Footprint Analytics: Will Gnosis jumpstart xDai lagging growth?

Footprint Analytics examines whether Gnosis can provide a kickstart to xDai and increase its growth for 2022

On November 8, Gnosis released a proposal called GIP-16 to merge with xDai, one of the top sidechains of Ethereum, and develop the xDai blockchain under the Gnosis Chain.

STAKE, the governance token for xDai, rose 35.9% from $13.33 to $18.12 on the news, while trading volume rose 138.6x, from $0.18M to $25.31M.

Footprint Analytics: xDai Trading Volume & Token Price

On December 8, the proposal passed. One STAKE can now be exchanged for 0.032 GNOs and xDai Chain will be renamed to Gnosis Chain. GNO holders will be rewarded with the actual value of xDai

While some see the merger as a hostile takeover by Gnosis, others believe it was the logical conclusion for Gnosis and xDai to unite and complement each other’s resources. 

But what is xDai, and how might this merger give it the means it needs to grow?

xDai: An Ethereum sidechain based on DAI

In September 2018, a team led by Igor Barinov, co-founder of Oracles Network launched xDai and integrated it into Block Scout at the end of October.

xDai uses stablecoin Dai as its native token and is designed with a proof-of-stake consensus mechanism to solve Ethereum’s congestion and transaction fee problems. 

xDai has several key features:

  • Fast transactions and low transaction fees. xDai’s transaction time is 5s; and 50,00 transactions cost $0.1.
  • Dual currency model. Native token xDai for payments, and native Governance token STAKE for POSDAO ( a new type of dPOS consensus) support.
  • High compatibility. Any dApps that can run on Ether can be deployed on xDai.

xDai, as an early Ether scaling solution, has been able to become a top sidechain. In addition to its own design to complement the disadvantages of Ethereum and meet users’ needs, it also needed the right opportunity.

Burner Wallet, a P2P payment wallet, was the opportunity that introduced xDai Chain to the broader community. Since then, protocols, projects and applications deployed on xDai have grown. xDai’s governance token, STAKE, has grown and moved in price to some extent.

Footprint Analytics: Price of STAKE 

According to Footprint Analytics’ xDai Dashboard, STAKE prices began to spike on February 18, peaking at $38.65 on the 21st, an increase of 95.3%. It has since declined, reaching a small $34.22 peak again on April 9.

xDai’s diverse ecosystem

xDai has attracted a large group of protocols, projects and dApps to be deployed on the chain due to its compatibility with EVMs (Ethereum Virtual Machines), fast transaction speed and low cost. 

According to xDai, the projects deployed on xDai currently cover major categories including bridges, analytics, DeFi, NFTs, DAOs, and gaming.

Footprint Analytics: Share of TVL of xDai by Category

Footprint Analytics data shows that the current xDai TVL is $256.58 billion, with the DEX category accounting for the highest share at 30.51%. xDai categories such as Honey Swap, Perpetual Protocol and Curve have a large contribution.

gnosis xdai

Although xDai has covered the current mainstream categories, xDai’s TVL growth is slow compared to the growth of other public chains, like Solana, Terra, and Polygon, among others, shown by Footprint Analytics’ data

gnosis xdai

Footprint Analytics: TVL of xDai and Other Chains

The main reason is that xDai suffers from no internal connections inside its industry, no big budget incentive plan, and weak marketing and operational capabilities. Without these, xDai risks terminal decline.

With the merger of Gnosis and xDai, Gnosis plans to prioritise incentives to complement the expansion of the existing ecosystem, in effect making up for xDai’s shortcomings.

Although xDai Chain must change its name and lose its right of attribution, it is still a new step for xDai to stay ahead in the era of expansion when all chains are expanding.

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What is Footprint Analytics? 

Footprint Analytics is an all-in-one analysis platform to visualize blockchain data and discover insights. It cleans and integrates on-chain data so users of any experience level can quickly start researching tokens, projects and protocols. With over a thousand dashboard templates plus a drag-and-drop interface, anyone can build their own customized charts in minutes. Uncover blockchain data and invest smarter with Footprint.  

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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