How UniMex Handled Block Rewards Halving in a Decentralized Way

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How UniMex Handled Block Rewards Halving in a Decentralized Way

May 4 2021

In brief

  • Block rewards halving is necessary in the crypto industry as it lowers the supply and boosts token price.
  • There are several ways to conduct rewards halving, some of which are deemed more decentralized than others.
  • DeFi project UniMex came up with a method that involves a smart contract, and differs from Bitcoin’s method quite a bit.

In order to handle block reward halving in a decentralized way, UniMex came up with a new approach for its SPACE token, which involves a special smart contract that will become the sole owner of 50% of token rewards.

Block rewards halving has been an important part of the crypto industry during its entire existence. Bitcoin, the first cryptocurrency ever created, was developed with the halving process included into its mechanism, set to be triggered whenever 210,000 blocks were mined, which ends up happening roughly every 4 years.

However, since Bitcoin’s creation, there were thousands upon thousands of new crypto projects, and some of them were developed in a different way. For example, one of the tokens belonging to the DeFi project UniMex — called Farm.Space (SPACE) — was created without rewards halving included into its contract. The project decided to take a different approach for the sake of decentralization, and this other approach is now explained.

UniMex Comes Up with a New Rewards Halving Method

When searching for alternative methods to cut block rewards in half, UniMex first considered token migration. However, this was deemed unnecessarily complicated, and so the project came up with a different idea.

The new idea revolves around creating a private pool, whose id is 18, and which has a 50% rewards allocation. The project even created a private token for this pool, which was followed by the creation of a special smart contract, to which the private token is sent to. Basically, the smart contract then becomes the sole owner of the new token, and it receives all the dividends from the pool.

The contract first adds tokens to the pool, and then it starts farming. Its primary role is to withdraw dividends and burn them, meaning that it locks them up with no ability for the tokens to get withdrawn in the future.

According to Farm.Space’s recent announcement, the first SPACE rewards halving was in preparation for its second phase in mid-April, and anyone was allowed to burn tokens and contribute to maintaining the network, in the spirit of decentralization.

The method is new, and while some may consider it unusual, it does seem to be working for this project. In the future, if it was discovered to be particularly beneficial when compared to others, it might even become a new norm for future projects.