I. Introduction

1. Definition

WAX Tokenomics is the monetization of the WAX blockchain through the use of WAX tokens.

The word ‘tokenomics’ itself is a mashup of ‘token’ and ‘economics’. Classical economists from Adam Smith through to Karl Marx have attempted to define how value is produced and distributed under the umbrella of economics. Tokenomics simply applies the same lens to the new world of blockchain, DeFi, and Web 3.0 applications.

II. Where Did WAX Tokenomics Come From?

1. How Did It Begin?

WAX launched in 2017 as an ERC-20 compliant token, meaning it could run smart contracts on Ethereum, one of the earlier main blockchains. A year later, WAX switched over to a ‘fork’ of the EOS blockchain, which resulted in an explosive growth to make WAX the ‘King of the NFTs’. This success was partly thanks to the dPoS algorithm used by EOS which, unlike Bitcoin ($BTC) and Ethereum ($ETH), is carbon-neutral and open in its governance model.

2. Where Is WAX Tokenomics Now?

In WAX tokenomics, users stake their spare tokens and vote for block-producing ‘guilds’ in return for ‘staking rewards’, which you can read about in our previous article. As of 2021, WAX launched a new tokenomic model with an inter-blockchain design, meaning users could yet again access the Ethereum blockchain via new $WAXE tokens. This means WAX currently has two parallel models of tokenomics, both of which offer rewards for the active participation of WAX users in the development of the ecosystem.

III. What are the Benefits of WAX Tokenomics?

The benefits of the WAX tokenomic model are:

1. You earn more tokens — in exchange for participating in the governance model, clicking on a few links for staking and voting for the best Block Producer guilds, you increase your own stash of tokens, be it in $WAXE (Ethereum bridge token) or $WAXG (WAX Governance token).
2. You support the healthy evolution of the WAX platform — by ensuring the best of the guilds get to produce the blocks that make up the WAX blockchain and develop innovative new dApps and smart contracts.

Plus, the new WAX tokenomic model lets you exchange your $WAXP (the internal WAX token) for $WAXE (external ERC-20 compliant tokens), meaning you can start to trade and exchange digital goods over a much wider range of platforms — all while earning rewards.

IV. Where Does WAX Tokenomics Take Place?

Tokenomics happens directly inside your wallet (for example, a Wax Cloud Wallet) when you vote for Block Producers or a proxy. Our previous WAX School articles describe how tokenomics works via staking. You can also read a more in-depth step-by-step guide by clicking here. You can also link your wallet to a Block Explorer such as bloks.io to get a more powerful overview of the WAX token and blockchain and vote for Block Producers (BPs).

V. Summary

Whatever Adam Smith or Karl Marx would have to say about it, the old classical economic model is certainly under some stress, either from the unbridled printing of fiat currency (QE) or from the increasing concentration of wealth in the hands of the hyper-rich. Tokenomics presents the possibility for innovation which may redistribute power and provide solutions for operating in a global online market with new models of governance.