As you probably already know HEX is the first decentralized Certificate of deposit (time deposit). So, let’s see the benefits of HEX over the Bank system. If you read this article you may notice that your local currency is losing purchasing power over time or the banks you use to keep your money doesn’t offer the interest as a decade or two ago. The problem with the inflation of the money is already solved by cryptocurrencies such a Bitcoin where the inflation is fixed and changing the supply is practically impossible. The issue with Bitcoin is that there is no way to earn interest or at least not in a decentralized way as HEX allows.
Centralized vs Decentralized interest on your money?
I do have some experience (good and bad) over the years by earning yield on my money by keeping them within the bank. The year was 2014 when the Bulgarian bank CCB (Corporate Commercial Bank) that was the biggest bank in terms of deposit growth offering around 10% interest to their customers. Shortly then June 2014, the bank got busted so my money was blocked. In the EU deposits under 100 000 euro are protected by the deposit guarantee scheme so “I am safe.” After more than a year of waiting and praying, I finally got my money back, so lesson learned “Never trust 3rd party with your savings”. Many people lost their wealth around the same time in Cyprus as well.
Clearly, there is no guarantee that you will get your money back if you trust someone else holding them for you. In cryptocurrency space, there is a quote by Andreas Antonopoulos “Not your keys, not your coins.” It is ironic so many people repeat that phrase and they still trust the middleman with their coins. Yes “They still trust the middleman with their coins” and shifting the narrative by saying “OH, this time is different” or “They got good intentions.” The truth is that Bitcoin was designed to eliminate the middleman and the message in the genesis block is showing that. So why we would like to offer the facility back to equivalent people, we should always be fighting against. The answer is very clear: „Greed“ or mildly said „Return of the investment.“ That is why people trust their Bitcoin to someone else.
I explained why centralized finance doesn’t work (at least most of the time or in the long run). Now let’s see the decentralized options and why HEX is the best one. Earning decentralized interest is known as staking. There are many blockchains that you simply stake your coins to validate the transactions in-network and you getting rewarded afterward. Let’s say the blockchain you participate in has a 5% inflation rate per year. So by staking your coins 5% is the highest return you could get.
Often the return is less because most platforms have a minimum limit of coins and at least if you don’t invest tens or hundreds of thousand you will be forced to use a pool where a cut of your reward will be taken. That is a great way of earning yield if you could find the right blockchain, so the question is “Why do we need HEX?” What if I told you that the inflation rate of HEX is fixed to 3,69% per annum and you will always be able to earn more. How is that possible you’ll ask? It is because of the T-Shares and I will try to explain!
If you stake that is the guaranteed minimum you going to get if 100% of the supply is locked 🔐
If less coins of total supply are staked you will have greater return of 3,69%
— Stay at home until THEY take your soul (@TodorSlavchev) November 19, 2020
What is HEX T-share and why is important?
First, I like to mention that the HEX code is locked in a smart contract so manipulation is not possible and the code is immutable. Also, the smart contract has had 2 security one economy audit. I mentioned that the inflation rate of HEX is fixed to 3,69% per year and stakers always get paid more (in HEX tokens). That is possible because of the T-Shares and while the HEX supply is increasing over time T-Shares are fixed to 10 800 000. So your interest is getting paid by the number of shares you own. So when you stake HEX tokens they are burned and converted to shares. On the tweet below, you could see how to calculate the interest, based on the T-share price.
Here is an example of how the interest is paid in HEX based on the number of shares you own.
Daily payout per Tshare is 5.7
4200 x 5.7 = 23,940 Hex a DAY!
Lets multiply it by 30 days
23,940 x 30 = 718,200 Hex a MONTH!
Hex goes back to $.014…
718,200 x .014 = $10,054.80/month
NO TRADING INVOLVED…
Few understand this!
— Annette ❤ HEX ❤ (@THEAnnette) November 24, 2020
At the time of the writing of this article, the staked HEX is around 10% of the total supply. The new coins are paid only to the stakers so when only 10% are staked the interest is 10 x 3, 69%, or 36, 9% on average. If 50% of the coins are staked the interest will be 18, 45% on average. By average I mean that some people will earn less and some people will earn more but always more than 3, 69%. That is because of the shares you are getting per stake. On the picture below is an example of 10 000 HEX staked for 1 year and 10 years.
screenshots from: www.go.hex.win
You are getting more shares for the same amount if you stake longer. That guarantees a high yield for the duration of the stake. Now you may ask “But what if all the tokens are staked?” Theoretically, that is possible but not likely to happen as no all supply of currency has ever been locked in human history. You could argue that HEX is only a tool for staking and we use different payment methods for day to day transactions. I agree with that but from time to time people always need extra money for many different unpredicted reasons. Because of unpredicted reasons, people will need to end their stakes earlier than planned.
HEX emergency end stake
Here comes the most beautiful and innovative part of HEX, the emergency end stake. If someone needs to emergency end stake (end the stake earlier) he, she, or they need to pay a penalty. The penalty could be quite severe if the stake is ended early. Sometimes not only the interest is lost but a percentage of the stake as well. Penalties of all emergency end stakes are distributed to other stakers so there is a bonus that rewards the strongest hands. All that is what makes HEX unique and could probably be the greatest financial innovation up to date. That is only possible because of the decentralized blockchain and the power of the immutable smart contract. No human intervention is needed as in HEX the code is the law.
Will HEX survive and what if something better comes along the way?
You may now be wondering if someone builds a better HEX and you are probably right to ask yourself this question. As people sometimes we overestimate ourselves that we could improve something quicker than actually possible. As I mentioned above HEX only exists because of decentralized blockchain and smart contracts. We know that these two innovations took a few decades to be finished. Thanks to some of the smartest people on the planet. So making a better certificate of deposit is not likely to happen in our lifetime. People could start copying HEX but this will be like all coins trying to replace Bitcoin with almost no improvement. HEX has the first-mover advantage with a few billion USD locked in the contract after just a year in existence.
HEX price going down and I am losing money?
This question is mostly asked by people who are new to the cryptocurrency space or not familiar with the price discovery in the free markets. All cryptocurrencies are very volatile and a drop in price in USD up to 95% is normal. That’s only in the short term as the long term charts are up 10,000% and more.
Here I could give you another example where the HEX shine over all other cryptocurrencies. When the price in USD is down that means most of the HEX is a liquid and a small percentage of total supply is staked. But if you have staked and don’t speculate with the price, this will earn you more HEX tokens. That is why I am happy when they are not many stakes and the amount of HEX I earn daily makes me feel great. If you are planning to stake your tokens for a long time the cheaper HEX is the better is for you.
How I should stake HEX?
HEX cryptocurrency gives you the best on-chain analysis of the blockchain than any other crypto. You could check everything from when the stake is started, ending, or other people’s stakes. So based on that information you could figure out how to build your staking ladder. These are some of the tools to use in research and staking HEX: hexinfo.io hex.vision graphex.rocks and staker app Other factors to consider are your age so if you are younger you may wish to stake longer and bigger. But if you are older you could make the stakes another way around. For special occasions such as birthdays and anniversaries, you could make bigger stakes than the one you are usually doing.
Regarding staking the only thing I am following is not to stake anything less than 10 000 HEX per stake. The reason is Ethereum transaction fees are a bit expensive. When the stake is ending there is 14 days period that you need to end it. That gives you enough time to end the stake when transactions are cheaper. Also bear in mind that if you end the stake after 14 days you will be penalized. The penalty after that period is 1% per week. The penalty will be distributed to the other stakers in HEX.