As a veteran blockchain developer and cryptocurrency trader, I have an experienced vantage point for assessing the controversies surrounding PulseChain and its predecessor HEX. While critics decry them as scams – not without reason – short-term profit potential exists for prudent speculators. In this in-depth guide, I‘ll analyze the technical, economic, and leadership red flags while detailing how traders may cautiously exploit peak hype cycles.
Revisiting the Interlinked Projects
PulseChain expands the HEX ecosystem by forking the Ethereum codebase to offer faster and cheaper transactions, seeking to boost engagement.
The predecessor HEX token launched in late 2019 utilizes a high inflation staking rewards model. Users lock up coins to earn inflated interest rates like 30% or more guaranteed in USD terms.
This approach triggered immense criticism over sustainability and tokenomics. However, early adopters reaped fortunes, explaining pockets of fervent support. Below we‘ll analyze the complex landscape from an insider perspective spanning the technical, incentive structure, and leadership planes.
Quantifying Worrisome Token Inflation Rates
A prime area of contention involves the questionable inflationary dynamics. When stakers unlock shares, it mints additional tokens – diluting the value of existing supply.
HEX utilizes a "viral growth" structure where greater adoption earns stakers bigger payouts rather than building intrinsic utility. But this depends on perpetual new buy-in. If that slows, inflation can rapidly outweigh new capital inflows.
Payouts scale based on USD rather than Bitcoin or a neutral benchmark, aiming to drive nominal token prices up independent of external crypto market cycles. Below we see both HEX and PulseChain‘s supply inflating severely over time rather than following a fixed taper like Bitcoin.
Token Supply Inflation Rates
HEX
Year 1: 132%
Year 2: 76%
Year 3: 51%
Year 4: 41%
PulseChain
No Supply Cap
Estimated Year 1: 220%
Year 2: 190%This dynamic pressures prices as increasing token quantity offsets new capital. Late joiners take on exponentially greater inflation vs early beneficiaries.
We‘ll analyze other deep flaws shortly. But first, let‘s tackle the founder‘s credibility.
Evaluating the Founder: A Concerning History
HEX and PulseChain creator Richard Heart (presumably a pseudonym) has an alarming history in my assessment as a veteran blockchain engineer.
He first gained notoriety in internet marketing circles selling email spamming techniques. This trained him skillfully in SEO, virality hacking, and "social engineering" – aka emotional manipulation.
But that early career validates critics questioning if he prioritizes personal gain over ethics. Heart later relocated to Panama and ran into serious legal troubles requiring him to return to Florida.
As a developer myself, I find his background in crafting spam concerning technically also. It suggests honing abilities to exploit people rather than create value.
Below we‘ll breakdown his technical decisions holding up a mirror to core design principles. First, let‘s tackle the economic incentive issues.
Incentive Structure Critique: Where Do the Returns Really Flow?
gains predominantly benefit early participants who bailed quickly by withdrawing share unlocks faster before inflation hit. Late joiners take on amplified risk as token dilution accelerates.
Payouts depend partially on community hype bringing in new buyers rather than just staked capital. This makes payouts resemble pyramid dynamics rather than based on neutral programmed criteria.
As the video correctly indicates, those holding tokens long-term see rewards drained by inflation to the benefit of founding team members who cash out horns early.
Opportunity still exists catching short-term spikes. But over a multi-month horizon, I estimate 95% of gains have flowed to the creator and earliest benefactors.
Evaluating from a Technical Lens
Next I‘ll analyze the software design choices underpinning HEX & PulseChain using my expertise as blockchain protocol engineer. This will help substantiate the scam allegations – or at least ineptitude – based on clear evidence.
Right away I noticed excessive centralization choices:
- Heavy reliance on a closed-source oracle "controlled by Heart"
- Centralized governance via the origin address
- Concerning dependence on Heart & co‘s leadership for ongoing function
These violate blockchain‘s core value – decentralized consensus!
Additionally, basing inflation payouts on USD rather than relative to Bitcoin or ETH exposes ulterior motives…
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