XEN Token Accounts For 11% of Ethereum Gas Consumption
‘Universal Cryptocurrency’ Surges to $70M Market Capitalization
By: Owen FernauDeFi News
An obscure smart contract has been guzzling gas on Ethereum.
XEN Torrent is responsible for over 11% of the transaction fees paid on Ethereum over the past 24 hours, making it the second-largest gas consumer after Uniswap’s router contract.
And yet, not many people have heard of XEN despite its appearance among the household names driving Ethereum usage. The token is up nearly 500% in the past month, however.
XEN Price. Source: Coingecko
“Our approach is to solve the adoption problem first and foremost,” ZEN TZU, a pseudonymous core team member at Fair Crypto Foundation, the company behind XEN, told The Defiant. “XEN is designed to be more of peer-to-peer cash than store-of-value,” they said.
The project’s whitepaper positions the token as “a universal cryptocurrency to achieve the original mission of blockchain.” The paper lists blockchain buzzwords like self-custody, transparency, and decentralization, as aspects of that mission.
One key feature of XEN is users can just pay the transaction fees on a supported blockchain to acquire the token for free. However, the minting process will yield progressively less XEN over time.
Jack Levin, the project’s founder and former Google engineer, told The Defiant that an application called DBXen, which makes users burn XEN in order to use the protocol, was responsible for the increased demand for the token on Ethereum.
Mint and Stake
At its core, users mint XEN through its website. After waiting for a user-determined period, they can stake XEN in order to acquire more tokens, according to the whitepaper. The specifics of how many XEN a user gets is dependent on a formula provided in the paper.
XEN Rewards Formula
There’s also an expanding ecosystem of applications around XEN. One called XEN Knights, launched earlier this month and involves burning the token for an NFT-like asset called an Ordinal, which lives on the Bitcoin blockchain. Another, called XENFT, allows users to batch-mint XEN with an NFT, according to a post on the release.
XEN’s design is gas-guzzling by nature. Another of the project’s smart contracts was responsible for 40% of Ethereum gas usage in October, making the blockchain’s native asset deflationary for the first time after EIP-1559 and the Merge.
Considering the nagging consideration that crypto solves a problem that doesn’t exist, it’s hard for people to get excited about a new project like XEN. The project isn’t well integrated with the dominant DeFi projects like Lido and Aave, established NFTs like CryptoPunks and Bored Apes, or many influencers in either of those Ethereum-dominated ecosystems.
For example, projects like Voltz, the interest rate swap protocol, have the blessing of an early license granted by Uniswap, arguably the most successful DeFi project. Voltz allows investors to speculate on the interest rates of major lending protocols like Aave and Compound.
XEN, on the other hand, looks to be coming out of left field, which may make it hard to trust by participants in ‘mainstream’ crypto culture, which centers around Twitter and the Ethereum blockchain.
Still, there’s a growing view that crypto needs to move beyond its self-referential culture and on to greener pastures where people may not know or care about the lore behind DeFi protocols.
Joe Blau, the co-founder of a project in the XEN ecosystem called Fenix Protocol which is set to launch in the coming weeks, is aware of the token’s position in the larger crypto community. “We’re on the fringe,” he told The Defiant. “We’re not in the core.”
Blau is familiar with the big names in DeFi, reeling off some of the top projects’ names without missing a beat. He thinks there’s another set of users outside the Ethereum-centric club.
“They don’t really care if it’s Compound on Ethereum or a Compound fork on some other chain or if it’s Uniswap or if it’s PancakeSwap or if it’s Spookyswap,” he said.
XEN’s creators have deployed the token on 10 different blockchains. That’s a dramatically different approach to the deliberate way that most of the largest protocols in terms of total value locked (TVL) slowly expand to other chains.
A former engineer at Uber, Blau said XEN took the “land and expand” approach that the ride-sharing company took when it launched in many cities in a short period of time and tried to develop business from there. Blau conceded that many chains, like BNB Chain, are effectively centralized. This admission does, in some ways, seem counter to XEN’s stated mission of operating from blockchains’ “first principles” like decentralization.
Blau argues that there are upsides to the broad approach XEN is taking. “We’re finding amazing developers in different pockets,” he said.
It’s unclear whether XEN will work in the long run. If it does, it certainly won’t have been through the typical route in DeFi, and it will have burned a lot of ETH along the way.