XEP coins are sometimes burned

There are several ways how XEP burns can take place:

  • The core team decides to burn a part of the premine.
  • The gas fee used during each transaction (~0.0002 XEP on average) is always burned.
  • Any user can burn coins from a technical perspective. However, this is unlikely to happen.

XEP is a deflationary crypto currency when comparing it with its max supply, since coins are also generated for paying staking rewards.

What does it mean to burn coins?

Burning XEP coins means to permanently remove them from the total supply. This effectively removes them from being used or traded. A declining number of coins is considered positive, as it does not drive XEP inflation and thus supports long-term XEP price stability. Burnt coins cannot be re-created again. There is also no mechanism to create new XEP coins other than XEP staking.

3 Billion XEP Premined

Electra Protocol was originally launched at January 1, 2021, with 3 billion XEP premined. These coins are in full circulation and reserved for expenses of the community. These network addresses of the premines are listed below including their original values:

The Binance Smart Chain collateral (view in Block Explorer) originally was 500 million XEP and used to be part of the 2021 premine. The balances of the 2021 premine and the Binance Smart Chain premine have decreased already from its original values.

2 Billion XEP Remaining

The original community premine (3 billion XEP) declined through burning events and collateral measures by ~33%. As of January 2022, the original community premine is ~2 billion XEP. The funds are held in these wallets:

40% Burning

On April 30, 2021 a big XEP burning event took place which brought the XEP total supply down by 40%. As a result, the total supply of XEP decreased to below 18 billion XEP at that time (as of December 2021). However, the maximum supply remained at 30 billion XEP. The maximum supply does not say much in a proof-of-stake blockchain.

XEP coin burn - Electra Protocol total supply burn - 40 per cent - April 30 2021

Binance Smart Chain Collateral

The Binance Smart Chain collateral address was used in order to get WXEP (Wrapped XEP) listed on PancakeSwap. This way Electra Protocol can address buyers who want to trade WXEP tokens in an environment they are familiar with. The pairing liquidity needed for the listing on the Binance Smart Chain was lended out by members of the community.

2021 Premine Burning

The 2021 XEP premine was used to pay for expenses in 2021, such as the creation of the Electra Foundation. All XEP coins not needed for 2021 were burnt by the end of 2021. In total, 636,927,946 XEP were burnt at the end of 2021.

XEP Premine burning 2021 - Electra Protocol - burning XEPs

Why does burning not reduce the max amount of coins?

Electra Protocol is a proof-of-stake blockchain. This means that the holders of XEP make sure that the network remains online. In order to give an incentive to XEP holders for keeping the network running, staking rewards are paid out.

The maximum amount of XEP coins currently listed is 30 billion XEP coins – and it not relevant for any proof-of-stake blockchain. More important is the yearly inflation rate at which the current supply is growing. The difference between the current supply and the maximum supply (30 billion XEP) is the amount which is available for staking right now (it is a theoretical number used in calculations). The max supply is not very much relevant for the Electra Protocol blockchain, given that the annual inflation rate of the protocol is just 3% XEP APY. Using the current XEP rewards mechanism, the max supply amount may be reached in the year 2050, 2060, or even later. If the 30 billion limit is reached, it will simply be crossed to pay for further staking rewards. This means that the annual inflation rate is determing when certain XEP supplies will be reached. This goes for other proof-of-stake projects as well.

More important than the max supply is the current supply: The amount of XEP coins in circulation is a lot less and is changing every day (you can check the current supply in the Block Explorer). At the time of writing it was 17,333,053,140 XEP (December 22, 2021). When coin burns take place with Electra Protocol, they are always deducting the current supply – and not the max supply.

Many other proof-of-stake blockchains use much higher staking rewards (12% APY, 18% APY, etc) which will result long-term in significant inflation rates and a loss of value over time to long-term holders. Additionally, many other crypto projects don’t have a max supply at all, causing them to indefinitely rise.

Electra Protocol