Onyxcoin (XCN) is an Ethereum-native ERC-20 decentralized digital asset that functions as the utility, gas, and governance token of the Onyx Protocol, a Layer 3 blockchain built on Ethereum, Base, and Arbitrum. XCN enables transaction processing, smart contract execution, staking, and decentralized governance within the Onyx ecosystem, while implementing a deflationary mechanism through transaction fee burns. ^{[1] [2] [5]}

Overview

Onyxcoin serves as the economic and governance backbone of the Onyx Protocol, a Layer 3 blockchain designed to enhance scalability, interoperability, and economic efficiency for financial-grade applications. As the native gas token, XCN is used to pay for all transaction fees on the Onyx network, facilitating smart contract execution and network operations. The token follows the ERC-20 standard on Ethereum, ensuring compatibility with existing wallets, exchanges, and DeFi protocols.

The Onyx Protocol leverages Arbitrum Orbit's rollup technology and AnyTrust's data availability model, while using Base Layer 2 for settlement. This architecture enables Onyx to process transactions with lower fees and higher throughput compared to Layer 1 blockchains, while maintaining Ethereum's security guarantees. The implementation of EIP-1559 introduces a predictable gas fee model where a portion of each transaction fee is burned, creating a deflationary effect on XCN's supply over time.

Beyond its utility as a gas token, XCN plays a crucial role in the protocol's governance through the Onyx DAO (Decentralized Autonomous Organization). Token holders can stake XCN to participate in governance decisions, propose protocol changes, and vote on important ecosystem developments. This decentralized governance model ensures that the protocol remains community-driven and adaptable to evolving market demands. ^{[1] [2] [8] [11]}

Technology

Layer 3 Architecture

Onyx is built as a Layer 3 blockchain, positioned above Layer 2 networks (specifically Base) which ultimately settle on Ethereum's Layer 1. This hierarchical structure allows Onyx to inherit Ethereum's security while significantly improving scalability and reducing transaction costs. The architecture consists of several key components:

1. Execution Environment: Onyx leverages the Arbitrum Nitro stack to process transactions and execute smart contracts with full Ethereum Virtual Machine (EVM) compatibility. The execution environment operates under an optimistic rollup model, bundling multiple transactions and settling them efficiently to reduce computational burden and gas costs.
2. Data Availability Layer: The protocol integrates AnyTrust, an optimized data availability solution that reduces the need for on-chain data storage while ensuring trust-minimized verification. A Data Availability Committee (DAC) guarantees that transaction data remains retrievable and verifiable without overburdening Ethereum Layer 1.
3. Settlement Layer: Onyx transactions are finalized on Coinbase's Base Layer 2, leveraging Base's economic security model and low-cost settlement layer. Once transactions are confirmed in Onyx's execution environment, they are settled on Base Layer 2 before achieving finality on Ethereum Layer 1.
4. Gas Token Mechanism: The network employs XCN as its native gas token and has integrated EIP-1559, introducing a base fee mechanism where a portion of each transaction fee is burned, reducing the overall supply of XCN over time.

Cross-Chain Functionality

Onyxcoin is fundamentally an Ethereum-native ERC-20 token, but its ability to bridge across multiple blockchain networks enhances its liquidity, interoperability, and overall utility. XCN can be transferred between Ethereum, Binance Smart Chain (BSC), Base Layer 2, and Onyx Layer 3 through two primary bridging solutions:

1. Wormhole Bridge: Enables XCN transfers between Ethereum Mainnet and Binance Smart Chain (BSC) through a lock-and-mint mechanism, maintaining a 1:1 pegged value.
2. Superbridge: Facilitates seamless transfers of XCN to Base Layer 2 and Onyx Layer 3, providing an optimized and cost-effective bridge for users interacting within Ethereum's rollup ecosystem.

These bridging mechanisms extend the reach of XCN while preserving its core integrity as an Ethereum-native asset, enabling liquidity movement, multi-chain DeFi compatibility, and secure cross-chain transfers.

Tokenomics

Onyxcoin operates with a fixed supply model, ensuring a predictable economic framework without the risk of unexpected inflation.

A portion of the XCN total supply is allocated to the Onyx Treasury, managed by the Onyx DAO. These funds support protocol development, grants, liquidity incentives, and strategic partnerships. The Treasury's allocation is governed by on-chain voting, ensuring decentralized oversight of fund utilization.

Onyx implements EIP-1559 for gas pricing and token burns, ensuring a sustainable economic model while preventing unnecessary inflation of the XCN supply. The mechanism includes:

• Base Fee: A network-determined minimum fee that adjusts dynamically based on demand;
• Priority Fee: An optional tip that users can include to prioritize transaction execution;
• Burn Mechanism: A portion of the Base Fee is permanently burned, reducing the circulating supply of XCN over time.

This deflationary approach aims to create long-term value for token holders while maintaining economic sustainability for the network.

Governance

XCN serves as the governance token of the Onyx DAO, enabling decentralized, on-chain governance where token holders can propose, vote on, and execute protocol changes. The governance framework is implemented via smart contracts, ensuring a secure, transparent, and permissionless decision-making process.

The Onyx DAO utilizes a structured on-chain governance mechanism, where governance weight is determined by the amount of XCN staked. The governance process follows these steps:

1. Proposal Creation: Any address holding at least 100,000,000 XCN in governance weight can submit proposals for protocol upgrades, economic parameter adjustments, treasury allocations, and smart contract modifications.
2. Voting Process: Once submitted, proposals enter a 3-day voting period. Staked XCN determines voting power.
3. Quorum and Approval: A proposal is considered successful if it meets the approval threshold of at least 200,000,000 XCN votes in favor.
4. Timelock Execution: Approved proposals enter a 2-day timelock before execution, preventing immediate governance takeovers.

The Onyx DAO is responsible for making critical protocol decisions, including protocol upgrades, economic policies, and security enhancements. ^{[1] [11] [3] [6]}

XCN Staking

XCN staking is a fundamental feature of the Onyx ecosystem, allowing token holders to lock their assets within the Onyx staking contract to participate in governance and earn staking rewards. Unlike traditional staking models, XCN staking does not impose a mandatory lock-up period, enabling participants to unstake at any time according to the contract's withdrawal mechanisms.

The staking process includes:

1. Token Locking: Users deposit XCN into the staking contract, where it is counted toward their governance voting power.
2. Governance Weight Calculation: The amount of XCN staked determines the participant's voting power in the Onyx DAO.
3. Rewards Distribution: A fixed monthly allocation is available for staking participants while the reward program is in effect.
4. Unstaking Process: Users may unstake their XCN at any time without penalty, subject to the protocol's withdrawal rules.

Staking rewards are determined by an individual's relative stake within the total staking pool, ensuring proportional distribution based on participation. ^{[1] [2] [3] [4] [7]}

Ecosystem

The Onyx ecosystem is built upon a foundation of scalability, security, and seamless interoperability across multiple blockchain platforms. To streamline the deployment of critical ecosystem integrations, Onyx utilizes Conduit, a Rollup-as-a-Service (RaaS) provider, to automate and optimize the rollup deployment processes. Key ecosystem components include:

Privy

Privy is a privacy-focused platform that facilitates secure data storage and management for decentralized applications. Within Onyx, Privy ensures that user data remains encrypted, verifiable, and accessible without compromising privacy. It enables decentralized authentication, encrypted storage solutions, and zero-knowledge proof capabilities .

Bridged USDC

Bridged USDC refers to USD Coin that has been transferred across blockchain networks via bridging mechanisms, maintaining a 1:1 peg to the original asset. In the Onyx ecosystem, Bridged USDC plays a critical role in decentralized finance applications, providing liquidity for trading pairs, collateral for lending protocols, and facilitating cross-chain transactions .

Superbridge

Superbridge is a cross-chain bridging protocol that enables efficient and secure transfers of digital assets between blockchain networks. Within the Onyx ecosystem, Superbridge facilitates seamless token movement to and from Ethereum, Base Layer 2, and Onyx Layer 3 through smart contract lock & mint mechanisms, optimistic rollup security models, and fast finality transactions .

Tenderly

Tenderly is a blockchain development tool that provides real-time monitoring, debugging, and analytics for smart contracts on Onyx. It offers automated smart contract monitoring, gas optimization analysis, and state replay & debugging tools, significantly enhancing developer efficiency, contract reliability, and security within Onyx's smart contract ecosystem .

Thirdweb

Thirdweb provides a suite of tools and frameworks that simplify the development, deployment, and management of decentralized applications on Onyx. It offers pre-configured smart contracts, NFT & token management tools, and gasless transaction support, enabling developers to build Web3 applications faster with pre-built infrastructure .

Decent

Decent is an NFT and digital asset platform that enables tokenization of real-world and digital assets on Onyx. It supports multi-chain NFT minting, NFT marketplace integration, and tokenized real-world assets (RWAs), empowering content creators, artists, and enterprises to launch scalable digital asset solutions within the Onyx network .

Chain

Chain offers a suite of institutional and commercial blockchain infrastructure products to build blockchain products seamlessly on Onyx. By leveraging Onyx's high-throughput, low-cost transaction processing, Chain's financial tools can operate more efficiently while maintaining Ethereum-grade security. Chain can deploy sub-chains under the Onyx Layer 3 to create permissioned environments alongside specialized smart contracts to meet their product demands .

Future Developments

The Onyx Protocol has outlined several potential areas for future development to expand its Layer 3 blockchain infrastructure and meet the growing demands of decentralized applications, finance, and next-generation blockchain use cases:

DePINs present an opportunity for blockchain technology to extend beyond financial transactions and interact directly with physical infrastructure such as energy grids, IoT devices, decentralized wireless networks, and supply chain logistics. Onyx aims to position itself as the primary execution and settlement layer for DePIN applications, providing scalable and cost-efficient data settlement, tokenized resource incentives, cross-chain oracles, and enterprise adoption solutions .

Onyx is exploring the development of sub-chains to facilitate seamless interoperability between permissioned enterprise networks and public blockchain infrastructure. These sub-chains would provide enterprises and institutions with a hybrid model combining regulatory compliance with blockchain security, offering dedicated permissioned environments, cross-chain messaging standards, customizable consensus models, and modular rollup deployments .

Onyx is considering the integration of AI-driven automation and analytics into its Layer 3 stack to enhance smart contract execution, security, and predictive modeling. Potential AI-powered enhancements include on-chain AI models for smart contract optimization, AI-driven risk and fraud detection, decentralized AI computation marketplaces, automated portfolio management, and predictive blockchain scaling .

As demand for scalable decentralized applications grows, Onyx is considering the implementation of parallel transaction processing and execution mechanisms to significantly increase transactions per second. Potential high-throughput solutions include state sharding for Layer 3 rollups, optimized sequencing mechanisms, and Layer 3-specific virtual machine enhancements .

These developments are designed to position Onyx as a next-generation blockchain solution, capable of handling enterprise-grade applications, DeFi scaling, and AI-driven decentralized automation. ^{[5] [6] [9] [10] [11] [2]}