To welcome in the new year, Axo is bringing you a surprise - your original staked ADA rewards from when Axo was Maladex. Don't worry! You're still eligible for your AXO tokens airdrop.
This article will explain Axo's goals, why you will receive your initial ADA rewards and an airdrop of AXO tokens, as well as how to claim them.
Regarding the initial community distribution
The digital asset industry is evolving, and many emergent behaviors have yet to be fully assessed in the legal landscape. This set of novel dynamics includes funding methods, such as stake pools and crowdfunding via decentralized protocols.
The Axo community’s support of Maladex stake pools generated ADA rewards, which have not been touched since they were received. The decision not to use these funds was taken given the regulator’s unclear guidance regarding the treatment of income generated from stake pools, and Axo’s commitment to approaching regulatory compliance proactively.
Regulation for financial entities already exists, but many in the digital asset industry choose to believe this doesn’t apply to them. There are some edge-case scenarios where the new technology allows for specific interactions that weren’t otherwise possible. In these instances, some clarity is required before proceeding.
Being on a distributed and public ledger is not an exemption from following the law; if anything, it's a stage where projects get the spotlight on them. Developing businesses in this industry must err on the conservative side or run into legal problems down the line. Many projects have prioritized short-term growth over long-term viability and could potentially pay dearly for this.
Axo wants to grow and work with both retail and institutional clients alike, so it's essential to be legally compliant. Axo thus aims to be proactive in identifying any potential problems.
To that end, Axo has decided to return ADA assigned to every wallet originally delegated to the Maladex pools. This return also includes the minpool fee, which takes 340 ADA from the first block that a stake pool mints per epoch.
In Axo’s consideration, the minpool is against the spirit of free markets and should be eliminated from Cardano. This artificial cost is a barrier to entry for newer and more efficient stake pool entrants, as they look expensive by comparison due to their mandatory lower delegator returns. Cardano doesn’t presently have Proof of Stake, where stake pool operators are assessed on their technical proficiency; it instead has Proof of early and existing Popularity.
All the rewards from the initial distribution should be in your original wallets now; if not, please reach out to Axo directly on Discord.
Axo is also aware that the community was excited about receiving AXO tokens for their early support. So it was decided to still gift eligible community members AXO tokens as an airdrop.
How to claim AXO tokens
The AXO tokens will be claimable through the Axo Vault. Once there, you can connect your wallet and see your eligible tokens.
In the coming weeks, you will be able to register to claim your AXO tokens, but you must complete an identity verification process. The verification process will include proving your identity via official documentation, a phone number, an email, and a “proof of liveness,” where users prove their identity in front of a webcam to show that they’re not using stolen documentation and are who they claim to be.
The know-your-customer (KYC) identity verification procedure is a standard requirement across the financial industry. This regulation protects financial platforms and their users from identity theft, fraud, and otherwise illicit activity.
Institutions that do not comply with such regulations in TradFi are subject to sanctions, loss of licensure, and being shut down. If Axo were negligent in this, it would hinder financial entities from considering using the protocol.
Axo wishes to expand trading opportunities for its users. As such, it will make the choices that maximize user freedom over the long term instead of choosing what may be immediately popular.
In the future, Axo users will be able to use their verified data to create decentralized identifiers (DIDs), a type of digital ID that is not controlled by a central authority but is instead self-sovereign and managed by the user.
These DIDs will be useful across the digital asset industry, allowing users to verify their identity while retaining complete control over the expression of their data. Furthermore, Axo will even allow users to verify businesses within the claim process. Enabling traditional businesses to operate on-chain is an important step toward widespread adoption, as it opens up numerous financial opportunities that would not be possible otherwise. (Please note that company verification is subject to a 250 ADA fee at this time, as the process is not yet fully automatable.)
Once you have completed the verification process, you can claim your AXO tokens within the Axo Vault. Up to four AXO token-eligible wallets can be associated with any connected identity on the platform. Users can link more wallets to a given profile, but they will be subject to separate anti-money-laundering checks. Due to the added administrative burden, users with wallets beyond the standard threshold will have to pay a processing fee of 150 ADA per wallet. Please reach out to Axo directly on Discord if you wish to add more than four wallets to a verified identity.
Regarding the Axo platform launch
KYC processing is not a requirement to use the Axo platform. Traders will be able to deploy non-verified trades from any wallet and exchange on a peer-to-peer basis. However, it is encouraged to verify one's identity as it will broaden the available pool of potential trade counterparties.
Axo is decentralized and permissionless and gives users complete control over their trade execution conditions, including whom they do business with. Because of this feature, when prominent institutions join the platform, they can participate in a trading environment, with the possibility to prove that one's counterparty isn't a sanctioned or potentially politically exposed person.
By extension, users willing to be transparent about their identity will have access to more efficient markets and deeper liquidity. Axo will not share any information it may have with counterparties except when compelled to do so by authorities with a court order.
The extent to which you decide to be private is your choice, but other users might choose not to engage with your trades to remain regulatorily compliant.
Axo allows users to define what they value and have the market organically determine its economic worth - this includes their privacy. There is an implied cost in withholding information when trading with someone. Axo makes this usually implicit cost into an explicit one, as people can see the price difference of the same assets under different execution conditions.
Through Axo, every trade can only happen if both parties consent to the execution conditions. There is no ultimate price for any asset but a variable range that adjusts on a case-by-case basis rooted in individual goals and desires.
Important information regarding the Axo token vesting process
Before launch, you must claim your AXO tokens in the Axo Vault, or you will lose your airdrop allocation. Upon claiming the tokens, they will be placed in a vesting smart contract on Cardano:
20% of your AXO tokens will be available immediately upon platform launch.
80% of your AXO tokens will be locked in a smart contract, vesting over the course of a year.
For example, if a user is eligible for 100 AXO tokens, 20 will be available immediately at the platform launch. The remaining 80 tokens will become available as the year progresses. In this scenario, 6.66 AXO tokens would be available to be withdrawn per month or, put differently, 0.22 per day. Of course, every withdrawal carries transaction fees, which are borne by you.
Assuming that the user withdrew the 20 AXO tokens initially available but left the rest, on the 365th day, they will be able to withdraw the 80 AXO tokens.
The Axo treasury will retrieve any allocation not claimed before the platform launch. Similarly, any tokens not withdrawn six months after the vesting period ends (18 months after platform launch) will be returned to the Axo treasury.
Why AXO tokens have a vesting period
When a large group of people receives any endowment of tokens, especially when it has yet to be actively traded, there is a momentary stalemate. People who receive the tokens want to maximize their financial position. On the other hand, potential investors are trying to determine the assets' ultimate value, so they might be hesitant to buy in a downtrend.
There is a strong incentive among some early claimants, especially if they received tokens at no cost, to sell as many tokens as possible while market price discovery is in effect. This incentive misalignment creates a negative feedback loop where people panic sell because others are selling, and the result is that the value crashes.
This initial oversupply shock might take a long time to stop impacting the token’s price. To protect users from speculators interested in extracting as much value from the community as possible, the token release must be more gradual.
Speculators still have immediate access to a fifth of their allocation if they so choose, but they will not be able to have a disproportionate effect in the early stages. As the platform grows, is more widely used, and the token is traded primarily for its utility rather than its speculatory value, it can better absorb any potential influx of tokens.
Through the vesting model, the amount of tokens grows proportionally with the platform's rollout. It also puts every user on the same footing. Whether they're a private investor or a community member who receives a token airdrop, everyone is subject to the same token vesting schedule.
Axo is a platform that prides itself on being decentralized, fair, transparent, and efficient in its design - the platform launch should also reflect this.
Until then, have a Happy New Year, and enjoy your ADA presents!