new architecture and creating the second, more scalable, and secure version of the MinePlex blockchain (here’s a roadmap in PDF). There two native coins – XMine (MPX) and CrossFi (XFI) – are at the heart of the new blockchain (as in the first version). MPX is a base token, a non-volatile token with unlimited emission, while XFI is a utility volatile token with limited emission.
The MPX serves as the base token. It provides the computing power needed to generate new XFI tokens on the MinePlex blockchain network via staking. The target level of returns on staking is set at approximately 7% per month. However, the exact level depends on market situation as XFI is a coin traded on cryptocurrency exchanges with non-fixed rate. MPX is also used for paying transaction fees. It can only be acquired with XFI and PLEX (a token of the first version of MinePlex blockchain) at an exchange rate determined by their value on exchanges. The nominal value of MPX is fixed at 0.01 USDT and is not subject to volatility. For example, if the exchange rate of the PLEX token is 1 USDT, when you convert PLEX to MPX, you will receive 100 MPX.
Meanwhile, XFI is a utility token required to access all products and services in the MinePlex ecosystem, including Wallet, Finance, Payment, and Marketplace. XFI is also a highly liquid asset. Its emission is scheduled to last for 20 years.
MPX is not traded on spot exchanges, but can be achieved via exchange operations using PLEX (native token of the previous generation MinePlex blockchain) or XFI.
In conclusion, the dual-token model may offer several advantages over traditional blockchain models, including increased liquidity, enhanced security, incentivized user adoption, and reduced regulatory risks. But with some challenges, which are also inherent in dual-token solutions, platforms need to have robust mechanisms in place to ensure that the value of tokens is not affected by market fluctuations and exclude any chance of market manipulations. MinePlex is an excellent example of how the dual-token model can be properly used to create a secure and efficient blockchain platform. And with MinePlex updating its infrastructure (roadmap PDF), including the launch of new tokens, it now deserves some extra attention from the community.