xDAI is a decentralized platform powering payments with a 5-second transaction speed and transaction fees as low as $0.01 for 500 transactions using a trusted stablecoin.
From USDT to DAI to BUSD, the cryptocurrency space is not short of stablecoins. However, most of these coins make use of Ethereum and other decentralized networks. Unfortunately, not running on stablecoin-specific systems hinders them from, among other things, reaching high transaction speeds.
And despite being stable, it’s sometimes inconvenient to use them to pay for goods and services when on the go. Apart from low transaction speeds, some of these coins are shrouded in controversy.
For instance, Tether (USDT) is accused of not providing a constant 1:1 ratio to the US dollar. To effectively answer the speed question and give a fixed 1:1 peg to the US dollar, xDAI was born.
Table of Contents
Background
xDAI’s developers are great minds in both the cryptocurrency or blockchain and traditional finance spaces. In fact, the project’s heads Igor Barinov, Vadim Arasev, and Alex Kolotov are quite experienced executives. Barinov is known for contributing to Ethereum-based projects, while Barinov is the popular Nifty Wallet team leader.
Apart from blockchain projects, the protocol’s team members have worked in robotics, computer science, telecommunications, and informatics.
What is xDAI?
xDAI is a decentralized platform powering payments using a trusted stablecoin. The protocol uses the proof of stake (PoS) consensus mechanism. Among its notable qualities is a 5-second transaction speed and transaction fees as low as $0.01 for 500 transactions.
These two qualities form the basis of the platform’s edge in a payment environment. Notably, to streamline the xDAI network, the protocol is divided into two. The first part deals with payments while the second leans toward securing the systems.
The security aspect uses a native token called STAKE. STAKE, unlike xDAI, is to be used only by validators and delegators, and is meant to help reach a consensus before committing transactions on the blockchain.
To remove the confusion, xDAI represents both the platform and a native currency used for inexpensive payments.
Top xDAI features
- Native stable currency – In the payments world, a stable payment solution cushions both shoppers and merchants from the volatility of cryptocurrencies. Instead of receiving a virtual currency and converting it to a stable coin to minimize price fluctuations, xDAI provides a single product that can be trusted by both parties.
- DPoS consensus mechanism – The xDAI platform uses a PoS version called delegated proof of stake (DPoS). Unlike other PoS implementations, DPoS gives network users the ability to delegate their coin holdings and earn rewards in return.
- Connects to Ethereum – Ethereum remains the most used blockchain platform by developers. Therefore, xDAI provides a reliable bridge/connection to it. The bridge facilitates an easy transfer of assets between the two networks.
- Non-biased platform – xDAI is open for public use. In addition, providing a stable hedge to the US dollar provides a non-biased network that is free from the virtual currency’s speculative attribute.
Other xDAI Use Cases Apart From P2P Payment
Community Inclusion Currency (CIC)
CICs are currencies used to pay for goods and services but not meant to replace fiat currencies. With its stable peg to the US dollar, xDAI is fit to become a CIC.
Powering Prediction Markets
xDAI can be used in prediction markets to enhance more participation by addressing the varying transaction fees witnessed in other blockchain platforms such as Ethereum.
Hosting Blockchain-Based Games
Besides powering a stable ecosystem, the xDAI platform can facilitate micropayments making it ideal for blockchain games. Decentralized games banking on the strengths of xDAI benefits from its instant onboarding, low transaction cost, and high transaction speed when making simultaneous distributed payments.
Transferring NFTs
The stable chain provided by xDAI allows non-fungible tokens (NFTs) to be transferred from the Ethereum blockchain using xDAI’s token bridge. Consequently, it provides an easy and economical way to develop and manage NFTs in an inter-chain setting.
Governance
Decentralized autonomous organizations (DAOs) are standard in the blockchain space. They enhance community involvement in a blockchain project. The xDAI system uses a type of DAO called POSDAO that enhances the participation of decentralized validators.
Apart from the platform, the network can be tapped to provide the same DAO-focused functionalities to projects such as community fund collection and voting systems.
Crypto Rewards for Conferences
xDAI’s stable and easy onboarding makes it suitable to reward participants of live events such as the EthDenver 2020, EthWaterloo II, RSAConference 2020, and Spunk19 Conferences.
The STAKE Token
STAKE follows Ethereum’s ERC20-token standards. Its initial supply is 8.53 million tokens. STAKE can be acquired by purchasing it on centralized or decentralized exchanges.
Centralized crypto exchanges with STAKE trading pairs include BitMax, Bilaxy, and Poloniex. On the other hand, decentralized exchanges (DEXs) that support STAKE trading include IDEX, Uniswap, Balancer Pool, and 1inch.exchage.
Staking on xDAI using STAKE
Apart from the typical use cases, the protocol is available to stakers. Through a process called Easy Staking, xDAI users holding the STAKE token can place their coins in a contract and earn STAKE emissions. Additionally, liquidity providers are encouraged to interact with the system.
Interestingly, xDAI’s Easy Staking feature can be accessed from cold wallets. Apart from stakers, emissions are sent to liquidity pools, effectively incentivizing liquidity providers. Note that on liquidity pools, rewards are shared after roughly seven days. However, the distribution date is randomized.
Notably, the Easy Staking functionality allows users to interact with Uniswap to engage with the ETH/STAKE liquidity pool. Uniswap is among the leading decentralized finance (DeFi) platforms.
To Start the Easy Staking Journey:
- Activate MetaMask, NiftyWallet, or any other Web3-compatible wallet. Note that the activated wallet must contain both STAKE and ETH. STAKE is used in the actual staking process, while ETH is used to pay for transaction fees.
- Next, make a deposit. Notably, Easy Staking allows stakers to make multiple deposits, with each deposit attracting incentives regarding the staking time. This feature is called multi-deposit.
- From depositing, it’s time to withdraw. Withdrawing can either be done immediately or scheduled to happen later, mostly after 12 hours. However, the two do not incur the same fees. For example, the costs on schedule withdrawals are calculated based on the withdrawal time, while instant withdrawals attract a flat 2 percent fee.
- For the tech-savvy stakers, staking can be done by sending funds directly to the staking contract without the need for a user interface.
xDAI Validators
Validators address the network’s security and mine new blocks. xDAI has 13 known validators, with each receiving an initial 20K STAKEs as a fixed incentive to be actively involved in the running and security of the protocol. However, the initial reward is kept in the system and has no withdrawal allowance. This enhances xDAI’s security. But, when a validator wants to leave the network, they can sell their spot with the buyer inheriting the tokens.
Conclusion
From normal users to stakers to validators, the xDAI project is primed for use by everyone in the cryptocurrency space. Also, its easy onboarding process and stable connection to the USD at a ratio of 1:1 enhance its adoption by novice crypto users or traditional businesses.
Apart from payments, xDAI provides staking capabilities, which enable its users to earn rewards by providing liquidity in DeFi platforms such as Uniswap. Additionally, the staking functionality allows users to earn incentives for delegating their STAKE tokens to validators. Consequently, they participate in securing the network.
