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by starburst
May 28, 2023

The eHEX and pHEX dilemma

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HEX on Ethereum is the brainchild of Richard Heart. Later on, he decided to launch PulseChain for the Hexican community, which was struggling with paying high gas fees, and that’s how pHEX was created. There’s a schism now between the two factions, one supporting ERC-20 eHEX and the other PRC-20 HEX, that could decide the fate of the token. We bring here the main pain points, trying to show what’s at stake.

The overview of the situation

The Hexicans sacrificed for PulseChain almost two years ago. After the PulseChain launch, they found out that their sacrifice was worth less on the new chain. HEX also fell 97% from its all-time high. Considering that there was a bear market and many assets had similar losses, this wasn’t abnormal. The recent market conditions allowed some price improvement, but as soon as the PulseChain snapshot was announced on 10 May and the chain started, investors dumped their HEX once again. 


On the other side, the price of PulseChain HEX started growing and is now pretty close to that of Ethereum HEX which means that the holders have same value tokens on both sides.

The HEX community started raising voices on Twitter and calling for letting go of HEX on Ethereum and concentrating liquidity in just one asset – pHEX, or PulseChain PRC-20 HEX.

Others came in defense of the Ethereum HEX and proposed a more balanced approach.

The community has the power to kill an asset if everyone decides to move their capital, but there’s a cost to everything.

Different game theories are at play all at once, but community perception is a powerful tool many are trying to use. Education is what makes for better choices, so let’s see what options there are.

eHEX/pHEX value bridging

Etheruem HEX dropped 88% from the past 6-month highs and had a very sharp decline after the snapshot. Users sold HEX after being sure of being included in the snapshot and getting copies on PulseChain. It’s difficult to say how much of that sold HEX was bridged over to PulseChain though.

On PulseChain, 1.4B of the HEX copy sits in a HEX/WPLS farm on PulseX. 

The other eHEX/pHEX farm has been closed. 

This means that the incentive to bridge HEX to PulseChain, add it to a liquidity pool together with pHEX, and farm it to get additional INC tokens is over. There still remains the incentive to earn fees from providing liquidity.

HEX copy on PulseChain versus bridged HEX has been in an uptrend since launch; however, the ratio between both tokens doesn’t deviate substantially.

The sentiment on Twitter calling for people to dump Ethereum HEX for the copy has grown in force during the past few days. The motivation is to concentrate the liquidity in just one asset, and since Richard Heart created PulseChain to move the Hexican community to this new chain, that asset should be PulseChain HEX.

The belief is that making pHEX successful will attract more capital.

The objection to this scenario is that people don’t want to unstake their stakes on Ethereum. Some of HEX was staked for 15 years, and there’s a strong unwillingness to see the value of these stakes going to zero despite the existence of a copy on PulseChain that has a similar value.

The price of HEX went 97% down from the ATH, and selling at such a big loss is not an option.

Many believe that both HEX can thrive when the market rebounces, and some are adding to their positions at these discount prices.

One thing is for sure: despite the price declining, the stakers still get the inflation, and the more people unstake, the more HEX they accumulate. This inflation works as a cushion against price drops.

The ETH market cap is $221 billion, and that of HEX is $8 billion, which is 3.6%. The OA holds over 90% of the HEX supply, which means that it has a great influence on Ethereum alone. The HEX community holds a small part of the total HEX supply, but its influence on the Ethereum network is visible.

A clear example of this influence is reflected in Ethereum gas prices. The price of gas was high weeks before the launch, but as soon as the community moved activities to PulseChain, ETH gas fell again.

Pulse, on the other hand, scaled the leaderboard by on-chain activity and total value locked (TVL).

The OA has HEX copied to PulseChain; however, it doesn’t seem probable that it would let go of the value of HEX on Ethereum. The OA isn’t staked and isn’t gaining more HEX from inflation, but selling HEX doesn’t seem like something that is likely to happen.

What is more probable is that HEX on both sides will continue thriving. People who want to play with smaller stakes will do so on PulseChain, as the cheap gas fees will permit closing stakes without having to pay too much for gas fees.

Real money will likely stay on Ethereum as the chain is more secure and gas costs aren’t a problem for large stakes. Eventually, they will become even cheaper. Moving funds to a new chain through a bridge that wasn’t yet battle-tested isn’t something that big money will do willingly, which is why Ethereum HEX is there to stay.

Fiat on-ramps and more on-chain activity together, leading to fast growth of PulseChain, may be a good bait for old money, though. Ultimately, the market (the community) will decide where the value is, but having a dual system between two chains is rather beneficial than harmful.

The play may be longer, but it might be worth the candle.


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