How does Onion Mixer’s Mining and Yielding work?
On June 20th, Onion Mixer, a cross-chain privacy transaction protocol, was officially launched. It uses a coin mixing scheme that combines CoinJoin and zero-knowledge proof, and can support anonymous transactions of crypto assets on public chains such as BSC, Ethereum and HECO. Other public chains will be included as well in the near future.
As we can see from its official website, Onion Mixer protocol mainly consist of three major sections, Mix, Mining and Vault. The Mix section is now available, while Mining and Vault are yet to be launched until June 24th.
Onion Mixer’s coin mixing function adopts a solution similar to Tornado Cash, that is, after users deposit assets into the mixing pool, the protocol will use zero-knowledge proof technology to generate transaction credentials for users. Users then can use the credentials to withdraw assets from the mixing pool to a new address. Over the process, all information of users will not be exposed, and there will be no connection between the old and new addresses, thus realizing the anonymity of assets. It is noteworthy that BSC launched Tornado Cash (TORN) transaction on June 11. Situating this move in the background of tightening regulation, it undoubtedly indicates the recognition of privacy transactions from BSC and the entire privacy transaction field.
The most highlight of Onion Mixer is its tokenmoics which is richer and more profitable than Tornado Cash’s. Unlike Tornado Cash that only supports a single transaction mining, Onion Mixer provides users with three means of value capture, transaction mining, liquidity mining, and holding mining (staking to receive dividends).
The rich profit-making means allow every Onion Mixer user to continuously gain revenue from the protocol, ensuring the depth of operation of the mixing pool and thereby leading to a win-win situation for all ecological participants. In this way, it truly establishes Onion Mixer as a DeFi protocol with a positive circular value.
Three mining choices
Transaction mining means that users are able to get the corresponding token rewards as long as they trade in the protocol. In Onion Mixer, users are able to earn OMT rewards just by mixing coins. According to Onion Mixer’s tokenomics, 70% (70 billion) of OMT will be used for mining rewards.
Unlike other transaction mining, Onion Mixer’s mining rewards are calculated based on the user’s historical transaction volume, i.e. OMT rewards allocating is based on the ratio of each user’s historical transaction volume to the total transaction volume in the protocol.
In addition, users can withdraw their mining rewards directly to the staking pool for dividends, which gives users an additional way to increase their income. This approach solves the problem of “farming and dumping” in DeFi, and thereby reduces the selling pressure of OMT in the secondary market, and ensures the sustainability of transaction mining.
In the Onion Mixer protocol, any user can earn rewards by adding liquidity to OMT’s transaction pool.
Users who provide liquidity to the OMT pool will receive the corresponding share LP Token, which can be staked on Onion Mixer’s Liquidity Rewards page to receive liquidity rewards. The specific rewards to be obtained depend on the user’s contribution share (staked LP Tokens/total staked LP Tokens), and the staked LP Tokens can be withdrawn at any time. Currently, there are two pools available: OMT/BNB and OMT/BUSD.
In the tokenomics of Onion Mixer, 10 billion (10%) OMTs will be used to reward liquidity providers. After the Onion Mixer protocol is launched, this reward package will be unlocked every day to incentivize liquidity providers on PancakeSwap. The liquidity reward OMT tokens are released on a per-block basis, and users can transfer the liquidity reward OMT to the staking pool to receive dividends immediately.
Holding mining, also known as staking for dividends, means that users are able to continuously receive dividends from the staked pool as long as they deposit the OMT tokens held into the staking pool.
There are two ways for users to participate in the staking pool: first, through the two mining methods mentioned above — transaction mining and liquidity mining, where users can withdraw the mining rewards and send them directly to the staking pool; and second, through direct investment, where users can participate in crowdfunding or buy OMT from third-party DEX to invest in the staking pool.
The dividends for the staking pool come from the “exit penalty mechanism”, under which it is free for users to invest funds, but they are charged a 10% fee for withdrawing OMT from the pool. Fees charged will be divided into three uses:
(1) Dividends for token holders.
(2) Add liquidity.
(3) Burn for deflation.
4% fees will be used to reward other users in the staking pool who continue to hold OMT. The higher the user’s share of OMT and the longer the user holds it, the more dividends the user will receive from the staking pool.
The other 4% will be added directly to the transaction pool of OMT to increase the depth. This way of adding liquidity does not depend on any external investors. As long as users trade in the OMT staking pool, there will be a constant flow of funds injected into the pool, which helps to achieve the self-growth of liquidity.
The last 2% is directly burned. The burn will lead to inflationary incentives for all OMT holders, who will be empowered with an equal share of the value of their OMT holdings.
Combined with the exit penalty mechanism, Onion Mixer’s three mining choices can effectively curb the speculative behavior of short term traders, ensure the stability of OMT market performance, guide users to return to rational value investment, make the tokenomics of the agreement sustainable, and guarantee the continuous and steady growth of benefits for investors.
Why should I be an early participant?
The three mining choices provided by Onion Mixer correspond to the three roles in the protocol, i.e. protocol user, liquidity provider and OMT holder.
For protocol users, as long as they are involved in coin mixing transactions, they are able to continuously receive OMT rewards. However, as the volume of protocol transactions increases, the percentage of users’ transactions will continue to decrease, diluting the rewards for transaction mining.
The mining reward is calculated based on the proportion of the user’s historical transaction volume to the total transaction volume of the protocol. Onion Mixer supports users to increase the transaction volume by repeated deposit and withdrawal operations to enable users to increase their profits from transaction mining. As long as the rewards can cover the transaction fees, this method can fully stimulate users to continue to trade.
Early participation will enjoy relatively low transaction volume across the whole Onion Mixer network, which enables users to obtain the same percentage of transaction volume at a relatively low cost. In other words, early participation in transaction mining has the highest ROI for users. It is estimated that on the first day of Onion Mixer’s mining, transaction mining will produce more than 39 million OMT. Assuming that the user has reached a transaction volume of $10, accounting for 10% of the network’s transaction volume. According to the current price of 0.001U of OMT, that is, users can divide nearly 40,000U of OMT with only 500U transaction fee, making the daily yield as high as 40%.
For liquidity providers, since the number of OMT tokens released is basically fixed every day, the revenue of user liquidity mining mainly depends on the ratio of the amount of funds provided to the total amount of liquidity. As the amount of funds in the Onion Mixer protocol and OMT transaction pool increase, the mining return is also diluted by more and more liquidity. Therefore, users who want to get higher returns need to join the liquidity pool of OMT as early as possibl to enjoy higher liquidity mining rewards and buy OMT at a lower price. This way, they can also receive significant gains from get OMT appreciation when they exit mining.
For OMT holders, the earlier they deposit OMT into the staking pool and the longer they stake the tokens, the higher the return will be. For example, if a user deposits assets in the early stage, the funds are in the staking pool for a longer period of time, during which other users trade numerous times. When withdrawing, the user will receive assets much higher than the amount deposited. Besides, the volume of dividends depends on the user’s investment share in the entire pool. Being an early participant allows the user to have a higher investment share with the same amount of tokens staked when compared with later joiners, and thereby give them a higher return.
As the blockchain market is going downward, opportunities with guaranteed revenues such as those provided by Onion mixer, are even more valuable. For “veterans” who have been involved in DeFi mining for a long time, they are highly aware of the importance of “early mining”. In addition, Onion Mixer’s public crowdfunding in DODO on June 15 was overfunded, suggesting the project is top quality and enjoys strong community consensus. Both of these advantages will help users to reap benefits in the current sluggish market.
Onion Mixer is the first decentralized protocol for anonymous cross-chain transactions.
Onion Mixer creates the new “anonymous transactions + DeFi” approach that combines CoinJoin and zero-knowledge proof. It supports anonymous token transactions on public chains such as ETH, BSC, HECO, TRC, etc. And by enabling liquidity mining, holding mining, anonymous transaction mining, it allows users to obtain extra revenues while enjoying high-quality anonymous transaction services.