Blockchain has introduced different types of tokens. In a simplified explanation the main types are the utility token type, the security token part and the currency coin type. X8X is a true utility token type, which acts as an access license in the X8currency. With it the user gets to access the X8currency system and use it with 0% fees.
The community though wants to be sure that the users will not be able to take advantage of such and similar utility token types. For example, if a group of people would like to share the utility tokens between each other in order to not having to buy the tokens for each individual, the system should be smart enough to stop such activity. This article explains how the X8currency system prevents such foul play and how it protects legitimate users that actually purchased the token in the right way.
VALUE OF THE UTILITY TOKEN
Before we start, one of the key factors that buyers of the X8X utility token want to see is that the demand for the token will actually increase together with the increase in the size of the community looking to use the X8currency value preservation coin product. If there are possible hacks in the system where a group of people can abuse the X8X utility token and purchase only one license worth of tokens instead of several licenses (one for each user), then the demand for the token would not necessarily increase even if the activity volume of X8currency would go up. Friends could help each other to share only one license and despite the growth in interest there would be no real additional demand for the utility token in such case.
This is a critical point with which the X8 team is making sure that growth in business actually will also mean growth in the demand for the X8X utility token. Ten times larger community and user base for the X8currency value preservation coin will also mean ten times larger user base for the X8X access license token. Even if a group of potential rouge users will want to abuse the system, they will not trigger a flood of X8X tokens from the existing users due to unjustified oversupply in the market.
As a result, both tokens will remain benchmarks and hold value in their own right. X8currency will do it by being the only true value preservation coin and X8X utility token will do it by being a true crypto market volatility benchmark, enabling insurance against cryptocurrency market or fiat currency market volatility and crashes. Both tokens individually can be seen as instruments that hold or preserve a specific type of value and therefore both tokens will be seen as interesting instruments also in the eyes of investors.
PREVENTION OF X8X ACCESS LICENSE ABUSE
A watchdog principle will be implemented and will be activated should a set of preconditions be met. X8 will implement a strict control that will monitor only those cases of X8X access license token use that will break the rules set by X8 AG. The users that will use the X8X token in a legitimate way should not worry about the X8 watchdog. The mechanism will not be activated for them at all.
However, in the event of a possible development of a foul play, which will be clearly visible and whose intention will be evident to the X8, a watchdog mechanism will be activated for any specific user portal wallet address and commence with monitoring of X8X transactions from that address.
The X8 watchdog will mostly make sure that the X8X tokens will not travel back and forth between the same users of the X8 user portal in order to avoid paying for the access license. Each user should have their own X8X tokens to be able to use the X8 user portal, or the X8 watchdog message will appear.
The X8 watchdog will also keep an eye on “friends” helping to hide the rouge transaction of the X8X tokens between the two known X8 user portal members without an underlying payment to purchase the tokens for example. In other words, even if someone will want to use several different wallets outside of the X8currency system in order to disguise the intention to send the tokens to a friend already using the X8 user portal, the activated X8 watchdog will diligently follow the X8X tokens being transacted in such a circle of wallets. Once the X8X tokens that were sent over several external wallets would arrive back to the address of an existing user of a X8 portal, the final step of the locking mechanism will become pending.
Everything will revolve around the fact of whether the user will be able to prove that he or she paid for the X8X access license tokens. If the X8 watchdog will be triggered to demand this proof, and if such proof will not be readily made available by the user, your tokens might get locked by the X8 watchdog without delay.
BENEFIT FOR LEGITIMATE X8X USERS
The X8 watchdog mechanism principle creates a clear benefit for the users of the X8X utility token. The main advantage is that the X8X will remain a free market! Anybody can count on the fact that their value in X8X will remain liquid. There is no arbitrary locking period in this system, which makes the X8X token a proper free market instrument. If you are not using your X8X tokens, or if you already have used them for the purpose, you can move your value that you invested in them freely.
At the same time the obvious fundamental truths remain in place. When you want to use the X8currency value preservation product, you will need to keep your X8X access tokens vested in the X8 user portal. This means that when someone would like to store value in the X8currency and keep the X8currency coins in the user portal for a few months for example, his or her X8X tokens will be locked in the user portal for the duration of that same period.
As long as the user will act within the rules set forth by the X8 the user will be able to move the tokens to another location after the tokens have been used for their purpose of the X8currency trading for example. That said, if the user will want to move the X8X access tokens back to the X8 user portal again, especially if within a short timeframe after their withdrawal, or if they will be transacted frequently back and forth, the X8 watchdog mechanism might get activated depending on the circumstances. Once activated the X8 watchdog will perform monitoring on the involved digital wallet addresses for a period of one year after the suspicious activity took place and for an additional one year after each iteration.
MORE X8 WATCHDOG DETAILS
Not all of the details of the X8 watchdog protocol will be announced publicly. The protocol will be there to protect the system and the well-intentioned users, and ultimately to increase the value of the ecosystem without punishing or patrolling everyone for no reason. X8 watchdog should be seen as a good friend and one that cannot be bribed once the rules have already been broken.
X8 project will increase the depth of the tracking of the X8X tokens over time, so that even if someone would like to hide any ill-intentioned activity by sending the tokens across a large number of proxy wallets, the X8 watchdog will be waiting at the door, ready to recognize what happened and act with appropriate measures when the tokens return back into the environment of the X8currency.
X8 AG will release Rules of Engagement for the X8currency prior to its live launch. This will include business policies concerning the vesting mechanism for X8X utility tokens. X8 AG will reserve the right to update these rules. Nevertheless, the X8 watchdog mechanism principle will remain in place to follow through on the technical requirements that will be described in the rules of the engagement. Users should focus on their need to protect their wealth and to preserve value by using the X8currency digital value preservation product. For this main use case the X8 will ensure the best and most fair conditions for all of its users.
Despite the X8X utility token being an ERC-20 on Ethereum network, the functionalities described in this article will implement specific behaviour of the X8X token that might be related to the properties of a Non-Fungible Token (ERC-721). Within the described context of the X8 watchdog the token becomes semi-fungible. It keeps all of the advantages of the ERC-20 token type, yet at the same time it will be possible to confirm forbidden activity due to selective tracking capabilities introduced together with the X8 watchdog, which could result in specific tokens to become locked.
This will make X8X users feel more secure since they will know that everyone will have the same conditions when using the tokens and that no one will be able to take shortcuts and use the X8currency system without first obtaining a license in a fair way. This topic created many questions also with other projects that opted for the utility token model as several voices were saying that a utility token model can never create proper scarcity.
In the X8 environment the watchdog makes sure that scarcity is created when the size of the user base increases. This supports the economic model of the system as it was introduced in the first place and guarantees that the benefits will be delivered to the users in full from both of the tokens.
Image source: istockphoto