$XRD is the native cryptocurrency and utility token of the Radix network. It exists as a monetary asset, with its primary utility being to pay transaction fees, secure the network via staking, and participate in the ecosystem’s various governance mechanisms.
- Etymology
- Utility
- Staking
- Transaction Fees
- Other Uses
- Supply and Allocation
- Initial Allocation at Genesis (12bn $XRD)
- Network Emission over 40 Years (12bn $XRD)
- Price-Based Token Unlock
- Stable Coin Reserve
- Purpose
- Policy
- Wrapped $XRD ($eXRD)
- Purpose
- Supply
- Policy for Fee/Emission Updates
- Fee Update Policy
- Emission Update Policy
Etymology
The naming of $XRD follows international rules ISO 4217 and ISO 3166, which prescribe that commodities and currencies not backed by nations begin with X and national country codes may not begin with an X, respectively.
Utility
$XRD has two primary purposes within the Radix ecosystem:
Staking
$XRD is a key component of Radix's Delegated Proof of Stake (DPoS) system, which utilizes $XRD to secure the network against potential attacks like Sybil attacks. In the DPoS system, $XRD holders can "stake" or delegate their tokens to validator nodes they wish to support. The top 100 validator nodes with the highest amount of staked $XRD are selected to participate in ordering transactions and achieving consensus. Stakers are incentivized to participate by earning a portion of the newly minted $XRD from network emission rewards. The upcoming Xi’an network upgrade will remove the limit of 100 validators.
Transaction Fees
All transactions on the Radix network require a fee paid in $XRD. The transaction fees are intended to prevent spam transactions by imposing a small economic cost. Notably, 50% of the base network fee portion of each transaction is permanently burned and removed from circulation. This deflationary pressure is aimed at controlling $XRD supply over time.
Transaction fees on Radix are calculated based on the following components:
- A fee table that assigns "CostUnits" to each operation in the transaction based on computation complexity and storage requirements.
- A fiat value multiplier that converts the CostUnits to an $XRD fee amount based on the $XRD/USD market price.
- Any optional "tip" multipliers specified by the user to increase priority during high demand.
- Any royalty fees owed to developers for use of their deployed code/components.
The total fee is the sum of the network's assessed CostUnits portion converted to $XRD, plus royalties, multiplied by any tip multipliers.
Fees can be paid from any wallet/vault containing $XRD, not just the transaction signer's wallet. Transactions can have fees covered by multiple parties "chipping in" portions.
Fee Distribution
Of the base network fee portion (excluding royalties), 50% is permanently burned, 25% goes to the validator leader for that round, and 25% is distributed among all validators at epoch boundaries based on participation.
Any royalty fees get paid out to the developer's specified vault. Tip fees go directly to the validator leader for that round.
Keeping Fees Stable
To keep fees relatively stable in fiat terms, the network can adjust the fiat value multiplier used for fee calculations if the $XRD/USD price deviates significantly based on a policy.
Other Uses
As the base currency of Radix, $XRD can potentially be used in various ways within the Radix DeFi ecosystem, such as:
- Collateral for lending/borrowing protocols such as Weft.
- Trading pair facilitating exchange between other tokens on exchanges such as Ociswap.
- Payment currency for dApp services and usage fees.
Supply and Allocation
$XRD has a maximum supply cap of 24 billion tokens. This maximum supply is divided into two portions:
Initial Allocation at Genesis (12bn $XRD)
At the genesis launch of the Radix network in July 2021, 12bn $XRD (50% of maximum supply) was issued and allocated as follows:
- 642m $XRD (2.7%) to participants of the October 2020 public token sale
- 3bn $XRD (12.5%) to early members of the Radix community
- 200m $XRD (0.8%) to liquidity mining program participants
- 2.4bn $XRD (10%) to RDX Works Ltd, the company developing Radix
- 2.158bn $XRD (9%) to Radix Tokens (Jersey) Limited, a subsidiary managing the Radix ecosystem
- 600m $XRD (2.5%) reserved for developer incentives
- 600m $XRD (2.5%) reserved as network subsidy
- 2.4bn $XRD (10%) locked as a stable coin reserve
Network Emission over 40 Years (12bn $XRD)
The other 12bn $XRD (50% of maximum supply) is being gradually released through new mint emissions at a rate of approximately 300m $XRD per year over approximately 40 years. This network emission serves as an incentive to validators and stakers securing the Radix network via the DPoS mechanism.
The current circulating supply consists of the 9.6 billion unlocked $XRD from the initial allocation, plus the network emissions released to date. The 2.4 billion stable coin reserve remains indefinitely locked.
Distribution | # $XRD | Percentage / Exc. Network Emissions |
Network Emissions | 12,000,000,000 | 50% |
Early Investors | 3,000,000,000 | 12.5% / 25% |
Stable Coin Reserve | 2,400,000,000 | 10% / 20% |
Team | 2,400,000,000 | 10% / 20% |
Radix Foundation | 2,148,000,000 | 8.95% / 17.9% |
Public Sale | 642,000,000 | 2.675% / 5.35% |
Developer Incentives | 600,000,000 | 2.5% / 5% |
Network Subsidy | 600,000,000 | 2.5% / 5% |
Liquidity Incentives | 200,000,000 | 0.8% / 1.6% |
Marketing | 10,000,000 | 0.04% / 0.08% |
TOTAL | 24,000,000,000 | 100% / 100% |
Price-Based Token Unlock
Main article: 2021 Token Unlock
Prior to September 15, 2021, a portion of the $XRD and $eXRD token supplies allocated to the Radix community, company founders, and Radix Foundation were subject to a price-based unlocking mechanism.
Under this model, only a baseline percentage of these allocated tokens began as unlocked and able to be traded. The remaining portion would then become unlocked incrementally, with 5% more unlocked for every $0.02 increase in the $XRD/eXRD price, up until a price of $0.43 where 100% would be unlocked.
This mechanism was put in place as a means to incentivize long-term commitment and retain tokens during Radix's early growth stages.
However, after surveying the community, the unlocking thresholds were removed on September 15, 2021, resulting in 100% of tokens (except the stable coin reserve) becoming immediately unlocked and transferable at that point.
Stable Coin Reserve
As part of the initial $XRD allocation at the Radix network genesis in July 2021, 2.4bn $XRD (10% of the maximum supply) was set aside in a "Stable Coin Reserve" and remains indefinitely locked.
Purpose
The Stable Coin Reserve was created with the purpose of potentially helping to bootstrap one or more decentralized stablecoin projects native to the Radix ecosystem. Reliable and low-volatility stablecoins are considered an important component for decentralized finance (DeFi) applications, providing a stable store of value.
While decentralized stablecoins provide benefits, their peg to external assets like the US dollar can also introduce systemic risks. The Stable Coin Reserve aims to mitigate these risks by provisioning a locked capital pool that could be utilized if needed.
Policy
The Radix Foundation has a 10-year period starting from the July 2021 network launch to review and potentially disburse the Stable Coin Reserve to support underlying protocols for Radix-based stablecoins. However, use of the reserve is not guaranteed - it will remain permanently locked and burned after the 10-year period if not utilized.
The 2.4 billion $XRD in the reserve is not included in circulating $XRD supply metrics during this period.
Wrapped $XRD ($eXRD)
$eXRD is a wrapped representation of the $XRD token that was deployed on the Ethereum network as an ERC-20 token.
Purpose
The primary purpose of $eXRD is to facilitate the use of $XRD within Ethereum's vibrant DeFi ecosystem of decentralized exchanges, lending/borrowing platforms, yield farming opportunities and more. By having $eXRD represent $XRD on Ethereum, DeFi users can earn yields, provide liquidity, use as collateral etc. all while benefiting from the features of the high-throughput Radix network.
$eXRD was also initially created and distributed prior to $XRD staking going live, as a means to further decentralize the distribution of $XRD tokens.
Supply
The circulating supply of $eXRD is not fixed, as it fluctuates based on how many $XRD tokens are wrapped into $eXRD form or unwrapped back into native $XRD. However, the maximum potential supply of $eXRD can never exceed the total supply of $XRD at any given time since each $eXRD is backed 1:1 by an $XRD token locked in reserve custody.
Policy for Fee/Emission Updates
The Radix network has established policies to adjust transaction fee rates and validator node emissions in response to changes in the $XRD/USD price and variations in epoch durations.
Fee Update Policy
The network fee table utilizes a "fiat value multiplier" that converts operational "CostUnits" to an $XRD fee amount based on the current $XRD/USD market price. Radix Publishing monitors the 7-day simple moving average of the $XRD/USD price. If this deviates by a factor of 2 (0.5x or 2x) from the current multiplier price, they target publishing a network update with a new fee table multiplier within 2 weeks, based on the new 7-day average price.
Emission Update Policy
The rate of new $XRD emissions awarded to validators and stakers is targeted at 300 million $XRD per year. However, the actual emission rate fluctuates based on the duration of epochs on the network.
Radix Publishing observes the 30-day moving average of epoch durations. If this deviates by a factor of 1.2 (0.83x or 1.2x) from the current duration assumption, they target publishing a network update within 2 weeks to adjust the per-epoch emission rate to bring it back in line with the 300 million $XRD per year target based on the new 30-day average epoch duration.
The updates aim to keep fees reasonably stable in fiat terms and emissions consistent with the planned annual schedule, without attempting to compensate for past over/under deviations.