Another 100 million MX Burned! Is This the Next BNB?
1. Why Reduce the 450 million MX holdings to 100 million?
On December 4, MEXC made an announcement declaring the launch of the MX2.0 plan. The plan is to reduce the 450 million MXs held by the MX Foundation. The reduction will be achieved via burning, in part for destruction, talent absorption, public chain ecosystem, infrastructure, MEXC Labs investment and MEXC strategic partnerships.
The original announcement is relatively rich in content. This paper summarizes five key points and makes key interpretations of personal nature. For the reference of MX Holders:
1. The 450 million MX held by the MEXC Foundation will be reduced to 100 million.
2. Among the 350 million MX reduced, 100 million MX are directly burned (this portion will be decided by MX community via voting).
3.The rest is used for strategic plans, such as MEXC Labs and MEXC strategic partnerships.
4.40% of the platform’s total profit is used to repurchase MX from the secondary market.
5.The total number of MX in circulation in the market remains unchanged at 100 million.
- What does “the reduction of 450 million MX holding to 100 million” mean for the MXEC Foundation?
From the perspective of the current price and future growth of the MX, the MEXC Foundation may have given up the existing short-term benefits. We can analyze this logic from the perspective of a company’s valuation.
Currently, MX has burned a total of 450 million tokens, with a profit of $112 million from previous repurchases. Based on the 30–50 times PE of cutting-edge technology companies, the current valuation of MEXC should be between $3.36 billion to $ 56 million, but even this valuation is still low.
The current market value of MX is only $341 million. If the MX is horizontally compared with the market value of BNB wherein the current market value of BNB has reached $105 billion, The market value of MX is 230 times lower than that of BNB.
The MEXC Foundation reduced its holdings by 350 million MX, which not only means sacrificing the short-term positions of the Foundation, but also indirectly sacrifices the benefits of MX in the future within the larger room for growth.
MEXC did not just reduce their holdings, but directly burned 100 million MX. The remaining 250 million will be used for MEXC Labs and MEXC strategic partnerships. This will help to improve the value of MX and the market value of the platform in the future, which is what a long-term enterprise should do.
- Why does the “direct burning of 100 million MX” needs to be voted by the MX community?
As a senior user of various platforms, I personally feel that MEXC is a platform with the most community-like feel and always attaches great importance to the opinions of the community. This includes the assessment area for the voting of cryptocurrency, product upgrading and polishing and other aspects. Therefore, it is not surprising that that there will be a “vote to decide the direct burning of 100 million MX”.
- Is it possible for MEXC to maintain the total market circulation of the MX at 100 million tokens?
Originally, my biggest doubt was that: the 450 million MX held by the MEXC foundation were kept in locked position, but now, in addition to the 100 million burned, the remaining 250 million MX will eventually flow to the market, which will cause certain selling pressure, right?
But if we think about this carefully, how could the platform allow the 250 million MX to be cashed out without taking care of the interests of the platform itself and their users? Both the portions held by the team and the portion used for investment and strategic partnerships are unlocked in a linear manner within 8 years. If calculating through quarterly unlocking, the average number of MX unlocked is 7.8 million per quarter.
However, this may also result in a certain degree of dumping pressure. As a result, MX 2.0 launched a plan to accelerate the burning of repurchases.
- What does “40% of the total profit will be used to repurchase and burn the MX” means?
This means that the platform is determined to safeguard the core interests of MX holders in the secondary market.
In September to November this year, MEXC repurchased about 13.7 million MX with only 50% of the profit from spot transaction fees. In the proposal of MX 2.0, 40% of the total profit will be used for repurchasing and bruning MX. This is the highest repurchase effort of the whole platform at present.
As you can see, in addition to the spot, MEXC also includes a series of products such as futures, margin, leveraged ETF and PoS mining pool, as well as a series of events such as Launchpad and M-day, and the investment profits of MEXC Labs are also included in the total profit. Therefore, it will not be a problem to maintain the circulation of MX at 100 million tokens in this way.
The MX 2.0 makes strategic investments and cooperation around 350 million MX. As I understand it, MXEC is likely to make the necessary moves to become the “Next Binance”.
2. Is MX the Next BNB?
The core of BNB is to make BNB the center of Binance and the ecosystem center of Binance. It is not limited to one platform currency. The same is true regarding the design of MX 2.0..
BNB was originally enabled around Binance, such as fee discounts, new Binance Launchpad activities, and staking/mining.
In the MX 1.0 system, the main use cases of MX are similar to BNB: MEXC Launchpad, M-Day, MX-DeFi, MEXC voting, MEXC PoS mining pool and Kickstarter events.
In addition, MX is not entirely the same as BNB. With the help of Binance Smart Chain, BNB is arranged around the whole ecosystem, broadening BNB’s use cases in DeFi, NFTs, trading media and so on.
In the design system of MX 2.0, MX will no longer be limited to the function of just a platform cryptocurrency, but will also be used for investments and strategic partnerships to further expand the use case scenarios outside the platform;s system. Its intention is obvious: MX hopes to become the next BNB.
This requires finding application use case scenarios outside the MX platform. So it is imporatant to use some MX for MEXC Labs and some for strategic partnerships.
MEXC has cooperated with BakerySwap before, and users can use the MX/BAKE pair for liquidity mining in BakerySwap. It was recalled that the maximum APY at that time was more than 150%, and if MX and BAKE is considered, the earnings basically doubled in a month.
At present, the ecosystem of major public chains is becoming more and more rich. Not even considering Ethereum, there are 101 ecosystem projects on fantom, 500 ecosystem projects on Solana and 156 projects on the Avalanche Protocol. Some projects also invested in MEXC labs, and even launched on MEXC.
If MEXC takes the platform as a “cross chain bridge” and cooperates with other mainstream public chains to establish a public chain ecosystem by looking for use case scenarios for MX, such as liquidity mining, or even issuing a public chain (the original announcement referred to “building infrastructure”, but whether it refers to the public chain is not known at present), then the MX can truly be BNB’s equal.
For MEXC Labs, the development of the MEXC ecosystem is promoted through long-term investment, and 40% of the tokens obtained from the investment are distributed to MX holders in the form of Launchpool or other events.
In other words, if MEXC Labs projects invests into Polkadot, Avalanche Protocol or Uniswap, the MX holders will also obtain certain project assets. Those who initially received the DOT have now earned at least 100 times the revenue.
MEXC will also gradually launch the MX DAO to further involve the MX community in investment decisions. As a voting token, MX further gives the holders the right to participate in the recommendation, evaluation and decision-making of investment projects.
3. What Kind of Platform is MEXC?
As mentioned earlier, the current value of the MX is significantly undervalued. In addition to evaluating from the perspective of valuation of the current trading platform, we can also analyze the current development of MEXC from the perspective of fundamentals, and what is its gap with Binance.
It is difficult to lose sight of the fact that MEXC has been a fast-growing cryptocurrency exchange for the past two years, and its spot market ranking has reached the top 3.
According to relevant statistics, in 2021, the growth percentage of overseas users of MEXC reached 1100%, and the growth percentage of annual transaction volume exceeded 700%. Overseas users account for 70% of the total number of users.
From the perspective of data, the globalization of MEXC has be remarkable. This provides benefits from 3 aspects:
- Driven by user needs, MEXC insists on finding a platform for high-quality assets to meet users’ needs for high-quality cryptocurrency assets trading.
- From my personal observation, MEXC currently has the most comprehensive online spot trading products, with fast new project launches. It is the platform with the fastest listings and most project types. For example, DOT, ENS, AXS, MANA, ENJ, SHIB, GTC, CRV, UNI, LUNA and almost all of the top 100 tokens were launched on MEXC first before they were listed on Binance and Coinbase. Thus, MEXC is often referred to as The Next Binance, the first stop for to list a high-quality project.
- Starting from the year 2020, MEXC has been expanding into the global market. For global compliance operation, it has not only obtained five national licenses from countries like Estonia, the United States, Australia, Canada, Switzerland, but also cooperated with the local communities in various regions of the world to further develop localized operations.
However, compared with Binance, the vulnerabilities of MEXC is quite obvious, such as lack of derivative trading, and MX’s limited ecosystem use case scenarios wherein it can only be used on the platform.
The launch of MX 2.0 is to complement the ecosystem aspect. The MX Token will no longer only be the platform currency of MEXC but will become the core of the entire ecosystem growth, connecting the MX and all stakeholders, including not only the MX holders, but also the cooperative project parties in each ecosystem.
At present, BNB only surrounds two ecosystem: the platform and the smart chain. As mentioned earlier, MEXC may expand to encompass the multiple ecosystems of the mainstream public chains. Of course, the cooperation depends on the follow-up of MEXC.
MEXC originally also has a community feel. This announcement will gradually launch the DAO and the MX community will become the MX DAO in the future.
In this way, the MX holders can further participate in project investments, recommendations, evaluation and decision-making. This is also a vision that Binance failed to achieve — a DAO organization in the crypto world that truly relies on the interests of its community, partners, teams and shareholders.
In terms of derivatives, MEXC reached an in-depth cooperation with derivatives trading platform ByBit in October, which also enabled the two sides to complement each other in terms of “spot + derivatives”.
Therefore, according to the current momentum and strategic moves of MEXC in the global cryptocurrency market, it is expected that MEXC can build a top exchange that can be the new leader in the industry and the most promising platform to become the next Binance.