HEX is different from most other high-risk dapps
As highlighted in our recent report on the high-risk dapp category. Q1 2020 has seen an explosion in activity, and the vast majority is due to one dapp – HEX.
Activity spiked again to over 1,000 daily active unique wallets in mid-April, and a couple of days later, the USD price of the HEX cryptocurrency, which is an ERC20 token, started to soar as one wallet bought 10,000 ETH-worth of HEX via Uniswap.
Since then, HEX’s USD value has risen by almost 800%. Which has driven the dapps daily activity to over 2,000 wallets on occasion. With daily value totals of well over $1.5 million.
High-risk, high growth
Of course, this sort of growth curve is fundamental to high-risk dapps, which advertise very high financial returns for their users. Driving a strong virality bubble in the process.
However, HEX is different from most other high-risk dapps, which are typically structured around hot potato game theory or standard pyramid selling.
Instead, because it combines its own token with long period, high return staking mechanics, and strong affiliate marketing. HEX is better viewed through the lens of an ambitious attempt to bootstrap a new cryptocurrency and community.
It’s no coincidence that the project was originally known as Bitcoin HEX, and is often positioned by its proponents as being akin to providing the opportunity to “buy Bitcoin in 2011” in terms of hoped-for financial returns.
Of course, there is plenty of debate swirling around the legitimacy – and even the legality – of the project. That’s beyond the scope of this article. Although it is worth pointing out that the formal description of HEX as being a high-interest certificate of deposit is not technically correct.
In a standard certificate of deposit, users lock up their fiat money for a set period of time and get back their principal and interest in the original currency deposited. To use HEX, users swap their principle in ETH for the HEX token and receive both their principal and interest in HEX, which is a new, untested currency.
Hence, the high-risk element of HEX isn’t that users receive nothing at all from the scheme. Which is what usually happens in high-risk dapps. Rather the risk is that by the time they receive their principal and interest in HEX tokens. HEX itself will be worthless.
As ever – and particularly in this case. DappRadar reminds users never to invest more value into dapps than they can afford to lose.