the hex model

Richard Heart, the founder of the controversial crypto project HEX, was recently interviewed by Charles Payne on Fox Business and he was slammed with questions concerning HEX’s business model and how it resembles a Ponzi scheme at first glance.

Heart claimed to have created an improved version of Bitcoin (BTC) that is eco-friendly, transparent, and fully decentralized. HEX token holders are encouraged to hold on to their assets for the long term as the platform offers annual percentage yields starting at around 38%.

HEX is an ERC-20 token and the project functions as a smart contract powered by the Ethereum network. In essence, HEX is a blockchain-based certificate of deposit (CD) that entitle the holder to receive compensation for staking his HEX tokens for a certain period.

Richard Heart Responds to Accusations of HEX Being a Ponzi scheme

In response to Payne’s inquiries in regard to HEX’s Ponzi-like structure, Heart stated that “Bitcoin has a lot of stuff it can’t do” referring to the fact that the token is not designed to generate income unless the investors are willing to lend his tokens via a crypto lending platform.

Heart claims that this is an inherent flaw that goes against the whole point of decentralization, which involves getting rid of the middle man, and investors have paid the price for adopting this model as various platforms and brokers have recently collapsed due to bad loans and poor risk management policies.

In regards to the Ponzi scheme allegation, Heart states that such a structure is “a fraudulent endeavor where people are told they are gonna get paid more for business activity that doesn’t really exist… and there is a middle man who pays you the rewards”.

Heart alleges that HEX is no different than Bitcoin in the sense that token holders mint their own coins and they are paid based on the parameters established in the Hex smart contract – no middle man involved.

However, he stressed that even though HEX is not a Ponzi scheme, it may be considered a bubble at any given point and this occurs from time to time but, historically, the token has always recovered and made all-time highs.

Moreover, Heart addressed claims that HEX might be a rug-pull by stating that the origin address has never sold a single coin. Rug pulls are a scheme in which the price of a cryptocurrency is temporarily pumped by using various strategies to enrich the founders who then take advantage of the exit liquidity and high price to dump their tokens on unwary investors.

His response to these accusations is that HEX’s origin address has not sold a single token in its history and that is proof that there is no intention of rug-pulling investors as that has never happened in the history of the project.

That said, the token has not been spared from feeling the pain of the crypto winter as HEX has experienced an 86% drop so far in 2022 as cryptocurrencies as a whole have been hit by a change in the macroeconomic backdrop and due to sector-specific events such as the collapse of the Terra ecosystem.

HEX is as Good as Any Other Inflationary Store-of-Value Crypto

Even though HEX users continue to be compensated for staking their tokens by receiving more HEX, if the value of the digital asset drops, so does their wealth and their income-generation capacity.

HEX’s rewards are determined by using two variables. The first one is the token’s annual inflation, which is set at 3.69%. Then, the percentage of HEX staked. If only 100% of HEX is staked by investors, then the reward will be 3.69%. However, if only 10% is staked, those rewards climb to 36.9% as only that 10% will be entitled to receive the new tokens minted in that particular year.

Token holders receive these rewards by the end of the CDs pre-defined period in the same way. Even though HEX does resemble a Ponzi scheme in the sense that the price will only go up if the demand for the token increases, this is also the way in which most cryptocurrencies work.

Hence, HEX is no different than many other projects within the ecosystem. There is no business model, no revenues, and no practical utility. HEX investors will continue to be compensated based on the smart contract’s parameters but the only way they will make money is if the token continues to rise in value in the future dependent on the publics interest in it.

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