Fcoin is known as one of the most controversial exchanges in the market due to its mining model. The exchange is looking to propagate a community governance approach, by allowing for a profit-sharing business model. The company gained popularity because of its trans-mining model back in May-June 2018, which allowed for the transaction fees to be used as a reward for the community.
However, that model was not sustainable. Last year Fcoin was involved in many of the controversies surrounding the drop in token price and clogging the Ethereum network. So, with the aim of providing a more long-term and sustainable mining model, the exchange has undertaken a complete makeover to replace its token model, which will emerge as a key differentiator responsible for improving FCoin’s ecosystem. Under the previous Trans-Fee Mining model, instead of taking the transaction fee which would be generated when one is making a trade, like most exchanges are prone to do, FCoin would convert the fee into FToken (FT) and give back to the users.
The blockchain community criticized this model for 2 reasons
1. Giving the transaction fee back in FT seemed like FCoin exchange was buying BTC, ETH with FT.
2. The daily distribution of FT flooded the market with supply, causing the price to crash
Recently the community voted to do away with the Trans-Fee mining model. That signaled the end of the FCoin 1.0 era of Trans-Fee mining. In its place, the Sustainable Mining model was introduced, which is a new approach to offer rewards to traders.
The sustainable mining model improves upon the existing model by doing the following.
1. Revenue from transaction fee will not be distributed in FT, instead, it will be distributed in the currency that it was made in whether that ETH, BTC, etc
2. Only 20% of the eligible FT will be distributed daily. The remaining 80% of the FT distributed will be locked for 1 year with holders continuing to enjoy benefits or interests such as dividends and voting during the lockup period.
FCoin is willing to guarantee stable mining for at least three years, and to ensure supply stability, it will control and adjust the daily return from the mining output. The balance between supply and demand will be maintained by allowing for repurchasing and destruction of the FT.
This new transition has proven immensely successful for the exchange. Till date, FCoin has never missed a daily dividend payout. It continues to maintain regular community meetings and gathers user proposals to improve the platform experience.
FCoin is the first exchange to implement the idea of transaction fee mining where 80% of the fee earned from trading activities are given back to the holders of the token.
More information about Sustainable Mining can be found here.
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