During the initial phase of the ICON project, ICX was an ERC-20 token that was used to bootstrap development of the ICON network. In mid-2018, following the launch of the ICON mainnet, a token swap was performed, enabling holders of the ERC-20 ICX to exchange for native ICX, which now powers the economy and governance of the ICON blockchain.
What Is ICX Used For?
ICX has a variety of use cases from governance of the ICON blockchain to DeFi collateral. In this section, we’ll look at a few of the most popular use cases for ICX.
As an ICX holder you can stake and delegate your ICX to a validator as part of ICON’s on-chain governance model. ICX staking means locking up the ICX in your wallet in exchange for daily ICX rewards. You must delegate the staked ICX to a validator in order to receive these rewards.
As a reward for participating in ICON’s governance, stakers receive an annual reward rate of around 6-8% per year. This number fluctuates based on the overall amount of ICX currently staked. If 100% of the network is staked, the reward rate would be 3.06%, while if only 1% of the network was staked, the reward rate would be 306.46%.
The ICX token is the currency of all applications that are built on the ICON blockchain. ICX can be used for sending or receiving payments on the blockchain and pays for ICON transaction fees as well. ICX is utilized throughout ICON’s suite of DeFi protocols, including Balanced, OMM, Optimus, and others, while also serving as the gas token to operate enterprise products such as Zzeung and broof.
Both broof and Zzeung are ICON’s core enterprise blockchain products, and each utilize the ICON public chain to conduct transactions in a decentralized manner. Zzeung, for example, is a decentralized identity service that operates on the ICON public chain, allowing users to store their verified identity on the blockchain where it’s immune from tampering and forgery. Zzeung can then be used by enterprises to verify the user’s identity for a number of different use cases.
Meanwhile, broof is a documentation service that embeds certificate into ICX transaction metadata directly, and private key is linked to an enterprise. So this allows enterprises, such as Universities, to issue certificates that can be viewed, timestamped in a tamperproof way.
ICX can also function as a peer-to-peer currency in order to transact value in a permissionless, borderless, and non-custodial manner. With the presence of highly liquid markets for ICX, utilizing ICX for peer-to-peer transactions can be done relatively quickly and seamlessly. Additionally, ICX serves as a currency within dApps on the ICON network, including Craft, ICON’s premier NFT marketplace.
How to Earn Yield on ICX
There are two primary ways to earn yield through the ICON network – native staking and DeFi.
For users who may be more risk averse, the safest way to ensure your ICX token is earning yield is through natively staking your ICX token as part of ICON’s governance protocol.
Using one of the available ICON wallets (which are explored further below), users can delegate their ICX to a validator node of their choice. Validators are responsible for making governance decisions within the ICON governance protocol while also operating nodes to ensure the ICON blockchain remains active at all times.
As a reward for participating in this process, those who delegate their ICX receive an annual reward rate of around 6-7% per year, paid in ICX. Rewards are distributed every 24 hours and can be claimed immediately upon distribution via one of the available ICON wallets. The reward rate fluctuates based on the total amount of ICX that has been delegated.
When ICX is delegated, it becomes locked in the governance contract. Should a user wish to unstake, it takes around a week until they receive their tokens. This unlocking period is in place to reduce the chances that a large number of tokens unlock at once, which would create network vulnerability.
Decentralized Finance (DeFi)
Like many other blockchain networks, ICON boasts a number of decentralized finance protocols which allow users to earn additional yield on their assets with varying levels of risk and reward. While the possible combination of available strategies is practically endless, here are some examples of how ICX holders who are willing to take on some additional risk may be able to earn some additional yield.
For one example, ICX holders can use their wallet to log into Balanced. They can deposit their ICX, which is converted to sICX (short for “staked ICX”, which allows users to continue earning the native staking rewards without requiring they lock their tokens). If they wish, they can deposit that sICX as collateral in order to mint bnUSD, a collateralized stablecoin. The user has now used their collateral to mint and borrow bnUSD, and can now use that bnUSD throughout the ICON ecosystem. Should they wish to withdraw their collateral, they simply need to return the bnUSD they’ve minted.
Alternately, users can also deposit their ICX into a liquidity pool of sICX/ICX. By doing so, they are gradually converting their ICX into sICX. In return, they’ll earn an allocation of the BALN token, the governance token of Balanced, along with a slice of trading fees earned for providing liquidity.
Balanced isn’t the only option ICX holders have when it comes to decentralized finance. Another protocol available is the “Open Money Market”, also referred to as OMM. OMM is exactly what it says it is – an open money market!
Users can elect to either lend or borrow ICX (or other ICON-based tokens) and will either receive or pay interest based on the given supply and demand dynamics of a given market. In addition, users who do either activity will also be able to earn $OMM, the governance token of OMM.
Optimus, one of the newest DeFi protocols, is also available. Optimus is what is referred to as a “yield optimizer”, meaning users can deposit their ICX, pick a strategy, and “set it and forget it” as the protocol will interact with other ICON DeFi applications in order to execute a yield strategy based on the users preferences and risk tolerance.
How to Buy ICX
For users who prefer trading on a decentralized exchange, ICX can be purchased on Balanced – an AMM-style DEX built on ICON. Balanced allows users to purchase ICX with IUSDC and IUSDT (USDC and USDT wrapped with Orbit Bridge), as well as USDS and bnUSD, a collateralized stablecoin minted via Balanced.
ICX is also available on a variety of centralized exchanges with highly liquid markets against USD, KRW, USDT, BTC, ETH. Below is a list of exchanges with ICX markets.
How to Store ICX
There are three wallets available for storing ICX and interacting with the ICON network:
The Hana wallet is a Chrome extension that was developed by ReliantNode, a validator node on ICON. Similar to other multi-chain wallets like MetaMask, Hana provides support for multiple blockchains including ICON, Ethereum, Polkadot, Kusama, and Moonbeam. Hana also boasts a seamless user interface and experience and is compatible with the Ledger hardware wallet.
ICONex is the original wallet developed by the ICON Foundation and is also available as a Chrome extension. Similar to Hana, ICONex also provides multi-chain support, but only between ICON and Ethereum. ICONex also offers some additional and more complex features including P-Rep bonding and custom smart contracts calls for more advanced users. ICONex is also compatible with the Ledger hardware wallet.
Also developed by ReliantNode, MyIconWallet is a mobile wallet (available on iPhone and Android) which allows users to access ICON dApps, keep up-to-date on what validators are working on, stake to earn rewards, and transfer assets on ICON.