On the 19th of January 2021, Refund Token will launch an innovative proposal known as "Fair Exchange Staking" (FEX) as a way to pay rewards to the holders of the token. Since this is a new method of rewarding cryptocurrency holders, I think it is important to cover how FEX works so that existing RFND holders can know what to expect and also so that potential RFND holders can determine whether purchasing and holding RFND is right for them. In this post, I will cover the basics of how FEX works, some of the advantages, some of the disadvantages, and give my final thoughts on both RFND Token as well as the FEX staking mechanism.
Refund token can best be described as a "cryptocurrency mutual fund" in which users purchase Refund tokens and then allow the RFND team to make cryptocurrency trades and deliver profits to the holders. I have written previous articles describing how RFND works as well as the profits that RFND has delivered to its holders.
The purpose of this article is NOT to reanalyze the strengths and weakness of RFND but rather to specifically focus on how the FEX launch will impact token holders. I'll try to keep this article as short as possible, but those of you who know my style already know that is going to be a challenge.
1). FEX Launch will allow RFND to automatically pay dividends. In the past, the team had to manually calculate the dividend and send payments to token holders. The new FEX system will work automatically and increase both the speed and accuracy of reward payments.
2). FEX will allow RFND token holders to receive payment in either Bitcoin Cash or ETH. The best part is that YOU get the choice of which crypto you want to receive as payout. In my opinion, this is one of the biggest advantages of the Refund Token. Many other crypto projects will provide staking rewards in an obscure crypto. This leaves the possibility that the team can simply be minting more of the coin to pay the rewards, but with RFND, you can be assured that you are earning a well respected crypto that is outside the hands of the team.
3). FEX will have some of the lowest staking fees in the crypto world. Many of you know that I am a huge fan of DeFi and lending ERC-20 tokens on protocols such as Compound and Harvest.Finance. However, the high gas fee for ERC-20 tokens means that it can cost several dollars just to stake; even enabling ETH as a lending collateral cost almost $12 as of 1-15-2021. By contrast, Refund Token is an SLP token running on the Bitcoin Cash blockchain which means that transfers are usually less then a fraction of a cent.
4). FEX will have a tiered reward system that provides a financial incentive to stake more RFND for longer periods. Users who stake larger amounts of RFND for longer time periods will have a higher reward rate than people who stake smaller amounts for shorter periods. This is in line with many other financial principles and is similar to how a bank will pay higher interest on a certificate of deposit the longer the term of the agreement is for.
5). FEX will still allow the airdrops of other "partner" SLP tokens. One perk of holding RFND is that the team forges frequent partnerships with other SLP tokens and you can get some nice airdrops of other SLP tokens simply for holding RFND. In the past, users have received a variety of airdropped tokens including Honk Token, Spice Token, Dividend Token, and Renew Token.
Prior to FEX, the Refund team paid dividends/rewards to any eligible RFND held in an SLP wallet. There was no KYC required or form to fill out, and simply holding the RFND in your wallet was sufficient to qualify for the dividend payment. With the launch of FEX, however, there will be additional qualifications to receive the payments.
1). Users who wish to participate in FEX will need to subscribe their SLP address and complete KYC using a web app. Simply holding the tokens will no longer automatically qualify you for the rewards. Moving forward, you will have to register your SLP wallet address and provide KYC documentation to receive the rewards. The funds will still be held in your wallet as this is a non-custodial staking. The registration is just so the team's program can know which wallets to send payments to.
2). Users will need to stake a minimum of 5 Million RFND to receive Bitcoin Cash rewards and 40 Million Refund tokens to receive the ETH rewards. The higher staking amount to receive ETH rewards is needed to cover the gas fees needed to send the reward tokens. At the time of writing, 1 Million RFND is between 9 - 13 USD. If we keep things simple and use the price of $10 USD per 1 Million RFND, we see that a user will need to stake about $50 worth of USD to achieve the Bitcoin Cash rewards and $400 worth of Refund to receive the ETH rewards.
UPDATE - After careful consideration, the Refund Team will be creating a "consolation prize" in which a minimum of 500K RFND will still be eligible for the airdrops of other SLP tokens even though they will be ineligible for the BCH or ETH payouts.
3). Users who live in US, North Korea, or Syria will not be allowed to take part in FEX. I guess it says a lot about US treatment of cryptos that we are being excluded from FEX alongside countries like Syria and North Korea, but the simple fact is that complying with US crypto law would have been especially burdensome for the RFND team. It is unfortunate, but this is the way the laws are.
Guess what? I'm going to start this part out by saying that nothing here is financial advice and that you should always do your own research. With that out of the way, I'd like to share my general thoughts on RFND and how the FEX launch will affect the token.
First off, I think it is undeniable that implementing the KYC procedures is going to be viewed as a "necessary evil" at best and an "evil" at worst. Many of us in the crypto world are opposed to KYC especially for an asset that we are going to hold in our own wallet. That being said, I understand why the team has chosen to implement KYC and due to the nature of RFND being a rewards paying token, it is unavoidable. It's something that crypto purists won't like, but its also an unavoidable consequence of how some governments regulate crypto.
Second, the decision to make RFND unavailable to US holders will alienate a large part of the crypto market. As someone who not only serves as an advisor for RFND but also holds a large amount of RFND, this is something that is disappointing for me. I think RFND is a great token, and I'm disappointed that the overly burdensome US crypto laws are preventing me from continuing to be a part of such a great project. As with the KYC, I don't think this should be viewed as a weakness of the token itself, but as one more instance of backwards government regulations of cryptos (specifically in the US).
On the plus side, RFND has a very strong history, and I believe it has a great future. The ability to stake an SLP token and receive ETH rewards is quite novel. There are a lot of projects that will allow you to stake XYZ token and receive XYZ token, but I like RFND because you stake RFND and earn either BCH or ETH. If you are receiving XYZ token as a reward, it can be hard to know whether you are making a profit, breaking even, or loosing money. Because RFND will pay in BCH or ETH, it will be easy for holders to see how their investments are performing.
The lower staking fees will also be a huge plus, and I appreciate how the tiered rewards program gives a greater reward the more RFND you stake. Lastly, the partnerships and airdrops of random SLP tokens are nice. You never know what token will be the next to "moon", so receiving random tokens through RFND could prove quite profitable if one of those tokens experiences a large price jump.
In closing, the Refund Token is a novel crypto investment that has a lot going for it. I have held RFND for several months and have been impressed by the payments as well as the strength of the management team. I understand that the transition to FEX will be a significant change and will require a bit of an adjustment. Everyone has to set their own investing strategy, but I know that I would certainly participate in FEX if I lived outside the US. Unfortunately, with the launch of FEX, I will no longer be able to participate in the BCH/ETH rewards offered by RFND, but I'd encourage my non-US audience to take a look at RFND, evaluate its pros and cons, and determine whether it has a place in your crypto portfolio.
As always, thanks for reading!
I have to be 100% clear that I hold a significant amount of RFND and serve as an advisor to the project. Although I always try to be as objective as possible in my analysis of crypto projects, I think its important to note that this is a project that I do strongly support and want to see succeed