Ron Governance Token

21 March 11:53

[TL;DR]

Axie Infinity, the play-to-earn game, is launching the RON Governance Token for its Ronin network. Sky Mavis, the creator of Axie Infinity, made the announcement.

The creation of the RON token is to allow Ronin users to pay for transactions on the blockchain; it will be the reward upon staking by block validators in the Ronin network.

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Background Information

Ronin was created by the popular blockchain game Axie Infinity to mitigate the congestion and high gas fees associated with Ethereum's original Layer 1 network. By February 2021, Ronin wallet had achieved an impressive 2 million downloads. The blockchain utilizes Proof-of-Authority, which requires lesser validators than Proof-of-Stake. Since the creation of the Ronin network, there has been an overall improvement in the experience of Axie users as transactions are now seamless and faster.

One major character of RON is that it is a governance token, and what is a governance token?

What is a Governance Token?

A governance token is a cryptocurrency token that grants users stakeholding rights. They are tokens that allow users to determine the future direction and make changes to a blockchain network. They are tokens that allow users to influence decisions concerning a blockchain protocol. Users can propose new features, and even vote on significant changes to the blockchain architecture. The organizations most responsible for developing these tokens are called Decentralized Autonomous Organizations (DAO). These are organizations that give users control over their development process.

The two most popular blockchains, Bitcoin and Ethereum, utilize some form of governance. It has led to significant happenings in both blockchains.

After a hacker stole $55 million worth of ETH, Ethereum investors voted to decide the direction the blockchain would take. While the investors voted for a "hard fork" that would allow them to withdraw their funds, the creators were in support of leaving the protocol immutable thus making the stolen amount frozen. This incident caused the creation of Ethereum Classic (ETC) which is based on the original blockchain and Ethereum took a different direction. It worked out well in the end for the investors as Ethereum is now 2nd most valuable cryptocurrency.

This story is a classic positive example of governance systems. There are also negative examples like Tezos, a governance token that had to stop development till it was through with litigations from investors.

Even though blockchains like Ethereum and Bitcoin have governance systems that allow for decentralization, experts still argue that decentralized finance (Defi) networks should operate using governance tokens. Some argue that it may not be useful for smaller cryptocurrencies. Philipp Hacker, a cryptocurrency researcher stated in one of his research works that "Cryptocurrencies, especially the smaller ones, are not systemically important enough currently to warrant governance systems".

One beautiful thing about governance tokens is that it gives members of the community a sense of ownership. For example, Nimbus gives dividends to token holders just like shareholders of a publicly-traded company. Governance tokens are also renowned for fast appreciation in value. It can be linked to the fact that users are stakeholders in the project and, the cryptocurrencies stick to being decentralized. For example, UNISWAP was launched in September 2020 at $3, and at the time of writing this article is at $11; it hit an all-time high of $45 in May 2021.

How Much is a RON Token Worth?

RON started trading on January 27 at $3.56. As of the time of writing this article, it was trading at $2.45 (February 2, 2021, 10 am UTC).

According to CoinMarketCap, the self-reported market capitalization of RON is at $365, 103,668. Considering that RON has been in the market for a remarkably short period, there is not sufficient data available to determine the amount of RON in circulation. Data currently available are self-reported.

Some interesting data available about the RON token can be seen on the charts below.

RON Price Chart as of February 2nd, 2022

Source: CoinMarketCap

According to the Ronin project, there is currently about 148,339,298 RON in circulation as of the time of writing this article.

In other news, Axie Infinity users have expressed pessimism at the launch of RON. The complaints have been mostly about the value of certain assets like SLP (Smooth Love Potion) that have gone to as low as 9 Cents. SLPs are crypto-assets given to users as rewards for completing tasks on the network. However, there is a reprieve for the investors as Axie Infinity has committed to giving 70 million RON out of the initial 185 million in circulation to its Ronin community members.

RON token has incredible potential to become a market leader in the NFT sector. It is because Ronin is second only to Ethereum in terms of all-time NFT sales volume, and RON is the token of the Ronin ecosystem. Information from Ronin shows that the ceiling on circulating RON token is 1 billion RON, and there is a breakdown of the sharing formula.

30% of all the available RON tokens will be allocated to Sky Mavis.
30% (300,000,0000 RON) will be allocated to the Axie Infinity Community.
25% (250,000,000 RON) will be given as Staking Rewards
The last 15% (150,000,000 RON) will be available as funds for the Ronin ecosystem.

How Can I get RON?

Source: Twitter

The token is listed on Gate.io. The RON/USDT pair is now live.

They are currently available as rewards for users of the Ronin network.

In fulfilling their commitments to users, RON can be claimed on the Katana platform by users who hold Axie Infinity coin (AXS) and SLP assets starting from the 3rd of February. The RON/ETH pool will receive 500,00 RON every day from the 28th January 2022 till 3rd February 2022.

From the 3rd of February, users can then farm RON using their LP (Liquidity Pool) tokens. The reward structures for the pools are as seen below.

AXS/ETH pool: 24,169.18 RON/day
SLP/ETH pool: 132,930.51 RON/day
RON/ETH pool: 84,592.15 RON/day

Axie Infinity gamers will be allowed 20 free transactions per day on the platform. According to Ronin, this is to "usher in a new era". A new application called Scatter can also be used to transfer RON to different addresses.

Author: Gate.io Observer: M. Olatunji
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
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