Introduction
The Conflux (CFX) token faces a major challenge : unchecked inflation. As mining continues to generate new CFX tokens, the total supply increases over time, potentially leading to price depreciation. Currently, staking CFX only results in more CFX rewards, which many users immediately sell for other cryptocurrencies, further pushing down the token’s value. But what if we had a staking model that rewarded users with Bitcoin (BTC) or Ethereum (ETH) instead? This new model could drive demand for CFX, lock liquidity, and create a deflationary effect that benefits long-term holders.
The Problem with Current Staking Rewards Right now, CFX staking operates in a self-defeating loop:
Users stake CFX to earn more CFX.
They sell those rewards to buy BTC, ETH, or stablecoins.
This constant selling increases supply and drives prices lower.
Miners keep producing more CFX, adding to inflation.
This cycle discourages long-term investment and leads to a saturated market with excessive token supply. If CFX’s value keeps dropping, fewer people will want to hold it, further worsening the problem.
A Smarter Staking Solution: Earn BTC/ETH Instead of CFX
To combat inflation, I propose a revamped staking mechanism where rewards are distributed in BTC, ETH, or other valuable crypto assets instead of CFX. Here’s how it works:
Users stake CFX, locking liquidity and reducing circulation.
Instead of receiving CFX rewards, the staking pool automatically converts rewards into BTC or ETH.
Users can set parameters to control when they receive CFX vs. BTC (e.g., “If BTC is above $100K, keep rewards in CFX; otherwise, convert to BTC”). - Also, each time they get rewards in other crypto, they burn CFX in the process.
Example A : User locks 100.000 CFX tokens, and chooses as a reward CFX tokens - He gets 30 CFX (based on current APY) Daily, nothing changes.
Example B : User locks 100.000 CFX tokens, and chooses as a reward BTC if the the price is below 60.000$ otherwise is always CFX .
If the BTC price falls below 60.000$ , The Staking pool directly buy BTC at the target price, based on the available CFX reward (It can be done hourly, or in bulk) . So if our user can have 30 CFX Daily, they can convert directly them in BTC, without going to a DEX or an exchange. The converted BTC will be taxed a bit (the transaction fee can be selected to be in CFX/Other crypto based on the stake pool operator, and can be used to do buybacks when CFX price hits new lows)
Rewards are distributed efficiently using DEX aggregators, batching transactions to minimize slippage and fees.
Why This Model Works :
This approach creates a strong use case for CFX while minimizing inflation:
Reduces Sell Pressure: Since users don’t receive CFX rewards, they don’t need to sell tokens to acquire BTC/ETH.
Locks Supply: Staked CFX remains locked, lowering the circulating supply and driving up scarcity.
Encourages Long-Term Holding: Users benefit from staking without worrying about token dilution.
Incentivizes New Buyers: Investors will be more inclined to buy CFX if they can earn BTC/ETH from staking.
Addressing Inflation While Keeping Miners Happy
Some may argue that this model requires constant selling of CFX to fund BTC/ETH rewards, but there are solutions:
1️⃣ Treasury Funding: A portion of protocol fees or initial reserves can be used to sustain BTC/ETH payouts.
2️⃣ Optional BTC/ETH Rewards for Miners: Miners can opt to receive part of their rewards in BTC/ETH rather than CFX, reducing direct sell pressure.
3️⃣ Gradual Mining Reduction: Like Bitcoin’s halving, CFX mining rewards could decrease over time to naturally curb inflation.
4️⃣ Dynamic APR & Staking Bonuses: Adjust rewards based on staking demand, rewarding long-term holders with better rates.
Long-Term Impact: A Deflationary CFX Model By shifting staking rewards away from CFX and into BTC/ETH, we change the game:
The demand for CFX increases because users need to stake it to earn BTC/ETH.
The supply of CFX decreases as tokens are locked in staking.
The price stabilizes due to reduced sell-offs and increased scarcity.
The network remains secure since miners can still earn rewards, with an option for BTC/ETH payouts.
Conclusion: The Future of CFX Staking This innovative staking model could transform Conflux into a deflationary ecosystem while still rewarding miners and stakers. By reducing unnecessary inflation and giving users BTC/ETH incentives, we create long-term value, higher demand, and stronger market confidence in CFX.
Time to change is now, we hit one of the lowest point in price of Conflux. We need to act now.