Gamers’ options for liquidating earned virtual goods are limited, flawed, or non-existent in many gaming platforms. WAX intends to foster more liquid markets for such goods by developing a protocol suitable for high throughput commerce amongst diverse gaming platforms and by providing a marketplace that facilitates peer-to-peer trading of earned virtual goods. Co-founders Jonathan Yantis, William Quigley, and John Brechisci lead this project; they also run OPSkins, a major centralized trading marketplace for skins (aesthetic upgrades for gamer items), operational since 2015. WAX raised $76.8 million in a token sale that finished on November 29th of 2017.
WAX consists of both a base protocol and a platform. The WAX protocol is a unique blockchain specifically designed to facilitate the exchange of virtual goods and services. The WAX team believes that purpose-built blockchains, such as their own, can achieve faster transaction times, lower fees, and more consistent performance compared to chains like Ethereum. To allow the network to meet high throughput demands, the protocol reaches consensus through a Delegated Proof of Stake (DPoS) algorithm inspired by Bitshares’ model.
Games and gaming platforms, which house virtual goods, tend to have unique exchange models and transfer conditions. This reality heavily influences WAX’s protocol design. Nodes on the network, dubbed “guilds”, focus on a single virtual goods platform or game server and are responsible for confirming transactions, maintaining consensus, and managing transfer agents. WAX introduced an entity, called the Office of the Inspector General that evaluates guilds, and publishes reports by which the community can compare said guilds. Nodes, and the users who elect these nodes via delegated stake, are compensated for such services with a percentage of the fees on lists, transfers, and contracts.
The WAX platform is modeled on companies like Uber, Airbnb, and Amazon: WAX aspires to be the decentralized infrastructure that allows buyers and sellers of virtual goods and services to directly, securely, and cheaply commerce. Key participants in this market include sellers and buyers of virtual goods, listing services, virtual goods appraisers, transfer agents, ‘guilds’ (the network nodes responsible for monitoring and assigning transfer agents), and asset creators. These participants are incentivized to interact in a mutually-beneficial manner conducive to monetizing previously illiquid goods and services.
For example, an agent looking to sell a virtual good (say, a character skin), be she a gamer who earned that good in a game permitting peer-to-peer trade or an asset designer offering a new product, can list that good through WAX directly or potentially through third-party specialty sites and blogs connected to the WAX network. Virtual goods appraisers provide valuation services to such marketplaces and node regulated transfer agents secure purchases through escrowing goods and payments. Disputes amongst buyers, sellers, and transfer agents are adjudicated by nodes, who appoint neutral transfer agents to review transactions.
WAX also supports decentralized applications (dApps) and since it went live in June 2019, the network has fostered a growing dApp ecosystem.
WAX’s token, WAX, confers holders a combination of payment, governance, and contribution rights. Token holders can take part in Wax’s DPoS consensus model through approving nodes by ‘voting’ WAX, and receiving a portion of the supported nodes’ transaction fees relative to WAX staked. Listing fees are paid in WAX, and all payments, including gamer purchases of virtual goods, ultimately use the token; WAX envisions end-users converting fiat to WAX through integrated exchanges. Transfer agents must also bond WAX tokens in order to contribute to the network. This bond serves as a long-term incentive mechanism, with portions of the bond forfeited in cases where arbitration concludes in favor of a user’s dispute against a transfer agent. On the whole, the token ecosystem is designed to incentivize quality service and security amongst market actors in this particular niche of the gaming industry.
WAX tokens were initially generated on the Ethereum blockchain while WAX’s chain itself was developed. Rather than burn the initial ERC-20 based tokens, WAX decided to issue new tokens to holders of the ERC version on a 1:1 basis.