Protocol revenue is vital to the functioning of any blockchain ecosystem, particularly in a proof-of-stake based network. It provides value back to the underlying token, which in turn secures the network from malicious attackers. Protocol revenue is thus crucial to the underlying security of the network.
SX generates protocol revenue from its three core technologies (SX Bet, SX Protocol, SX Blockchain) in three separate ways. The SX token - not a centralized entity - is the sole beneficiary of this value creation.
Every transaction on SX Bet has a 4.00% fee on profits (roughly equal to 2.00% of total volume). Therefore, on an average $100 bet, SX Bet generates roughly $2.00 in revenue. For trades denominated in USDC or ETH, this revenue is sent to the SX Community Fund. As of April 17th, 2022 SX Bet has generated $2.45m (USD) in crypto assets for the SX Community Fund since inception after expenses:
For SX-denominated bets, this fee revenue is sent to a separate address to be later burned. As of April 17th, 2022 SX Bet has generated 36,032 in SX fee burns since inception on March 22nd, 2022:
Any transactions that take place on platforms that hook into the SX Protocol for shared liquidity pay 50% of their gross protocol revenue back to SX. This fee can be charged as an affiliate fee or as a share of each specific transaction. This dynamic fee gives platforms the flexibility decide on their own revenue model, whilst still providing value back to the SX Protocol. As of today, there is one primary platform - Exodus Wallet - that is utilizing this model.
Cryptocurrency wallet Exodus officially integrated with SX, an online sports and crypto betting platform back in November 2021. The partnership gives Exodus’ more than 1 million users access to SX’s prediction market where they can place bets on a wide range of sports and esports games using cryptocurrency.
There are a host of other platforms currently in development that are building their own in-app prediction markets utilizing the SX Protocol that will be announcing over the coming months. SX Bet revenue continues to dwarf direct SX Protocol revenue, but we expect that to change over time as adoption of the SX Shared Liquidity layer continues.
All transaction fees on the SX Blockchain will flow back to SX holders through staking rewards. The SX core team is also working with the Polygon Edge team on a mechanism for instituting an EIP-1559 style burning mechanism. This would burn a portion of all transaction fees generated on SX Network, thus distributing the value creation directly to token holders.
SX Blockchain isn't expected to generate meaningful fee revenue in 2022. Long-term though, it's likely fee revenue from SX Blockchain transactions will far surpass protocol revenue from the other two segments.
More details will be released here.