Beginner’s Guide to the World Asset eXchange and Its WAX Token

By April 14, 2021DApps
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The guide will introduce you to WAX – the first decentralized marketplace that focuses mainly on video games and trading virtual collectibles. It is the first protocol in which gamers can truly own their assets, without depending on a provider or network.

WAX – the King of NFTs

Worldwide Asset eXchange (WAX) is a blockchain designed to scale e-commerce transactions. The protocol uses delegated proof-of-stake (DPoS) as its consensus mechanism. With its own WAX token, the platform allows users to participate in a fully operable virtual marketplace. Originally, it was designed to serve over 400 million active video game players in the world of e-sports who wanted to trade in-game items.

The platform aims to take advantage of the current centralization of video games and provide users with a decentralized platform where they could swap, trade, buy, and sell assets.

Thus, WAX became the first decentralized marketplace that focuses mainly on video games and trading virtual collectibles. In addition, it is the first protocol in which gamers can truly own their assets, without depending on a provider or network.

The WAX protocol offers a flexible platform for issuing feeless e-commerce transactions, an idea that aims to expand a higher rate of adoption.

WAX Launch and Leaders

William Quigley (now WAX Chief Executive Officer) and Jonathan Yantis (currently Chief Operating Officer) launched WAX in 2017. Both have a long history in the industry. Yantis was a pioneer of virtual products back in 1997, while Quigley founded WAX two years after working on OPSkin – the largest marketplace for gamers to trade digital items.

In December 2017, Wax launched its Initial Coin Offering (ICO), reaching a market capitalization of $1.2 billion by January 2018.

WAX View of Blockchain

WAX blockchain uses several mechanisms to achieve speed, scalability and allow better overall performance in the system. The network also has backward compatibility. In other words, it allows interoperability with older legacy systems with EOS, so you can duplicate your dApps built on EOS onto WAX.

The WAX architecture supports a 500-millisecond block time with zero-fee transactions for customers. Besides, the network rewards its participants in the selection of block producers and improvements in the protocol.

How Does WAX Work?

The Worldwide Asset eXchange relies on several core principles in its functioning. Find their description below.

  • Consensus Model

The protocol uses microservices layers with a DPoS consensus algorithm that relies on a group of block producers (so-called WAX Guilds) to manage block production. The DPoS consensus optimizes the nominal condition of honest nodes by providing robust network connections and improves the overall performance of decentralized applications (dApps) on the blockchain.

  • Block Production

As a token holder, you can select WAX Guilds and produce tokens if the community approves them. Blocks are produced on the blockchain every 0.5 seconds. Nevertheless, this production has to be scheduled. In case they are not produced on time, they get skipped. This produces a 0.5 gap on the blockchain, which can slow it down. To avoid this, WAX Guilds do not receive rewards if they only produce 50% or less of their scheduled blocks.

  • Smart Contracts

As taken for granted, smart contracts play an essential role in the functioning of the ecosystem. WAX uses a combination of smart contracts and a Random Number Generator (RNG). The latter is an algorithm that generates random values. A prime example of RNG is its employment by dApp developers. They use the RNG to introduce a random outcome for an asset, it can be an NFT or any other collectible, for example. The WAX RNG native blockchain service solves some of the problems associated with classic RNGs, such as unfair, non-random values. To address these problems, the WAX RNG allows dApp developers to integrate the service into their dApps easily, using a Rivest–Shamir–Adleman (RSA) public-key cryptosystem.

The combination of smart contracts and RNG provides an infrastructure similar to classic smart contracts, where all participants process financial transactions on the WAX blockchain. There is a set of certain parameters that smart contracts must meet to be executed, and the records for legal transfer are recorded on the blockchain with transparency.

WAX Smart Contracts reside on a WAX Account with a 12-character human-readable label chosen by the creator of the account. As a user, you can send actions to other accounts where the transaction is handled by the smart contract code residing on the target account, and multiple accounts can receive multiple actions for a single transaction.

The WAX smart contracts define the obligations, parameters, required actions, information structure, and interface code.

  • Token Model

WAX has its own token which serves as a unit of currency for its exchange and purchasing NFTs. The main functions of the WAX token are staking, rewarding, and voting.

As a token holder, you can stake your WAX tokens using compatible wallets within the protocol, such as Sqrl, Scatter, or Lynx. Further, using a compatible wallet also allows you to vote. All you need is to connect your wallet with the WAX blockchain account. Notably, as a token holder, you can vote for up to 30 WAX Guilds (block producers mentioned above). And the strength of your vote relies on how many WAX tokens you stake.

Finally, you can receive so-called Staking Rewards if you stake your tokens and later use them to vote, earning additional WAX. The WAX Blockchain distributes the rewards for all of its users. By the way, dApp developers can also benefit from staking WAX as it helps to reserve computing resources.

To sum up, staking WAX tokens will allow you to vote on improvement proposals on the blockchain, earn WAX rewards, and vote against WAX Guilds that commit double-spending. As a token holder, you must vote every week to maintain your position as a voter and earn rewards.

  • Types of Voting

One of the WAX protocol’s features is that it has three types of voting: guild voting, proxy voting, and worker proposal voting.

In guild voting, you can stake a fixed amount of WAX tokens. For instance, if you stake 1,000 WAX tokens, you can assign 1,000 votes each for up to 30 Guild candidates.

In proxy voting, you can designate a proxy that votes on behalf of token holders using their staked WAX, which gives them WAX Staking Rewards. Although, if a proxy does not vote, it will not affect your vote strength. However, they should keep their proxied vote updated to retain full voting strength, similar to guild voting.

As for the worker proposal voting, you can stake your WAX tokens to vote for proposals submitted by other WAX token holders.

One of the main issues for DPoS-based blockchains is voter apathy. Many protocols have failed due to a lack of voting, showing systemic low voting rates on the chain. This also prevents from achieving decentralization. The WAX Staking Rewards system is valuable as it prevents voter apathy and incentivizes the community interest in the voting process by giving them rewards.

  • Vote Strength and Stake Weight

Vote strength is a number between 0 and 1 (for example, 0.08 or 0.20). 1 represents full strength, and you can maintain this value by voting every week. Naturally, your vote strength decreases every week you do not vote.

The vote strength has a great influence on your stake weight. Stake weight is the number of currently staked WAX tokens multiplied by your vote strength.

  • BFT Consensus

To avoid double-spending, WAX uses Byzantine Fault Tolerance (BFT) that discourages WAX Guilds from signing two blocks at the same block height or timestamp. Any user signing two blocks is suspended and punished by WAX token holders. The BFT consensus keeps the network safe from failures of system components with or without symptoms that prevent other components in that same system from taking control of it.

WAX Services

  • Creator – a self-service tool where you can create NFTs on the blockchain for free.
  • Wallet – the protocol’s wallet, except that it does not store private keys.
  • All Access – single sign-on and OAuth service.
  • ExpressTrade – the protocol’s peer-to-peer trading service.
  • Explorer – it features a user-friendly design with a visual representation of all traded items in the network, multiple 3D, interactive features.
  • Random Number Generator – a native blockchain service and an open-source service that solves common problems.
  • Marketplace – allows you to buy, sell, and trade your NFTs and assets in a single, fairly decentralized protocol.

WAX Marketplaces

There are several WAX-powered marketplaces, featuring WAX All Access, ExpressTrade, WAX Seller Central, and other services.

WAXPeer and dCart are the most popular marketplaces. Both are decentralized, WAX-powered marketplace for trading VGO or vIRL items with many different payment methods.

Conclusion

WAX was launched in 2017 by top experts in the virtual world industry. Since then, it has become the first decentralized, blockchain-built protocol for global gaming and e-commerce. The platform is the safest, fastest, and most convenient way to create, buy and trade unique items in a flexible, feeless manner.

The platform offers developer-friendly microservices as well as allows an ecosystem for developers and e-sport enthusiasts. Therefore, users can build in the blockchain without experiencing friction or any other difficulties common when creating dApps.

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