What I like about the Wrapped XX coin (WXX)
PatCrypt created a great post about the Wrapped XX coin aka WXX with the contract address 0x171120219d3223e008558654ec3254a0f206edb2 (view it on Etherscan).
Why it's good
The main benefits are already called out by Pat:
- Compatibility with the major Decentralised Exchanges (DEXs)
- A shorter route to being listed by Centralised Exchanges (CEXs)
There's a lot to like about that, obviously, especially since:
- At least one CEX recently rejected xx coin because "it's a privacy coin" (except that it's not - I wrote about that here)
- The globalists have been making progress with their plan to "allow but disable" private cryptocurrencies
- Because of the KYC/AML regulations, listing a coin on a CEX has been expensive for years and now it's even worse - it's more expensive and more scrutinized
Because of that and because xx coin is not a pump-and-dump/meme coin (although anything that's tradeable has people who pump it, and xx coin is no exception), xx coin used to have a hard time getting listed. It's been listed on MEXC for some time, but that was about it.
I know some vocal MEXC users complain about MEXC (not in the context of xx coin, but in general), but considering it's located in a low-hassle country, I think it's a great exchange and all things considered, less likely to rat on its users than 90% of other CEX (all the EU-based CEX will have to rat on their users once they codify the latest EU regulations.)
In any case, WXX fixes "all of the above" (challenges): people will be able to get xx coin on centralized and decentralized markets (and anything in between - more on that later).
Of course, just being available on one popular DEX would be enough, but on-chain DEX are not known for great liquidity and they're (in my opinion anyway) less user-friendly and less liquid, although this last bit may change as more trading moves to DEX due to the fascist laws passed in communist and capitalist jurisdictions alike. We still want and need CEX exchanges, especially in crypto-friendly jurisdictions (go MEXC!).
Why it's important
I haven't traded xx coin, or any coin for that matter, for many years. I haven't (yet) sold any xx coins either. When I have enough for my needs (which I now do), I prefer to do things that interest me - if I have free time I'd rather do something interesting and hopefully useful to the community than trade.
Why do I care, then?
Because WXX is good for things I care about, such as privacy and decentralization.
It is very important that xx coin be easy to trade because - see the post on new EU legislation linked above - xx Network plans to introduce postage (fees for prioritized and/or high volume users of its mixing network layer).
If you can't buy xx coin, you can't pay for postage (once the feature becomes available). That doesn't mean you wouldn't be able to use xx Network - its mixnet is now completely free to use and I have no reason to think it won't retain a generous free tier even when/if postage kicks in.
But I want xx Network to attract large users who pay postage, because that creates a virtuous circle: demand for xx coin to pay for mixnet postage creates a demand for coins earned (and sold) by mixnet runners ("validators"), which makes xx Network sustainable for both paid and free users.
This may seem trivial now (hey, it's free and it's working just fine as-is!), but remember this next time you use Signal and get that donation prompt upon starting the app.
What's not so good
There isn't much not to like.
PatCrypt's posts mentions some admin to-do's and the fact that WXX is currently semi-centralized (which is what I mentioned "something in between" a CEX and DEX - even when traded on a DEX, it's still semi-centralized until EVM bridge comes about, which should be shortly).
A wrapped xx Coin was recently listed on the XRP Ledger (XRPL) where liquidity is thin and it appears there aren't many users. One may be reasonably skeptical about WXX as well, but I am optimistic because ERC20 tokens are everywhere. Anyone who owns more than two coins probably has an ERC20-compatible wallet or a CEX account and can easily access any DEX by simply installing an app. XRPL is accessible as well, but I feel its main user base are Ripple-focused users, which is fine but not as large as these new markets.
Scavengers welcome
I won't put this under good or bad, it's something that simply is, and can't be judged.
An immediate effect of WXX is that its existence increases opportunities for trading, because the more markets which also means more opportunities for arbitrage.
With xx coin available on MEXC, XRPL, WXX (including DEX-es, each of which may be "out of sync" with others) and the fact that only MEXC has its own API while integrations for others already exist (for different ERC20 tokens, but it just takes a search-and-replace), it's no longer prohibitively expensive to build a bot that trades xx coins among several markets. It takes just one MEXC integration and a xx-focused repurposing of ERC20-compatible code for other markets.
It's kind of silly, but necessary. Scavengers exist because they need to exist. The main benefit for the regular buyer (or seller) is they get close to best price and liquidity regardless of where they buy (or sell) their coin.
Remember that, initially at least - until an Ethereum bridge is built and WXX decentralized - it may be inconvenient to easily move coins between MEXC, XRPL wrapped coin and WXX coin, but this will get easy for WXX once those to-do's are completed. For people who engage in arbitrage and move a lot of coins around this means arbitrage will remain inconvenient until that EVM bridge becomes available.
More to come
Three things I'd like to mention here:
Firstly, Pat's article does mention Snowbridge, a trustless Polkadot bridge technology which - once completed - will bridge Substrate (Polkadot, initially) and Ethereum - something I've been looking forward to since last year.
Snowbridge is now getting attention in the xx community, but I think there still isn't enough appreciation for what had to happen in order to get here: the fact that xx Network picked a Substrate-based chain, which is the only reason why Snowbridge is now relevant to xx Network in the first place.
They could have picked some cooler "next gen" blockchain design with even faster finality and whatnot, but they decided to build on Substrate where all chains and parachains benefit from network effect.
Perhaps this isn't the best comparison, but Substrate can be compared to the Linux kernel. Once an improvement is implemented - due to permissive licensing - it becomes a new feature that every Linux application can use - all Substrate-based blockchains ("Linux applications") can easily benefit from it. That's why it will be relatively easy for xx chain to benefit from Snowbridge without spending many months on developing novel code just for your own project.
(This reminds me - even the development effort for a xx Network EVM bridge (that xx Foundation has awarded a grant for) probably significantly benefits from the ability to reference 3rd party EVM bridge implementations for Substrate chains. That's why that doesn't take quarters, but only months.)
So again, kudos to David Chaum and the team for making a good choice here. Maybe it wasn't a hard choice - naturally a decentralized mixnet project would pick a well-maintained and popular chain with governance features built-in, rather than a niche or new chain that requires a lot of in-house chain development - but it was still a choice and they chose wisely.
Secondly, due to network effects of the Substrate chain ecosystem, I think it won't take long for Polkadot to take advantage of Supra's HyperNova. Punchline:
In short, Supra verifies Ethereum’s L1 consensus cryptographically.
In other words (please visit that link to find out more), Supra's HyperNova does not need staked bridges that create multi-signature transactions.
The quoted part mentions Ethereum, obviously because that is likely to be the first target for Supra, but the same design applies to other L1 chains.
HyperNova is a new design and quarters may pass before it becomes available. But once it does, if Polkadot gets integrated, it becomes easy for xx Chain to get integrated as well. That means a Supra-wrapped xx coin could become instantly available on Supra in a decentralized, management-free and derisked (considering it's bridgeless) manner.
Thirdly, the benefits of Substrate flow in both directions. It is easy for other Substrate projects to connect with xx chain (not just for trading, but for on-chain identity, native assets held, balances, voting history, and other information xx chain holds). You can take a look at the Crust Network (based on a Substrate chain) documentation to see how they have a separate section for integration with Substrate-based chains, for example.
They recently released Ethereum integrations, but even in that case, it's nice to have a choice and be able to easily integrate semi-natively using the familiar Polkadot SDK. Ethereum bridges have many advantages (see WXX), but also adds a bit of complexity, risk, round-trip-time and cost. It's not the only answer.
xx Wallet was able to showcase native Crust Network integration by making their application code to load in one's xx wallet. I haven't looked if there are multi-coin wallets for Substrate and how they work, but they could make it easy to do buy xx coin for postage and use the purchased "message tokens" to pay for (xx) mixnet (proxied API) traffic created by Web 3 apps that work on other Substrate chains. It may take a year or two, but it's doable.
These are just three examples - there must be more - where Substrate (Polkadot SDK) can take care of 80% of the plumbing. It is much appreciated, but still widely underappreciated!
Wrap-up
WXX makes xx coin available to all ERC20-capable wallets and markets.
This is a product of hard and smart work by xx Network developers (including the wise choice to use Polkadot SDK) and the wider Substrate and crypto community.
Also because of Substrate, the best is yet to come.
- an integration with Snowbridge could give xx coin a native and trustless xx-chain-to-Ethereum bridging
- Supra HyperNova - this would also require an xx chain-specific, but not unique, integration and would enable a direct, trustless and bridgeless xx-to-Supra cross-chain interoperability. I plan to keep an eye on HyperNova, especially if Substrate or Polkadot are mentioned
- DEX for native Substrate coins - useful for multi-currency Substrate wallets and shapeshift-like purchases of xx mixnet credits (to pay for postage)