Learn & Earn - Pundi X & Function X

Great work as always. I just went through some of the transactions and its mindblowing. This definitely needs to be explained.

We can certainly overlook EGF and transfers between wallet addresses as most of the issues related to governance have only recently started being addressed. I think this is a good time for the team to reorganize and put everything into perspective.

I am really worried about “60.6M $FX (16% of TGE) which should have never landed in team’s wallets.” That’s 1/8 current Total Supply. Those delegating would have received higher APY without them. Should these coins even have existed? What do you do about them?

Waiting for reply from the team.

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@Mdmdmd83 great work! I agree with most of your recommendations.

My suggestions are:

  1. Unused TGE should not be staked by team, because it is decreasing APY for public delegators (although it increases overall bonded %, still it should not be used for this purpose)
  2. I agree with transferring unsused portions of buckets to CSP OR team can control it, but with better transparency
  3. Rather than burning unused FX, i recommend they get used for direct marketing of this project (desperately needed) and may be some AirDrop to reward old supporters/attract new ones (onboarding new ones is more important)

As mentioned earlier, the leftover/unplanned FX needs to be put to use right away! It’s not adding any value to the project by being staked and earning rewards. This is stealing from reward pool of FX delegators.

I think the team staking it, is fine because this will mean that they will have more funds to do collaborations or partnership with other network in the future. The team built this company from the ground so i can guarantee that they want the best for Function X and have the best interest for it.

They did clarify before that the unused funds of pre-governance staking will be used for R&D. For the other leftovers, i’m not sure but most likely the same too, like X Wallet mining back in 2019.

Maybe the team can clarify.

I do not see any problem with them staking it as it increases the fund for future partnerships. I think the team is currently waiting for EVM to be implemented before doing mass collaboration. We shall see.

No doubt team has best interest for the project. But staking that amount reduces the rewards for legit delegators.

If they want more funds for collaboration, than the focus should on increasing the dollar value of FX. $ 0.5 FX means $30.3 Million of funds. Increase the value to $1 to double the funds or $10 to x20 the development funds. But the team has mentioned many times that focusing on increasing FX value is not their priority. So delegating just to increase development funds doesn’t make sense.

PS: rewards earned on these funds are unaccounted for, which is a bad practice. We trust the team but for outside observers this makes a legit project look bad.


If i am not wrong, when FX was created, there was an article that showed that they will stake all tokens generated. So going by that, even if there were unused coins, they are still to be staked regardless.

The concept paper - Function X: Coin structure, use of funds, governance and proposed roadmap | by Function X Foundation | FunctionX | Medium

All tokens are to be increased in tandem with inflation, so they have to stake it in order not to get diluted by inflation. It makes no sense to not stake it.

For example:
They hold 10%, if they do not stake, it will be lesser than 10% as inflation eats it away. By staking the tokens, they maintain that 10% peg.

All tokens, including their holdings are supposed to be staked as shown above, to be increased together with inflation in order not to get diluted. Whether used or unused, it is supposed to be staked.

And the reason it is unused is because so many people didn’t participate in so many activities. So the leftover can be used for R&D or upcoming partnerships.

Things may look slow for now but wait till EVM is out… Maybe then the team will start to expand rapidly since nothing can be build now. We shall see.

I would like to add also that:

Currently, the staked ratio is 69%. That means 31% is getting diluted every second. Technically, we are earning 31% more right now than the actual plan.

Those 31% tokens that are not staked will slowly get diluted and lose its percentage, becoming <31% overtime, since we are eating its share. We (69%)

I feel that the word “decentralized” is always being overused.

Even other networks like Avax, Terra and Polygon are all centralized. They control where the funds go to because they dont just fund any project “just because they want to accelerate things”. That is no way to do business, that is bad business actually.

There is no company in the world that can be decentralized from the start.

In order to reach decentralization, the company has to build from bottom up with the tokens they generated. And at the moment, nothing can be build yet until EVM is implemented.

Decentralization comes after the funds is totally depleted. Funds are used to support projects that are innovative and/or not seen anywhere yet. Not just random projects looking for funding.

Once the funds are used and if the ecosystem is self-sustainable without team intervention, then it becomes decentralized.

The timeline given was 15 year period - We are only at year 1.

Moving forward, in order not to have any misunderstandings, it would be best if the team let the community know whenever they decide to shift any tokens anywhere, just like Terra - Full transparency is needed.

I don’t mind them using the tokens for R&D, marketing or for any developments as long as the community is in the know.


Some pretty serious discussion happening. All of you have some very good points.

I would add that:

We are supportive but this would look bad to potential newcomers. Its better to address the issue now then wait for the problem to explode suddenly. It can bring a lot of negative PR. If it is dealt with now, it would certainly be regarded as community’s decision rather than a forced one.

  1. Do not burn the tokens
    As it will be an internal ecosystem removal, it can negatively impact the market capitalization of Function X and we would slide down the rankings even further (>300). We are still the top 2%. This would be bad for the investors ROI overall.

  2. Allocate the coins
    I don’t mind the team keeping it for collaboration and marketing or whatever is needed but it must be accounted for.

–Reallocate them to existing departments such as Marketing/R&D or create new ones such as:
—Function X Centralized Marketing (FXCM) and allocate funds there for quick marketing push. Desperately need in my view. This time use it. Set a budget that needs to be utilized.
–Publish what each wallet holds and belongs to which department for transparency purposes.

–Airdrop to long time delegators or send to CSP, the rewards that were earned through staking.

–Delegate them to public validators to increase their authority and therefore aid decentralization.

What happened in the past, lets turn the page over it. Where we can lead it to matters the most in my humble opinion. As governance related matters is still being worked on, the reason for the existence of these coins should be clearly defined.

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I disagree with your inflation theory. The purpose of those funds is to add value to the ecosystem, not build wealth. As for dilution, they have already accounted for it by allocating a good sum of development funds to be released in the next 15 years.

If team members are delegating their personal stash, that’s perfectly fine. But pool funds should not be earning delegation rewards. Unless these funds get back into the CSP, but there is no clarity on this from the team.

The chart shows that the funds are supposed to increase with inflation. You can see from the chart that shows that each category increase with inflation meaning from the start, it is supposed to be staked.

Because it is impossible for the whole 20% to be used within 1 year when the space is still evolving. And when the blockchain space is still evolving, it makes sense to keep the peg and not get diluted so the funds can continue funding innovative projects as years goes by.

Can you imagine the scenario when, let’s say few years later, the whole blockchain space evolved into something that is totally different from now and there is not enough funds left because it has been slowly depleting by funding projects in the first few years.

I guess can only wait till team clarify. I don’t mind them using it but full transparency is needed on how they utilize the funds to avoid misunderstandings.

That table shows new coins being minted every year. These are not rewards from delegation. Infrastructure Service Provider column shows coins available for distribution to delegators.

Also, if you look at the increment column, overall less coins will be minted every year. Similar to bitcoin.

In a nutshell, by delegating pool funds, team is taking coins from infrastructure column and transferring them to developer column (if they confirm the rewards will be used for development). So it is going against the concept paper.

If you calculate, 60 million is more than 15% of the total staked coins. So out of the 110 million dedicated to Infrastructure Service Provider for Year 1, team has transferred over 15 million tokens to developer column (given they confirm they plan to use these for development).

If it is as @cop4200 pointed out. This is very concerning. The concept paper is absolute in my opinion (unless a consensus was reached) and this would just mess everything up down the road. What about the numbers on the table posted by @SCENE? Is it consistent or does it need revision?

So, unless there is a revised version somewhere, I say we should always stick to the proposed mechanics. This is what was agreed upon when Token Generation Event took place.

I hope the team takes up this issue and provides us with information/solution in the next AMA.

@indra @Richard

The reason overall coins are minted lesser each year depends on the overall staked ratio. It bounces between 17-41% based on total staked. The initial was 35% inflation so since we are at 69% staked, it is bound to go down but the rate it goes down is very slow.

It is a dynamic inflation system, and it goes up and down depending on staked ratio.

Regarding about the used of funds, i think it is alright for any company to rebalance and shift where the amount goes to according to market pricing of developments.

For example:
I can allocate 5 million for the future. But i do not know how much development may cost in the future and it could very much be possible that the team had to shift tokens based on paying for costs. That said, of course it would be best if they are transparent with it.

It is very normal for any company, whether in the traditional world or crypto, to reallocate funds to certain departments because of varying cost, especially back in 2019-2020 when it was a total bear market where most companies shut down.

Currently, i’m just defending based on how traditional companies work. Re-allocating funds here and there based on market pricing. I could be wrong but i dont think they will do anything to harm the company. They went through a 3 year bear market without shutting down.

Maybe the team can clarify. Let’s see.

There are lots of stuff changed since v1 white paper.

As far as I remember it’s said down the road everything will be collected in goverance funds page.

To be clear about fundings and funds etc.

There are decisions between take soley by team and it’s best for project at certain time frame.

So brining this topic should be covered at anyways in an official document than a comment here in forum.

It’s essential part of the white paper and to any investor.

And I agree such action without clarifications in outside related to company address bring lots of questions and fear. I see alot with similar situations.

We trust team and know things had Abit of it had to change to that but again for sake of transparency must be covered in an official document and submitted on the website or GitHub as part of whitepaper.

So let’s. Not set on offense or defensive mode.

We all agree this should be covered in official document by @indra or any of foundation respected members.

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I agree. Full transparency will dispel all the misunderstandings. +1

Hi everyone !

I was pretty busy yesterday and couldn’t take into account all discussed items.
As a reminder, I’d like to say the project is not 1 year old, but 3 years old actually (FunctionX initial contract → May 2019).

First, I’d like to remind everyone to stay calm. I didn’t publish this analysis for FUD (we’re quite a lot invested in this project, even if limited to 5% of our portfolio), but essentially to bring attention to things that would scare other investors. My aim is to make sure this project 100X in the future.

Doing My Own Research” drove me to the conclusion the initial White Paper was not respected and I shared it (and not on Twitter) to have a thorough discussion with everyone. That, in no way, means the project is not interesting, but that governance needs better transparency in every way.

I sincerely think the FunctionX White Paper need to be re-baselined and all accounting needs to be as well, as suggested by @cop4200 or @Riz_Truth .

The accounting and traceability need to be more transparent : this is what DAO is all about (transparency, voting power, etc.)

One of the most important thing relates to how DAO works, and all recently submitted proposals demonstrated that, if the team does not support a project, the project could never reach quorum. This changed recently with the team delegating more voting power to public validators. This is still acceptable for now, but will not be anymore in years to come. Or at least, rules must be described as to how team delegations to public validators are managed : this cannot be arbitrary.

I don’t mind if the team’s funds are being staked, because a lot of it is delegated to public validators, but also because this is too late to not stake it : either it should have been burnt from the beginning, or it should be staked now to avoid inflation from making it less valuable.
I agree with @SCENE that rebalances can be needed for a project : however, either we talk about decentralization, DAO, etc. or we consider this project as a self-managed company. The essence here is that we all wish to have a word in that matter, even if it’s not the last word. And we expect the team to take those things into account.

Now, let’s see what would happen if funds were tranferred to the CSP:

  • the EGF leftover funds (~65.76M $FX), EBT (~18.9M $FX), PCV (~30.8M $FX) and FXS (~14.4M $FX) transferred to the CSP [PME funds will still stay in the hands of the team only]
  • 27 % (~129.86M $FX) would be removed from the current circulating $FX supply (~479.8M $FX), but still accessible through proposals and voting.
  • Currently, the community pool is endowed with 32.95M $FX. That would make up for a total of 163M $FX available for proposals.
  • The circulating supply would then be something like 350M $FX, of which 330M $FX would currently be staked. This would decrease drastically the inflation rate, thus the APY as well.
  • The team would still own PME funds (58.9M $FX), delegate them to validators according to transparent rules (whether accepted or not by the community, but at least known) but still own a voting power of at least 16.8%.
  • Public validators would have lesser delegated $FX in absolute, that would still be more representative of the real public voting power and a higher voting power though !

As you can see, there are clear pros and cons to all approaches, and this is what the team MUST DECIDE, through discussion on this forum, and not through an AMA-session that would not leave enough time to think and discuss about it.

But once again, the first thing to do is to put clear accounting on the table, re-baseline the funds, have a document describe all addresses, their respective fundings and what their use is intended for and how they are being spent. What about starting with this ?

A project is about trust, and I trust this project and the team but I feel like I need more (roadmap, expectations, delays), but trust can easily be lost over time.
We currently have a lot of denigrators on the web and I wouldn’t want to leave them an ounce of potential disinformation, because blockchain is all about TRUST.


P.S.: For @zaccheah, @DavidK , @indra and all staff : I’d be happy to help writing, maintaining, proposing, animating any further discussion on the subject, along with the team.

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Hi guys,

Thank you for this, quality posts.

I read a few times what @SCENE wrote, it captures the truth, however unpopular it may be. Respect you for the courage.

We have two public proposals that didn’t pass (Nammy’s plugin and DAOVerse) and one passed (Kronos). I hope one day Nammy, Alchemist and Shady will apply again - it will be our pleasure to see your projects on Function X.

That’s correct.

We have to admit that when we wrote the whitepaper, CSP and EGF was not 100% clear, now it is as what @Mdmdmd83 wrote and i quote above.

We will produce a report of our company’s holding, EGF holdings etc, staked and unstaked. Many of the addresses are unknown to us hence are public addresses, including institutions that prior owned $npxs and $npxsxem that converted. @Mdmdmd83 has set the stage of doing such a detailed excel, your effort will be helpful.

EGF can be used for team’s funding, but it is not the team’s fund. If the team wants to use it, we should apply like anyone else.

It is the team’s dream that the current team does not carry the majority of the development and abled people can jointly develop.

Correct, the foundation have used our own money more than we have claimed via governance from the funds (CSP and EGF), including 3-years of development cost, I think it’s important for the team to also put up governance voting to ask for funds one day. It won’t happen this week or this quarter, we will think about this when we do 10x.

We hope to transition into a full DAO one day and have taken active steps towards it. Transferring EGF to CSP will happen eventually but not this quarter.

  • Action 02: Accelerate & fund private & community developments, and make all projects public (FxWallet, FxExplorer, etc.) to allow for community-driven developments and bounties.

A lot of code are public in github, please fork, contribute and apply for EGF. I’ve said here, here, here, here that we need developers and non-developers. Our engineer have also written one of the most detailed guideline in the industry to help you get the funds.

  • Action 03: Burn or airdrop the EBT funds and delegation rewards to current non-team delegators. A snapshot could easily be made for that. That would allow to not consider the EBT as team’s.

If in the case it is not spent we should make a meaningful program to reward it to active participants, preferably on future actions, there is a likelihood that we have from another wallet and the funds was NOT reimburse back to the company.

Agree, I am also against arbitrary burning of tokens, unallocated tokens can be used in much more meaningful ways, such as performing task that can be rewarded to active users. I am also against overly doing arbitrary random airdrops, it can also be done in better ways.

Finally, thanks for taking time during your festives (Good Friday, ramadans, weekends) on the forum, we are stronger because we have you.