New Hexonomics: Discounted T-shares and Parallel Hex Staking Strategy
Within the Hex community, there has been an emerging debate. The debate of which version of hex is better, hex on pulsechain or hex on ethereum? In my opinion each one has their own advantages and disadvantages. We also have a unique way of looking at hex in a post pulsechain launch world. Hex was a simple product; buy on uniswap, stake hex, then unstake at the end of the staking period. The problem came about as ethereum gas fees became expensive. For this reason, Richard Heart created pulsechain to support the hex community and reduce unstaking fees for hexicans.
What are new Hexonomics?
Hex started out as simply a three coin system: Hex, USDC as its main trading pair and ethereum for transaction costs. This basically describes the Hex ecosystem as it was in 2019 when it was launched. Now as of writing of July 2023, Hex had 4 years to mature and gain user adoption. With ever increasing user adoption comes the demand for ever increasing new services to support hex.
We should understand the Hexconomy as divided into two sectors, the Ethereum sector and the Pulsechain sector. When you consider what Ethereum offers is a larger user base but pulsechain offers a layer1 solution that is favorable to Hex users, it tells us both have something to offer the hexconomy. In addition, many important assets in Pulsechain need to be
When you look at what is currently available to users on the ethereum side:
Hex(Staking, inflation rewards)
Uniswap(Dex, Swap fees)
Hedron and Icosa(Liquid Hex Stakes)
Phiat(Lending Protocol)
Maximus Dao(Perpetual Hex Staking)
When you look at what is currently available to users on the Pulsechain side:
Hex(Staking, inflation rewards)
PulseX(Uniswap Dex fork, Swap fees, farming rewards)
PHUX(Balancer Dex Fork, Swap fees, farming rewards)
Pulserate(Tomb fork, Algo-stables)
Daytona Finance(Uniswap Dex Fork, Swap fees, farming)
Maximus Dao(Perpetual Hex Staking)
Hedron and Icosa (Liquid Stakes)
Then take a look at what will be coming onto pulsechain soon:
9inch(Dex)
Liquid Loans(Stablecoin CDP)
Mintra (NFT Platform)
While this doesn’t seem like much, we should set an expectation that most of the Hexconomy growth will be be on the pulsechain sector versus the ethereum sector. It comes down to the fact that hexicans will not need to compete for transaction costs with other ethereum users. However there are going to be reasons why the ethereum side cannot be ignored. We will go into the basics about this.
Discounted T-Share and Hex Purchasing Parity(HPP) Theory
What is the difference between Hex on Ethereum versus Hex on Pulsechain? The reality is that they are fundamentally not different at all except for the networks they use. The smart contracts operate in the same EXACT way. So we should understand how these two different networks affect the price of each coin.
We should first set the expectation that when the price of Pulsechain Hex to outpace the price of Ethereum Hex over shorter term spurts. Why? It comes down to cheaper fees. So it costs very little to use pulsechain hex and acquire it. However, as the price of pulsechain appreciates, the cost of acquiring T-shares on pulsechain goes up as well. This also creates a purchasing parity against each hex token. For the purpose of this conversation we will call hex on Pulsechain phex while hex on ethereum shall be called ehex. We will also examine how this creates a phenomenon known as the Hex Purchasing Parity(HPP). Now we are going to take sample data from day 1314 of Hex for both chains.
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| eHex T-Share Price and USD Price |
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| pHex T-Share Price and USD Price |
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| pHex to eHex Trading Ratio |
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| eHex to pHex Trading Ratio |
Ethereum:
Usd t-share cost: $251.1
T-Share Rate: 28,292 hex/T-share
Pulsechain:
Usd t-share cost: $668.18
T-Share Rate: 28,280 hex/T-Share
Before the launch of pulsechain, the strategy was to buy as much hex as possible as cheaply as possible and sell hex when the price appreciates. In a post pulsechain launch world, we will need to use the HPP to figure out where hex ought to flow. As we can tell from the trading ratios that 1 ehex will buy you 0.474 phex while 1 phex will buy you 2.11 ehex. Now let us show what would happen if we traded phex for ehex and vice versa.
Ethereum pHex HPP:
USD t-share cost: $251.1 * 0.474 = $119.02
eHex HPP T-share Rate: (28,292 hex) * (0.474 HPP)/ T-share= 13,410Hex/T-share
Pulsechain eHex HPP:
USD t-share cost: $668.18 * 2.11 = $1409.86
Ehex HPP T-share Rate: (28,292 hex) * (2.11 HPP)/ T-share= 56,696Hex/T-share
This allows us to create a series of formulas to evaluate hex using the HPP method:
USD T-share cost: (USD t-shareprice) * (HPP) = realized USD T-Shareprice
HPP T-Share rate: (Quantity of Hex)*(HPP)/T-share = Effect Hex T-share price
T-Share Cost Ratio: (eHex USD T-share cost)/(pHex USD T-share cost)
Just to make a demonstration of the T-Share cost ratio:
$251.1/668.18=.3758
When the number is less than 1, that means eHex T-Shares are at a discount relative pHex T-shares. When the number is greater than 1, it means the pHex T-shares are at a discount relative to the eHex T-shares.
Parallel Hex Staking Strategy
This is a novel strategy that has yet to be conceived in the hex community. What it does is plays the strength of hex to a stakers while reducing the weakness that comes from using the ethereum network. As I have stated, pulsechain was created to reduce the costs of unstaking hex. However, this leaves a weakness in allowing eHex T-share to go on discount if people choose to only use pHex.
Reasonably, a person can predict when ethereum gas fees are going to be expensive and when they will be at their cheapest. When there is a full blown bull market, we can expect ethereum has fees to go up significantly. When there is a bear market, people can expect gas fees to be relatively cheap. This means the best time to unstake ehex is during a bear market. However, we also want to take advantage of the phex staking opportunities as well and compound our coins. It would also be ideal to have coins to become unstaked every year to create a hex ladder.
The core strategy of parallel staking is to time our ehex stakes ladder to come out during a bear market and for out phex stakes to come out during a bull market. This is actually reasonably easy to do. All we have to do is set our expectations around the Litecoin halving and the Bitcoin halving. The Litecoin halving happens around a bear market while a bitcoin halving can trigger the start of a new bull market. Each halving happens every 4 years. So over a 15 year period, we can expect halvings to happen around these periods. We’ll look at the halving periods up to the year of 2038. Halving basically happens in bear markets.
Litecoin halving: 2023, 2027, 2031, 2035.
Bitcoin halving: 2024, 2028, 2032, 2036.
2023- eHex Unstake
2024- eHex Unstake
2025- pHex Unstake
2026- phex Unstake
2027- eHex Unstake
2028- eHex Unstake
2029- pHex Unstake
2030- pHex Unstake
2031- eHex Unstake
2032- eHex Unstake
2033- pHex Unstake
2034- pHex Unstake
2035- eHex Unstake
2036- eHex Unstake
2037- pHex Unstake
This strategy is set up to give Hexicans the most probable case for low unstaking fees, a bear market, while still compounding coins. It also allows for hex stakes come out during a bull market via pHex Stakes.