The Dual-Token Model in the Blockchain World: Pros and Cons

by Arthur · April 17, 2023

The concept of dual-token models refers to systems based on a blockchain with two native tokens, one of which acts as a means of payment and the other as a governance token. In fact, the roles tokens play may vary depending on the project, but the basic idea of this model assumes that one token supports the other, and that both are an integral part of tokenomics. This model is quite popular among the newer generations of blockchain projects. Today we will discuss some pros and cons of the dual-token model in the blockchain world and explore MinePlex as an example of its proper implementation.

Table of Contents

What is the Dual-Token model?

The Dual-Token model is a two-token system used in some blockchain platforms to support the flow of liquidity, provide incentives for users, and keep them within the ecosystem. For example, one token may serve as a medium of exchange for transactions, while the other provides its holders with various benefits such as governance rights or betting opportunities.

Advantages of the Dual-Token Model

Price stability: The dual-token model can improve the stability of the token exchange rate, and mitigate the volatility of the cryptocurrency market. It gives investors a more stable investment option, as they can use the currency token for payments or hold it as an investment.
Improved liquidity: The currency token can be traded on exchanges, which makes it more liquid and accessible to investors by involving, among other things, market players. It provides more opportunities for investors to buy and sell the token seamlessly.
Clear Tokenomics, which in this context means clarity about the specific role of each of the tokens within the project’s ecosystem. It ensures that the project’s users and investors understand the value and purpose of each token, as opposed to the confusion that can arise when these roles are mixed.
Incentivized token use, which follows from the previous point. As for the tool, it is used to access the project’s products or services, which incentivizes its use. And this ensures that the utility chip retains its value and is not affected by market fluctuations.
Improved management: As for governance tokens, they provide a means for investors to participate in the platform’s governance. It can help to align the interests of the platform with the interests of the investors, and create a more transparent and inclusive ecosystem.

Disadvantages of the Dual-Token Model

Complexity: The dual-token model can seem complicated, as it requires investors and users to understand the role and value of each token.
Token Economics: Dual-token models require careful consideration of the token economics of both tokens, which can be challenging to manage and balance.
Slower adoption because the dual-token model is still relatively new and unknown to many investors and users.

MinePlex and its implementation of the Dual-Token model

MinePlex is a next-generation digital ecosystem that offers advanced payment solutions to expand blockchain’s influence and make using cryptocurrency as easy as traditional currencies. To achieve this goal, the company uses its unique CrossFi technology, which combines the stability of traditional finance with the transparency and security of blockchain technology.

The MinePlex ecosystem consists of nine products and services that offer users around the world advanced payment solutions for everyday life. XFI coins act as entry keys to these solutions. This design means that the coin has utilitarian functions and is used directly within the project’s services.

The team undertook a major project update by moving to a new architecture and creating the second, more scalable and secure version of the MinePlex blockchain (here’s a roadmap in PDF). There are two native coins – XMine (MPX) and CrossFi (XFI) – that are at the core of the new blockchain (as in the first version). MPX is a base token, a non-volatile token with unlimited emission, while XFI is a utility volatile token with limited emission.

MPX serves as the base token. It provides the computing power needed to generate new XFI tokens on the MinePlex blockchain network via staking. The target level for return on investment is set at approx. 7% per month. However, the exact level depends on the market situation as XFI is a coin traded on non-fixed rate cryptocurrency exchanges. MPX is also used to pay transaction fees. It can only be acquired with XFI and PLEX (a token of the first version of the MinePlex blockchain) at an exchange rate determined by its value on the exchanges. The nominal value of MPX is fixed at 0.01 USDT and is not subject to volatility. For example, if the PLEX token exchange rate is 1 USDT, you will receive 100 MPX when you convert PLEX to MPX.

Meanwhile, XFI is a utility token required to access all products and services in the MinePlex ecosystem, including wallet, finance, payment and marketplace. XFI is also a highly liquid asset. The discharge is planned to last for 20 years.

MPX is not traded on spot exchanges, but can be obtained via exchange operations using PLEX (native token from the previous generation MinePlex blockchain) or XFI.

To conclude

In conclusion, the dual-token model can offer several advantages over traditional blockchain models, including increased liquidity, improved security, incentivized user adoption, and reduced regulatory risk. But with some challenges, which are also inherent in dual-token solutions, platforms must have robust mechanisms in place to ensure that the value of tokens is not affected by market fluctuations and exclude any chance of market manipulations. MinePlex is an excellent example of how the dual-token model can be used properly to create a secure and efficient blockchain platform. And with MinePlex updating its infrastructure (PDF roadmap), including launching new tokens, it now deserves some extra attention from the community.