ALEX Governance Proposal: $XLNK Approval and Tokenomics

Introduction

ALEX is pioneering trustless finance on the Bitcoin network, developing a comprehensive suite of DeFi primitives that span across all Bitcoin meta protocols. At the heart of its innovative offerings, including the ALEX AMM, ALEX Orderbook, and ALEX Launchpad, stands the $ALEX token, a cornerstone of the ALEX Ecosystem. In addition, ALEX has introduced XLink, the platform formerly known as ALEX Bridge.

In November 2023, the community of $ALEX and $atALEX token holders overwhelmingly supported the transformation of ALEX Bridge into a standalone entity, XLink. Since its establishment, XLink has achieved significant milestones:

• Over 39 million in total volume has been bridged since its launch. For detailed analytics, visit XLink Bridge Overview.
• Our community engagement has flourished, marked by significant growth across platforms:
  - Discord boasts 4,500 members.
  - Twitter has gathered more than 8K followers.
  - Telegram close to 1K members.
  - Zealy features 4,300 members and has received 12,000 quest submissions.

Building on this success, we propose launching the $XLNK token to support scalable growth and establish a governance framework aligned with validator interests, securing XLink’s role within the ALEX ecosystem.

$XLNK Token Launch

The launch of the $XLNK token is to be entrusted to the Xlink DAO Foundation (“XlinkDAO”), established specifically to guide the governance of XLink and safeguard its sustained growth. Operated under the ALEX LAB Foundation (“ALEX”), which itself is overseen by $ALEX holders, this governance ensures that the value created through XLink and $XLNK accrue to the ALEX ecosystem and its contributors.

Additionally, our tokenomics approach encompasses a strategic allocation, awarding 10% of the entire $XLNK supply to $ALEX holders. This move facilitates direct involvement of $ALEX holders in XLink’s governance while also maintaining their engagement within ALEX.

This 10% supply of $XLNK will be distributed as rewards over time to those $ALEX holders who are economically contributing to the ALEX ecosystem, specifically those staking and farming involving $ALEX (see “The Proposed Tokenomics of $XLNK”). For avoidance of doubt, the allocation for the XLink points system is separate from the allotment for $ALEX holders and is sourced from the Marketing and Initial Sales segment.

Why $XLNK Token?

XLink, as a subsidiary of ALEX, operates with a distinct business model and distinct needs. For XLink’s ongoing and scalable growth, there’s a requirement for operational funds, marketing resources, and a governance framework — needs which the $ALEX ecosystem token is not structured to fulfill.

To maintain the integrity of the bridge, it is crucial to establish a governance model that aligns with the vested interests of key stakeholders, incentivizing them to actively secure the bridge.

The proposed tokenomics will enable XlinkDAO to:

• Fund its operations and ecosystem expansion.
• Access capital from institutional buyers seeking to invest.
• Motivate validators to secure XLink, with a structure that rewards performance and penalizes non-compliance.

Furthermore, $XLNK is proposed to be accepted as a payment for bridge services.

Opting for a separate token, rather than solely utilizing $ALEX, while still allowing value to accrue to the ALEX ecosystem, presents a clear indication of XLink’s performance, mitigates potential risks by bridge validators, and enhances the utility of $ALEX.

The Proposed Tokenomics of $XLNK

The proposed maximum supply of $XLNK is 1 billion tokens, allocated as follows:

• Market campaign and Initial Token Sales: 10%
• Allocation to $ALEX holders: 10%, as staking and farming rewards for:
  - ALEX Staking (Manual Staking and atALEX)
  - ALEX/STX Farming
  - ALEX/atALEX Farming
• Strategic buyers: 10%, with a 24-month vesting period
• XLinkDAO Treasury Reserves: 70%, allocated for operational and developmental needs, specifically:
  – Working Capital: 25%, at the discretion of XLinkDAO
  – Validators Incentives: 25%, at the discretion of XLinkDAO
  – Ecosystem Growth: 20%, at the discretion of XLinkDAO

Token Utility

The functionality of $XLNK token includes:

• Governance: Enables holder participation in decision-making processes.
• Bridging Fees: Accepted as payment for bridge transaction services.
• Validator Incentives: Offers rewards to validators, subject to vesting conditions.
• Insurance Fund: Protects the network by using unvested incentives and staked tokens that may be slashed in certain scenarios.

How $XLNK Benefits $ALEX Holders

The endorsement of the $XLNK token is a pivotal move for the ALEX ecosystem, ensuring that XLink’s progress feeds directly into the prosperity of $ALEX holders. This crucial decision provides $ALEX holders with significant advantage:

Direct Economic Interest: The allocation of 10% of $XLNK tokens to $ALEX holders not only incentivizes their participation in XLink’s governance but also allows them to benefit directly and proportionately from XLink’s success.

Clear Performance Metrics: Introducing the $XLNK token provides a transparent and quantifiable metric for $ALEX holders to gauge the returns of their involvement and the overall health of the ecosystem.

Risk Mitigation: With a separate $XLNK token delineating specific roles and incentives, potential risks associated with bridge validators are reduced. This aligns their goals with the broader objectives of the ecosystem, ensuring that their performance enhances security and trust in the XLink bridge.

Utility Expansion: $XLNK augments the functionality of the $ALEX token by separating the utility roles, enabling $ALEX to focus on its core functions of governance and rewards within the ecosystem.

Synergistic Growth: The interdependent growth of XLink and ALEX is such that as the bridge’s utilization increases — thereby enhancing the TVL of the ALEX platform — it will organically draw more users, promote developer involvement, and, consequently, amplify the demand for $ALEX.

Review of $ALEX Utility and Ongoing Benefits

$ALEX remains the pivotal governance token of the ALEX platform, serving as the community’s voice within the ecosystem. In the recent half-year, $ALEX holders have endorsed XLink’s emergence as an autonomous entity and ratified the initiation of four launchpad projects, with additional ventures poised for evaluation. Furthermore, $ALEX holders are poised to receive $XLNK tokens, positioning them to potentially share in the distribution of protocol revenues, subject to the community’s consensus. Importantly, $ALEX holders will continuously reap benefits from a variety of ventures cultivated within the ALEX ecosystem, including projects incubated by Bitcoin Lab and those propelled from the ALEX launchpad. This ongoing engagement with new and existing initiatives ensures that $ALEX holders remain integral to the platform’s evolution and share in its collective success.