The Flux Halving Just Happened!

Flux Official
6 min readFeb 9, 2023

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Today the Flux blockchain experienced its second successful halving. It was set to take place on February 8, 2023, at a block height of 1,313,200.
For those new to the world of blockchain and cryptocurrency mining, the concept of halving may be unfamiliar. However, seasoned veterans in the industry are well-acquainted with the process, as it has occurred in other cryptocurrencies like Bitcoin & Litecoin.

Halving is a predetermined event in specific blockchain networks, such as Flux or Bitcoin, where the block reward for miners is reduced by 50%. This event is embedded in the blockchain and occurs regularly, determined by specific block heights. Unlike Bitcoin’s halving cycle, which occurs every four years, Flux halves its network every two and a half years.

The primary objective of halving is to control inflation and ensure the finite supply of cryptocurrency. By reducing the rate at which new coins are added to the network, halving helps maintain the value of the cryptocurrency and prevent inflationary devaluation. Additionally, halvings incentivize early adopters of the technology by making it more challenging for new miners to enter the network as the rewards decrease over time. This means that those who believed in the long-term success of a project and started mining when rewards were higher are more likely to reap the benefits of their initial investment.

What does a halving mean for the Flux network?

To break down what the halvening means specifically for Flux and how it benefits network participants, we need a basic understanding of current monetary policy. It shouldn’t come as a surprise that we all live in a debt-based society, where individuals and institutions rely heavily on borrowing money to maintain a certain standard of living. Further, to combat rising debt, governments tend to print more money out of nowhere, devaluing their currency in the long term.

So how does this correlate to the halving and the Flux network? Well, it’s pretty simple — a basic rule of finance is that it needs to be scarce to make something valuable. Similarly, this same rule can be applied to halvings in the blockchain space. The block distribution of Flux transitions from 75 tokens per block to 37.5 per block. Therefore, the total number of new tokens created and added to the Flux network during the mining process is cut in half. Fewer tokens mined into circulation means reduced supply, which increases scarcity overall.

The halving affects two Flux model components as the block reward distribution is divided equally between the node operators and network miners. As a result, both parties receive half the rewards compared to the yield previous to the halving event, regardless of their role in the network. Ultimately, this means that in the short term, network participants will see a reduction in overall block reward for the same resource input. At this point, Flux network participators can do one of two things; they can use either scale with the network and stand up twice the hardware (two times the number of nodes to yield the equivalent block rewards previous to the halvening), or they may choose to turn off their rigs/nodes, which will ultimately benefit the individuals that stay on the network. But why would you want to stay on the network if the block reward yield is reduced by 50%?

Historically, some blockchains have had lackluster halvening events that resulted in individuals leaving the network for several reasons. Firstly, as previously mentioned, a project's underlying token or asset needs to be scarce to be valuable; moreover, the currency needs to have a use case, which is imperative. If there is no use case, the asset is speculative and will only move as the market moves. In contrast, the Flux ecosystem is built around its underlying token that facilitates every transaction and process on the network. If you want to stand up a node, you need Flux. If you want to deploy a website, you need Flux. If you want to utilize the Flux Drive, you will again need Flux. Every component in the Flux ecosystem is geared towards increasing the asset’s valuation as utilization increases. In other words, coupled with its economic scarcity, the Flux token has a universal use case that positions itself to benefit from halvening cycles.

Essentially, Flux inherits a deflationary model that’s reliant on its core piece of technology — the Flux token. As the price of Flux moves upward, the total amount of Flux tokens decreases; as more individuals come into the network, there is more demand and therefore reflects in the asset price positively. Ultimately, halvings make some individuals nervous only if they look at a short-term Return on Investment (ROI).

No halvening event. What if?

Supply and demand are the backbones of a halvening event. If Flux did not undergo a halving cycle, it would result in a longer period for overall adoption. Setting our halvening much quicker than Bitcoin’s is because our forecast projects the demand for our technology would scale in a shorter period compared to other protocols. There used to be a short history in blockchains when projects did not include halvings in their schedule and alternatively utilized token burns to manipulate the economic model. However, suppose an event is hard coded like Flux's case. In that case, processes such as halving cycles become undeniable and very predictable and drive use cases that enable Flux to scale the network quickly and efficiently. Individuals only argue against a halvening because all they can see is a delayed ROI — “today I can’t make the same amount of reward as I could previously, so I am out.” This is justifiable if an individual is in it for short-term gains. Still, suppose a person believes in a project and is dedicated to a network for a few years while the same platform produces innovative technology and use case. In that case, the long-term outlook becomes very positive. In the specific case of Flux, as Proof of Useful Work (PoUW) is deployed, future components utilizing the Flux token will ultimately be well-positioned to benefit significantly from the halving cycle.

Collateral Halvening

Traditionally, you need a certain amount of Flux tokens served as collateral to run a node on the network. While the network will be undergoing an overall block reward halvening, a similar event also reduces the total collateral required to stand up more infrastructure. In contrast to the block reward reduction programmed into the protocol code, a collateral halvening is executed on demand instead of in a fixed manner. In other words, the next collateral halving cycle will commence when the Flux network begins to reach 50% utilization. With the last collateral reduction, the Flux platform initially scaled upwards from 2,500 to almost 16,000 nodes. The anticipation is that as the network moves towards the next collateral halving, total nodes are forecasted to peak at around 30,000 nodes; this could make Flux one of the most powerful networks in the industry. While the current likelihood is relatively low, certain cases can facilitate this type of network progression contingent on overall adoption speed. For example, if Twitter suddenly decides to run on Flux, the network would need substantial infrastructure immediately, forcing a collateral halvening to encourage node operation to support such a rapid network demand. Although, realistically, another collateral halvening is not expected shortly unless a significant anomaly occurs to expedite a collateral-reducing event rapidly.

Flux invites you to learn more about the entire ecosystem on its official website, where you can find information on running Flux nodes, mining Flux, and exploring the network dashboard. The Flux team and community can also be found on Discord, where they are always open to new members and developers.

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