Every DeFi project aims to solve a problem ailing the financial world. The founder of Jax.Network, Vinod Manoharan, aims to build a fully decentralized stablecoin which is more reliable than USD-pegged stablecoins.
Although the Jax.Network blockchain is anchored to the Bitcoin protocol, its native token dubbed JAX shouldn’t be as volatile as BTC. One of the basic features of the technology is decentralization, which most stablecoins, including USDT and BUSD, have not been able to accomplish.
In this article, we discuss the main reason why Manoharan and his team work with the Bitcoin protocol and what benefits Jax.Network gets from supporting Bitcoin.
How Jax benefits from the Bitcoin blockchain
- Curb shard inflation – Anchoring to the Bitcoin blockchain helps to reduce inflation that might take place across Jax.Network shards. Since miners can merge-mine the Jax.Network beacon chain, shard chains, and Bitcoin, they can only mint JAX on the shard chain by burning their coming Bitcoin and JXN reward. This process helps reduce the rate of JAX issuance. It aims at transfering the value of BTC + JXN into JAX. Miners can arbitrage what is the most profitable for them: mining BTC+JXN or JAX, depending on the market conditions.
- Promoting early adoption – Implementing JAX into the Bitcoin protocol could be used to promote early adoption of the coin.
- Boost network security – Merge-mining both Jax.Network and the Bitcoin network provide an additional layer of security against 51 percent attack, provided the miners do their work on Jax.Network transparently and honestly.
- Prevent centralized intervention – By implementing the Proof-of-Work consensus, Jax.Network aims to build a fully decentralized payment system that third-party entities cannot take down. PoW ensures that anytime a miner on the network goes down, another one rises. Therefore, contributing to the overall continuation of the network.
- Healthy miner rewards – Merge-mining both networks ensures miners can get block rewards and transaction fees in the form of JAX, BTC, and JXN. The rewarding system takes any of the following combinations:
- JXN + BTC block reward
- JAX block reward
- Anchoring Jax.Network to the Bitcoin blockchain contributes to the value of the Bitcoin network and ensures miners get JXN freely to stand for electricity costs and the additional costs associated with merge-mining.
- Complementary technologies – Bitcoin was built as a payment ecosystem and a store of value, similar to gold. However, Bitcoin is flopping as a payment coin due to its high volatility. Jax.Network compliments this inadequacy by building a reliable decentralized payment infrastructure powered by a stablecoin. Jax.Network will add stability and scalability to the Bitcoin network and provide miners across both networks with additional rewards.
As you can see, there are endless benefits of anchoring Jax.Network to the Bitcoin blockchain. The network can curb inflation brought about by Moore’s law of monetary economics, where a coin is devalued due to increasing hash power. JAX achieves stability and scalability in the Bitcoin ecosystem. Therefore, it can function as a reliable payment system which is non-volatile, decentralized, and scalable.