Hermez In Depth: The Hermez Token (HEZ)

2 years ago   •   3 min read

By Polygon Hermez

As many of you are already aware, Hermez is a Layer 2 ZK-Rollup construction to scale token transfers on Ethereum.

As such, in order to keep the network decentralised, Hermez is on the look-out for people interested in taking part in the validation processes as coordinators on the network. Coordinators are the network participants that will collect users’ transactions, generate proofs through zero-knowledge cryptography and post the proofs and transaction data on the Ethereum mainnet. They are the figures that pay the gas and additional costs (electricity, hardware, etc.) and in return they will get to collect the fees from all the transactions they can process — the equivalent of miners in a PoW network.

The Hermez token (HEZ) will act as the vehicle for bidding in the auction to award exploitation rights to slots of the Hermez Network to the highest bidders. To do so, we have decided to start offering HEZ to the public.

How to Get Your Hands on HEZ

We have started supplying HEZ on the Uniswap Exchange, where anyone can acquire them in exchange for ETH. The pool started with 3 million tokens and 8000 ETH, for a target price of around 1 USD. As such, any users that want to take part in the auction and become coordinators will have to get hold of their Hermez Tokens on Uniswap.

Once the Network has started, there will be rewards for the early participation in the Hermez layer-2 network by airdropping Hermez tokens to users who onboard specific tokens (such as DAI, USDT, ETH and HEZ) onto the new network and complete at least one L2 transaction.

But BEWARE! Scammers may create tokens with the same or similar names to trick people into buying worthless tokens and handing over their ETH to them. Make sure you are interacting with the right Uniswap pool as we cannot take responsibility for any losses incurred if you try to buy illegitimate tokens that someone is trying to pass off as HEZ! The link to the right pool is right here (click to open in a new window) and it will be linked in the official website.

HEZ Flows

There are two specific ways that HEZ will flow through the network: the auction and rewards.

In the auction, prospective coordinators use HEZ to bid for right to validate blocks on the L2 network as part of the Proof-of-Donation process.

As the HEZ come into the system through the bids, they will be distributed in the following way:

  • 30% of the tokens will be burnt.
  • 40% of the tokens will be donated to Gitcoin grants (for further information on why we selected this particular method, check out this article)
  • 30% will be distributed among the network participants to reward users for onboarding specific tokens onto the network and transacting with them.

As per this last point, we want to reward the onboarding of specific tokens (DAI, USDT, ETH, HEZ) onto the L2 network, and to achieve this, 30% of the tokens from the winning bid will be awarded out to the network participants who have deposited and transacted with these tokens in L2.

Allocation, Vesting and Distribution

We want to make sure that we keep a strong bond with the key founders, initial development team and the active community of people invested in the long-term success of the Hermez Network. In order to do so, we will implement a form of vesting for the tokens awarded to the team, the founders and early supporters. As a general overview, all token allocations will be broken down into two tiers.

  • Tier 1: 5% of tokens unlocked initially, then after a 6-month cliff, 0.104% of the total amount released every day for ~2.5 years. All tokens will be unlocked after 3 years
  • Tier 2: 10% of tokens unlocked initially, then after a 6-month cliff, 0.164% of the total amount released every day for 1.5 years. All tokens will be unlocked after 2 years.

The token is a deflationary token because a portion of the supply is burned upon every winning bid in the Proof-of-Donation auction. There will initially be 100 million of them, a number that will only decrease as more tokens are burned. For more information on the rest of the token economy, please have a look at the project’s white paper!

Stay tuned with our progress towards Layer-2 scaling on Twitter under the handle @Hermez_network and sign up for Telegram updates here.

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