WAX (Worldwide Asset eXchange) is renowned for trading digital assets and is currently the most traded and widely-used blockchain ecosystem for dApps, NFTs, and video games. Gaming companies like SAW, Mattel, Atari, and Street Fighter utilize the blockchain to sell their digital assets in the virtual game ecosystem. WAX also hosts OPSkins, a top global brand that buys and sells digital goods.
Compared to other blockchain networks, WAX offers faster transaction speeds, allowing for multiple transactions per second, and reasonable gas fees significantly lower than other blockchains.
We bet you don’t know WAX is certified as a carbon-neutral platform?
WAX is reportedly over 66,000 times more efficient than Ethereum or Bitcoin. Compared to the energy-intensive PoW mining operations of Bitcoin or Ether, NFTs in this ecosystem have helped offset about 4 million tons of carbon emissions. Its ecosystem’s mainnet emits 211 tons of carbon dioxide per year in exchange for 473.04 MW/h. The carbon credits generated by WAX blockchain operations fund environmental initiatives worldwide.
In this article, we will examine how the WAX blockchain works, what its selling points are and the challenges it must overcome to successfully achieve its aims. Let’s get to it.
How WAX Works
The WAX blockchain uses a delegated proof-of-stake (DPoS) consensus mechanism that combines elements of proof-of-stake (PoS) and proof-of-work (PoW). This DPoS model, which is compatible with EOSIO, has enabled WAX to achieve high transaction throughput and scalability. The blockchain’s native token takes its name and is integral to its operations in specific ways.
In WAX’s DPoS system, there are 21 active block-producing nodes called WAX Guilds at any given time. These guilds are elected by WAX token holders through a continuous voting process. The 21 guilds take turns producing blocks in rounds of 126 blocks, with each guild producing six blocks per round.
In addition to the 21 active guilds, there are 36 standby guilds that act as backup block producers. These standbys are randomly assigned some blocks to produce, incentivizing them to stay online and operationally ready. For a block to become permanent and immutable, it must be signed by 15 of the 21 active guilds, providing Byzantine Fault Tolerance.
WAX guilds that fail to produce at least 50% of their assigned blocks do not receive the associated block reward and risk being voted out by token holders. Conversely, token holders can maximize their “WAX Staking Rewards” by voting for the highest-performing guilds. The staking rewards earned are directly proportional to the performance of the guilds the voter selected.
The WAX ecosystem features the WAX Cloud Wallet, which provides more functionality than a typical cryptocurrency wallet. The Cloud Wallet allows users to view token balances, stake WAX, vote for guilds, claim rewards, and manage their WAX NFT holdings, all without having to store private keys. It also enables single sign-on integration with accounts like Google, Facebook, etc.
The Cloud Wallet is free for users and implements anti-spam measures like multi-factor authentication and account scoring. Overall, it aims to provide a unified and user-friendly interface for accessing all features of the WAX ecosystem.
There is also a Wax Lab, a venture capital-like platform where developers can pitch concepts and submit proposals for assessment. Once a project idea has been submitted, users and token holders at WAX Labs can vote on it. The more coins a user owns, the greater the weight of their vote. 10% of eligible voters must vote for a project to be funded, and 50% of those voters must approve of its creative potential.
WAX’s Unique Selling Points
The WAX project represents a significant step towards achieving mainstream adoption of blockchain technology. By focusing on the digital goods/NFT market, which spans video games, collectibles, and tokenized consumer products, WAX is targeting applications that have immense demand and potential for mass consumer usage.
Building on the fact that online gaming is booming globally, the project’s development team believes digital goods represent a $2 trillion opportunity. By building a blockchain tailored for this market, WAX is driving crypto/blockchain use cases that can onboard millions of new users through applications they actively use and payment models they are already accustomed to.
Crucially, WAX’s design philosophy prioritizes consumer user experience over everything else. Features like free transactions, fiat payment integration, cloud wallets not requiring private keys, and tools to create/view NFTs without coding – all lower the barriers to blockchain adoption for non-technical mainstream users. This user-centric approach sets WAX apart from many other blockchain platforms.
Additionally, WAX provides an ecosystem of services like the Explorer, ExpressTrade marketplace, NFT creator etc. that allow developers to easily build consumer-friendly dApps and NFT projects without having to develop complex infrastructure themselves. This microservices layer can significantly boost innovation in the NFT space.
Perhaps most importantly, though, WAX demonstrates how blockchain can solve real enterprise pain points in areas like digital item provenance, ownership rights, supply chain traceability, and more. By working closely with partners across video games, esports, collectibles and fashion, WAX is showcasing blockchain’s value proposition to mainstream businesses and consumers.
In summary, through its sector focus, user experience innovations, development tools and enterprise use cases, the WAX project represents a concerted effort to drive crypto adoption at a mainstream scale. Its success could pave the way for blockchain to transcend its current niche and become a transformative layer for entire industries like retail and entertainment.
Potential Challenges WAX Must Overcome
While WAX’s vision for mainstream blockchain adoption through digital goods/NFTs is compelling, there are certain limitations and challenges to its approach that are worth examining.
Firstly, by focusing specifically on digital/virtual goods and NFTs, WAX is targeting a relatively niche use case within the broader blockchain ecosystem. While sizeable, the markets for gaming, collectibles and tokenized products may not provide the ubiquitous demand required for truly mass adoption. There is a risk that WAX’s sector specialization could limit its reach and impact.
Secondly, despite efforts to abstract complexity, user onboarding remains a key hurdle for any blockchain project. Having to create a wallet, stake tokens, interact with smart contracts, etc., still creates frictions that mainstream consumers may be unwilling to deal with, even with WAX’s user experience improvements. Making blockchain truly invisible could have limits, at least for now.
There are also technological limitations around WAX’s throughput that could get stress-tested at a mass scale. While fast by current standards, a throughput of 3,000 TPS may not be sufficient for a platform processing millions of minting/trading requests for digital assets concurrently.
Another potential challenge is around NFT liquidity and market fragmentation. With the proliferation of NFT platforms and lack of cross-chain operability, it remains to be seen if WAX’s marketplace can achieve the depth and concentrated liquidity required for efficient price discovery of NFT assets. Fragmented liquidity could diminish the investment thesis.
WAX’s vision relies on a thriving ecosystem of marketplaces, games, and dApps built on its platform. If developers don’t flock to WAX or favour competing ecosystems, achieving a critical mass of digital goods could become difficult. There is also the problem of Integrating WAX services with external systems, APIs, and codebases across gaming, retail, and other sectors, which brings unforeseen technical hurdles that impede adoption. In short, extensive cross-industry collaboration is needed for its success.
There are regulatory uncertainties as well regarding the issuance, trading and taxation of NFTs across jurisdictions. An unclear regulatory environment could dampen enterprise and institutional involvement until policies catch up with the technology.
Finally, one must consider the competitive threat from major tech companies also eyeing the NFT/digital goods space, which could potentially usurp WAX’s first-mover advantage through greater mindshare and capital resources.
In navigating these challenges, WAX will need to strike the right balance between its specialized approach and ecosystem interoperability, technological development and strategic partnerships to create a scalable and sustainable NFT economy. Continued innovation will be key to maintaining its pioneering position.
Final Thoughts
The WAX blockchain combines the best of all the technologies in the crypto blockchain world while avoiding its biggest problem: environmental impact. It is currently the 10th biggest blockchain in terms of user activity, and recently inked a mega deal with Amazon.
Its future looks bright, especially with the dedication its development team is showing to creating the best possible version of the platform. (They admittedly spent more than five years just fine-tuning the idea and execution strategy for the platform.) As the project matures and its ecosystem grows, it will be fascinating to observe WAX’s impact on shaping the future of blockchain-based digital economies.
Disclaimer: This article is intended solely for informational purposes only and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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