Congestion on the Ethereum blockchain has become an issue of concern. It has led to high gas fees as well as slow transaction speeds. The congestion has led to a growing demand for a scalability solution. A workable scalability solution would help to relieve congestion, reduce gas fees, and lead to an inclusive payments network on Ethereum. Hermez, a decentralized layer 2 solution, is looking to monetize the Ethereum network through a layer 2 protocol. The company has launched HEZ tokens to get the community involved.
Hermez Scalability Solution For Ethereum
Hermez offers a leading decentralized Zk-rollup ( layer 2 protocol ) that is a scaling solution for Ethereum. The Zk-rollup gives Hermez the ability to scale payments and token transfers on top of ETH’s public blockchain. According to the companies whitepaper, 50% of transactions on the Ethereum network are transfers.
Additionally, a high percentage of these transactions are deposits and withdrawals from exchanges. Hermez strongly believes that the use of rollups could cut costs, reduce gas prices, facilitate more complex contracts, and more. According to a recent report, ETH cumulative transaction fees in 2020 are more than $350 million. This is more than double of Bitcoin’s aggregated total in network fees.
Why HEZ Token Launch Matters
The project has given early users a role in their protocol while supporting community projects. Besides the protocol, users will get early access to the HEZ tokens. HEZ tokens launched on Friday, October 16, 2020, via a liquidity pool on the Uniswap decentralized exchange.
By giving users a portion of the protocol, Hermez is reaffirming its mission of creating a decentralized ecosystem for the community. The HEZ tokens are deflationary tokens with 30% of the value being generated via token burns and redistribution to stakeholders. 40% of the tokens will go to community-driven projects, and the remaining 30% will be allocated to the maintenance of the Hermez Network and rewarding layer 2 participants.
Investing 40% of the value generated into community-driven projects will be done through grants. The process will be governed by the Proof of Donation mechanism built into the protocol. On October 16, 2020, three million HEZ tokens became available to the public via a liquidity pool on Uniswap. In total, 100 million HEZ tokens have been created.
Jordi Baylina, Tech Lead At Hermez Stated That:
“We are offering early access to our deflationary HEZ token by inviting the Ethereum community to take a meaningful part in the Hermez Network’s journey towards a scalable and sustainable Ethereum network. Our aim is simple: To create a decentralized ecosystem for the community.”
About the HEZ Tokens
The HEZ tokens will be the main token of the Hermez Network. All users who wish to bid and participate in auctions will have to use it. User rewards will also be sent in HEZ tokens. The goal is to reward early users that help the network fire on all cylinders.
Out of 100 million tokens total, users will have access to three million tokens via the liquidity pool on Uniswap. The introductory rate is set at $1. After that, any user that wishes to take part in the action and become a coordinator can access their Hermez tokens in Uniswap. The rest of the tokens will be distributed once the Hermez Network is launched. In regards to listing on other exchanges, Hermz told Visionary Financial that:
“Following the liquidity pool on UniSwap, Hermez Network is working to list the HEZ token on several exchanges with details to be announced later this year”
By giving users a chance to become part owners of the network, Hermez is reaffirming their mission to be inclusive and community-focused. The aim is to create a collaborative and self-sustaining network for all users.
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