HEX is a project to recreate a common banking product called a Time Deposit. It is an ERC-20 token and fully automated in the form of a smart contract on the Ethereum blockchain. Information and a FAQ is available at

The purpose of this document is to walk through the features and bullet points of the project and verify or explain them in terms of what the smart contract actually says. The project founder, Richard Heart, has provided in-development versions of the code to the community via the Telegram channel I have participated in the discussion in that channel, reviewed the code, and even pointed out a bug or two (which were fixed in the next iteration). I do not wish to provide advice or editorial comment on any of the features. This is meant to be an objective explainer of what the contract will do.

For a more in depth discussion of Staking and the gains to be made, see this companion document HEX Staking Deep Dive.

If you find this document useful and want 10% extra HEX for your BTC claim and Transform Lobby participation:

If you want to maximize your AA participation, use my Cost Averaging Contract described here:

If you would like to send a tip, my ETH address is 0xD30BC4859A79852157211E6db19dE159673a67E2


The HEX folks will create a snapshot of the state of the BTC blockchain at some future block height. This means whatever addresses you control will have their balance in BTC recorded and referenced by the contract. *This part is not in the smart contract but it is referenced from the smart contract*

Before launch, 3 things will be made available to the public for confirmation of accuracy. 

1. The snapshot UTXO set before editing (see GoxMeNot)

2. The snapshot UTXO set after editing

3. The code for generating the merkle tree and top hash

With these, any interested party would be able to confirm

1. The snapshot was taken properly

2. It was edited properly

3. The top hash in the contract is correct

There will be a claim tool on the website that assists the user in signing the target ETH address with your BTC private key. Instructions will be provided when the tool is available. *This part is not in the contract but the contract is provided the signed statement material, BTC public key, and Ethereum address which are verified by the contract*


There will be one day of the contract being live that supports only a Transform Lobby. This ensures that folks who buy HEX via the transform process may begin staking at the same time as BTC claimers. Details on this process are below in The Transform Lobbies. One notable difference about the first day is that 1,000,000,000 HEX are distributed on the first day. This is congruent with the narrative that lobbies are filled with unclaimed coins and on the first day before claiming, there are no unclaimed coins.

Basic Flow

The contract issues 10,000 HEX per BTC held by the BTC address at the time of the snapshot. We have been promised a 2 week warning for the snapshot. For example, if we are given warning on April 20th, the snapshot should occur on May 3rd with the contract going live on May 4th and the first claim day being May 5th. It doesn’t matter how much bitcoin I have at my address(es) on April 20th. It matters only how much bitcoin is confirmed at my address(es) on May 3rd. Suppose I get the warning and move 3 BTC to address A, and 2 BTC to address B on May 2nd. After the snapshot on May 4th I can then do anything I want with those bitcoins including sell them. I sell them on May 6th. Then on May 19th (first claim day + 2 weeks) I go to claim I will generate 2 signed statements, one from address A and one from address B. Note that each wallet can contain multiple funded addresses. You need to make a separate claim for each funded address. I decide to consolidate on a single ETH address for both claims. The contract validates my signature and credits me with 10,000 * 3 + bonuses – penalties (described shortly) HEX for address A to my ETH address because on May 3rd I had 3 BTC in that wallet. The contract validates my signature and credits me with 10,000 * 2 + bonuses – penalties HEX for address B to my ETH address for the same reason. I will also receive some bonuses and penalties which will be described momentarily.

For BTC claims, the contract immediately stakes 90% of the claimed HEX for a minimum of 350 days. This will be mediated by the UI and allow for longer stakes (the #days is passed as a claim parameter). The remaining 10% is minted to the claimant address. In the above example, 90% of the HEX (i.e. 45000 + bonuses – penalties) is staked for a user-provided length of no fewer than 350 days. The remaining 5000 + bonuses – penalties is minted and available immediately to stake for any length of time or market sell.

Now I have some HEX. I can transfer it like any other ERC-20 token or use a contract function to Stake it. Staking means I lock up my HEX in the contract, reducing my transferable balance. The benefit of Staking is that when I end my Stake period, the contract will return not only the HEX I put in, but additional HEX based on an interest rate and additional bonus payout features coded into the contract.

Claim Examples

The claim bonus is better and the penalties are lighter the closer to launch date you stake. The bonuses are described in detail below so for these examples they will just be applied. I will assume a 5 BTC claim for these examples

Normal Claims

Launch Day

5 BTC * 10,000 HEX/BTC * 1 (no late penalty) * 1.2 (speed bonus) = 60,000 HEX

Two Weeks Post Launch

5 BTC * 10,000 HEX/BTC * 0.96 (late penalty) * 1.192 (speed bonus) = 57,216 HEX

One Month Post Launch

5 BTC * 10,000 HEX/BTC * 0.914 (late penalty) * 1.1829 (speed bonus) = 54,073 HEX

Six Months Post Launch

5 BTC * 10,000 HEX/BTC * 0.5 (late penalty) * 1.1 (speed bonus) = 27,500 HEX

Last Eligible Claim Day (~1 year post launch)

5 BTC * 10,000 HEX/BTC * 0.0029 (late penalty) * 1.00057 (speed bonus) = 143 HEX

Whale Claims
(1,000 BTC <= claim < 10,000 BTC)

Launch Day

5000 BTC * 10,000 HEX/BTC * 0.3889 (silly whale) * 1 (no late penalty) * 1.2 (speed bonus) = 23,333,333 HEX

Two Weeks Post Launch

5000 BTC * 10,000 HEX/BTC * 0.3889 (silly whale) * 0.96 (late penalty) * 1.192 (speed bonus) = 22,250,667 HEX

One Month Post Launch

5000 BTC * 10,000 HEX/BTC * 0.3889 (silly whale) * 0.914 (late penalty) * 1.1829 (speed bonus) = 21,028,571 HEX

Six Months Post Launch

5000 BTC * 10,000 HEX/BTC * 0.3889 (silly whale) * 0.5 (late penalty) * 1.1 (speed bonus) = 10,694,444 HEX

Last Eligible Claim Day (~1 year post launch)

5000 BTC * 10,000 HEX/BTC * 0.3889 (silly whale) * 0.0029 (late penalty) * 1.00057 (speed bonus) = 55,587 HEX

Mega Whale Claims ( >= 10,000 BTC)

Launch Day

50,000 BTC * 10,000 HEX/BTC * 0.25 (silly whale) * 1 (no late penalty) * 1.2 (speed bonus) = 150,000,000 HEX

Two Weeks Post Launch

50,000 BTC * 10,000 HEX/BTC * 0.25 (silly whale) * 0.96 (late penalty) * 1.192 (speed bonus) = 143,040,000 HEX

One Month Post Launch

50,000 BTC * 10,000 HEX/BTC * 0.25 (silly whale) * .914 (late penalty) * 1.1829 (speed bonus) = 135,183,673 HEX

Six Months Post Launch

50,000 BTC * 10,000 HEX/BTC * 0.25 (silly whale) * 0.5 (no late penalty) * 1.1 (speed bonus) = 68,750,000 HEX

Last Eligible Claim Day (~1 year post launch)

50,000 BTC * 10,000 HEX/BTC * 0.25 (silly whale) * 0.0029 (no late penalty) * 1.00057 (speed bonus) = 357,347 HEX

The Transform Lobbies

The other way to acquire HEX is the enter a Transform Lobby (called the Adoption Amplifier on the website). Every day, 1/350th of the unclaimed BTC is converted to HEX. ETH accumulated in the prior day is converted into HEX. For example, if there are 350,000 unclaimed bitcoins at the end of day 200, one thousand of them will be converted to HEX, i.e. 10,000,000 HEX (10,000 * 1000). If 500 ETH were accumulated over the course of day 200, any time on day 201 or after a user could claim HEX equal to 10,000,000 * / total ETH. If they sent 1 ETH that day, they would collect 20,000 HEX.

Entering a transform lobby entails sending ETH to the contract function joinXfLobby. All ETH sent during a given day is tallied and any following day, leaveXfLobby may be called to claim your share of the transformed HEX. It’s possible to make multiple entries in a day and the leaveXfLobby function takes both the day# and number of entries to resolve as inputs.

Note: The Transform system also pays for referrals so if you’re using or promoting a referral link, this is another avenue to earn HEX.


Staking is invoking a function on the smart contract to commit your HEX for a time period. Currently the unit of time is days. I may Stake 10,000 HEX for 10 days, for example. During this time I may not access those HEX, but at the end of 10 days I end my Stake and receive my 10,000 + payouts. This is the Certificate of Deposit functionality.

Payouts are drawn from a pool based on my share of total Shares. I use “Shares” here intentionally because staking bonuses are calculated as a scaling of your HEX into Shares. Meaning, if I stake 10 HEX and qualify for 40% bonuses, then my 10 HEX become 14 Shares. My payout is based on my Shares divided by the total number of Shares, not HEX divided by the total number of HEX. This is important because it means that accruing bonuses is how to get the best payout, perhaps even more economical than starting with more HEX. It’s much easier to get a 40% bonus than to buy 40% more bitcoins, see LongerPaysBetter/BiggerPaysBetter below.

Share Price

In order to ensure that longer and larger stakes pay better over time, there is a pricing mechanism built into the contract. Every time a stake is ended the gains for that stake are calculated in the form of a share price which all future stakers will pay to convert their HEX into shares. An important note here is that HEX’s base unit is the Heart. Hearts are to HEX as Satoshis are to Bitcoin. There are 100,000,000 Hearts per HEX.

The share price at launch will be 1 share per Heart. The way the price moves is related to return on investment for a stake. For example, if on day 5 someone ends their stake and has a 20% gain, it translates into a share price of ~1.2 Hearts per share. If that user wishes to stake again, their Hearts will be divided by 1.2 to determine their number of shares. Since Ethereum only supports integer math, this is accomplished using a scalar which is listed below.

The exact formula is: 

(BPB + cappedHearts) * stakeReturn * SHARE_RATE_SCALE / ((LPB * shares) / (LPB + extraStakedDays) * BPB);

Defining those terms:

  • “BPB” is 10 x maximum value for BiggerPaysBetter bonus
  • “stakeReturn” is the total amount paid out for ending the stake
  • “SHARE_RATE_SCALE” is a scalar to maintain precision in the output (at time of writing it’s 5 decimal places)
  • “shares” is the number of shares in that stake
  • “LPB” is 1820
  • “extraStakedDays” is the lesser of 3640 and (stakedDays – 1)
  • “CappedHearts” is the lesser of your stakeReturn and the maximum BiggerPaysBetter figure

This means that it’s a calculation of your gains, adjusted for the additional BiggerPaysBetter bonus you will get for staking your returned HEX.

The intent is that the math ought to work out such that you should only ever be able to re-enter a stake with at best the same number of shares you just cashed in.

In this way, it guarantees that longer, bigger stakes will pay better over time because nobody else can play games to get more shares in the system. This also means it’s always better to stake now because the price will only ever go up.

Payout Calculation and Interest

The contract accumulates a payout pool per day. The payout pool is filled with the daily interest of 0.009955% of the total coin supply. This comes out to 3.69% per 52 weeks, compounded daily. There are additional inputs to the payout pool discussed below. When ending your stake at the end of your commitment, the contract goes through each day of your term and accumulates a total payout from your Shares/Total Shares * payout for the day. The contract mints the HEX and credits you with them.

Unstaking Gotchas

Early/Emergency Unstake (EES)

The contract has a feature whereby a user can terminate their stake before the committed time. The user pays a penalty for this. The contract calculates the payout for ½ (rounded up) the days committed, e.g. 182 for a 52 week commitment, and subtracts that from the funds returned to the user. It will always apply at least a 90 day penalty. For example, I stake for 52 weeks (about 1 year) and emergency unstake after 266 days (38 weeks). The contract calculates my payout for days 1 – 182 and flags that as the penalty. The funds returned to me are then my Principal + (Days 183 to 266) payouts.

If the user emergency unstakes before ½ their days are served or if their stake is fewer than 179 days due to the 90 penalty day minimum, the penalty can cut into Principal. The contract just calculates ½ the days or 90, whichever is larger, of payouts, estimating for future days unserved, and subtracts that from the funds returned.

For example, I stake for 364 days and then unstake at day 140. Several steps take place to determine my final returned coins.

  • The contract calculates my payout for 140 days then estimates a penalty
  • Because I have not served half my commited days it estimates the difference by applying a ratio of half-committed-days / days-served * payout
  • In this case that is 182 days (half of 364 committed days) divided by 140 days served. The penalty is therefore 182/140 * payout (½ days divided by served days). 
  • My returned HEX is equal to Principal + payout – penalty
    • The penalty can be defined as a scaled version of the payout so my net HEX returned will be Principal + (140/140 * payout) – (182/140 * payout)
    • Which simplifies to Principal – (42/140 * payout)
  • This means my return will be less than I put in. Read that again. Your principal can be penalized should you unstake before ½ your committed days are served OR if your stake length is fewer than 179 days due to the 90 days minimum penalty.

Late Unstake

The system penalizes a user for leaving their Stake unattended after it has sat for its committed period. There is a grace period of 14 days and then upon ending the stake, the returned HEX will be reduced by 0.143% per day late (1% per late week). For example, if I have staked for 52 weeks, I have days 365 – 379 to end my Stake and have my HEX, earned interest, and bonus HEX returned to me. After that, my total payout will be penalized 0.143% per day. This includes Principal so if I’m 700 days late (just under 2 years), I will receive 0 HEX regardless of stake length or Principal.

Stake Example

This will be a simplified example to demonstrate how the contract flow works. It ignores the LargerPaysBetter bonus because I want to show small enough units to make sense, which means small, pointlessly confusing percentage bonuses. More detailed information will be available at

  • (A), (B), and (C) each claim HEX on the same day and by coincidence each end up with 10,000 HEX
  • A stakes 10,000 HEX for 182 days (6 months), B stakes 10,000 HEX for 364 days ( about 1 year), and C stakes 10,000 HEX for 1820 days (about 5 years)
  • To simplify, we’ll assume they are the only 3 stakers and they get a share rate of 1:1
  • The contract converts HEX to shares using the LongerPaysBetter scalar (days/1820) resulting in
    • (A) 10,000 * (1 + 182/1820) = 11,000 shares
    • (B) 10,000 * (1 + 364/1820) = 12,000 shares
    • (C) 10,000 * (1 + 1820/1820) = 20,000 shares
    • Total Shares are 43,000
  • Every day a payout pool is accumulated from inflation * (1 + Critical Mass bonus + Virality bonus). Let’s assume for simplicity that there are no further claims so Critical Mass, and Virality remain constant
  • For this example assume inflation is 714.285 HEX/day15% Critial Mass25% Virality, making daily payout 714.285 * (1 + 0.15 + 0.25) = 1,000 HEX/day
    • Day 1, say the pool is 1,000 HEX among 43,000 shares
    • Day 2, the pool is 1,000 HEX among 43,000 shares
    • Etc. until Day 182
  • On day 182, (A) ends their stake without penalty
    • The contract goes through each day, 1 – 182
    • It accumulates a payout for (A) using (A)’s shares / total shares
      • 1000 HEX 11,000 (A) shares / 43,000 total shares = 255.81 HEX
    • It does this for all 182 days, resulting in 46,557.42 HEX as the payout
    • This is minted to their address along with their initial 10,000 HEX
    • Their address now has 56,557.42 HEX

This process will happen for (B) and (C) as well once their stakes mature, albeit for 364 and 1820 days’ data.


All bonuses and modifiers I describe here are advertised on the website and coded within the contract. I saw all of them and validated the math and operator precedence using Solidity documentation (if that doesn’t make sense to you, it means that I made sure it does what it claims to do).


These are listed in the order they are applied.

GoxMeNot: The website says it doesn’t allow some well known addresses of bad actors to claim (e.g. Mt. Gox). *This will be achieved during the construction of the snapshot Merkle tree. Richard says he will publish sufficient information to allow users to build the snapshot Merkle tree for themselves so we can validate that the snapshot is accurate but no such information has yet been published and so I cannot verify that this happens at the moment.*

SillyWhalePenalty: When claiming, if the supplied BTC address held 1000 or more bitcoins at the time of snapshot, the claim is scaled down. The scaling goes from 50% for 1000 up to 75% for 10,000+ bitcoins. This scaling is linear so 5500 bitcoin claims (½ way between 1000 and 10,000) is scaled down 62.5%. This means a claim of 1000 BTC is only credited with 500 times 10k HEX. 10,000 BTC claims would only receive 25,000,000 HEX (2500 * 10,000 HEX/BTC). 5500 BTC claim would only receive 20,625,000 HEX. Pro Tip: This penalty can be avoided by splitting large addresses into multiple addresses each containing < 1000 BTC *before the snapshot occurs*.

LatePenalty: The system rewards fast claims and punishes slow claimers. The intent is to reduce the value of your claim by 0.286% per day (~2% per week), dropping you to 0 after day 351 of the project launch. The function is easy, it just multiplies your claim by (350 – days passed)/350. So on the first claim day, 0 days passed, you get claim * 350/350. Three weeks later you only receive claim * 329/350. For example 1 BTC claim would net 10,000 HEX on the first day and only 9400 HEX three weeks later. The earlier example of claiming 2 weeks after first claim day (May 19th), we would incur a 2,000 HEX penalty on our 50,000 claim as shown in the Claim Examples section.

Speed: In the Basic Flow section, I claimed 50,000 total HEX across 2 BTC addresses. There is a “Speed Bonus” applied to these claims. The bonus is applied for the first 350 claim days after launch and starts at 20% on the first day and drops by 0.057% each day thereafter. For example a 5 BTC claim on May 5th nets me the full 20% (5 * 10,000 HEX base + 10,000 HEX bonus), bringing my total to 60,000 HEX. In our example we claimed 2 weeks late so our base claim is now 48,000 HEX and the bonus has dropped to 19.2% of that new base value, or 9216 bonus HEX. If instead I claimed 175 days (6 months-ish) later, I both lose out on bonus and some of my claim has been redistributed via We Are All Satoshi. My base claim value would now be 25,000 HEX (LatePenalty) and the Speed bonus is only 10% or 2500 additional HEX.

Referrals: The website allows you to generate a referral link. This sets a cookie in the browser of the person who clicks it. The cookie merely states your ETH address and is read by the claim tool. The contract receives a “referrer” address and at the time of claim, pays the “referrer” address 20% of the claim value *including the Speed bonus*. Better still, it pays the person using the link a 10% bonus for having a referrer. To restate, using a referral link gives you 10% extra. Your referrer makes 20% on your total claim value. For example, if you claim 1 BTC on the first claim day, it will get a full Speed Bonus of 20%, resulting in 12,000 HEX. Clicking a referral link generates an additional 10% for you, 1200 HEX, and 20% for your referrer, 2640 HEX.

Self referring works, meaning you can generate a referral link for your own ETH address, click it, claim your HEX, and receive the 20% referral bonus. I mention this because it should be obvious that you could do this using a “dummy” ETH address to receive claim bonuses and your “real” address to claim against. Then consolidate or not at your leisure. If this now means you don’t want to click my referral link at the top, consider simply sending a HEX tip to 0xd30bc4859a79852157211e6db19de159673a67e2.

Stake Related

Modifies the Payout Pool

We Are All Satoshi

As part of the snapshot process, the total amount of bitcoin in existence is calculated. Each day after the first claim day for 350 days, 0.2857% of this total, minus claimed coins, is snapshotted. For example, let’s say there are 17,500,000 bitcoins total in the snapshot. At the end of the first day, ½ of the possible claims have been made, meaning 8,750,000 bitcoins are unclaimed. The next day, 25,000 bitcoins are taken from the 8,750,000 pool and recorded as “unclaimed”. The next day, assuming no more claims, another 25,000 bitcoins are drained and added to the unclaimed amount. And so on.

If more people claim, the daily unclaimed pool is reduced by their claim sizes. To be clear, their claim size is reduced at the same rate as coins are marked “unclaimed” so everything scales appropriately. Meaning, if I have 50 BTC and don’t claim for 35 days (5 weeks), I only get 45 BTC worth of HEX. The unclaimed pool has marked 5 of my BTC as unclaimed. *The math in the contract works such that claims and unclaimed payouts balance.*

After the claim phase ends, 352 days after contract launch, all tabulated unclaimed coins are paid to stakers. How this achieved in practice is if you have a stake that includes this special day, in addition to your interest payout you will receive a one time payout of your share of all unclaimed coins. For example, above we imagined that 8,750,000 BTC are claimed and no more. After the end of claim phase any active stake on that day will receive a one time slice of the unclaimed coins upon stakeEnd. If you have 5% of the shares of all stakers, you will receive an additional payout of 0.05 * 8,750,000 BTC * 10,000 HEX/BTC = 4,375,000,000 HEX

Critical Mass/Virality

I’m listing these together because they work essentially the same and are calculated together in the contract. Critical Mass is a bonus applied to the payout pool equal to coins claimed / total possible coins. So if there are 17,500,000 total claimable bitcoins and 13,125,000 have been claimed, the bonus is 75%. Virality is similar but for bitcoin addresses. It is the number of eligible addresses claimed / total eligible addresses. The bonuses are additive, meaning calculated separately and both added to the payout (payout * (1 + coins claimed/total coins + addresses claimed/total addresses)).

Early/Late Unstake

These aren’t bonuses but rather penalties incurred by other stakers. As described in the Unstaking Gotchas section, there are actions a user can take which incur penalties. Half of all HEX removed from the staker’s return by penalties are added to the payout pool for the next round. The penalized HEX are added to a combined “penalty” pool and each day that pool is drained into the payout pool for the next day and reset. So each day’s payout pool is increased by the penalties incurred the day before. For example, say 10,000 total HEX were lost by penalties on day ten. Day eleven’s payout pool would be increased by 5,000 HEX. Then on day eleven,15,000 HEX are lost to penalties. Day twelve’s payout pool would have 7500 HEX added. And so on.

Modifies Your Stake

These bonuses are how your HEX are multiplied to become Shares. The bonus for LongerPaysBetter caps at 2x, meaning 10ish years or 3641 days, and the bonus for BiggerPaysBetter caps at 10% for 150,000,000 HEX stakes. This means that with a 10 year stake, your Shares are equal to triple your coins. With a 75,000,000 HEX stake, you receive a 5% bonus on top of that. The total after bonuses is the number used to compute Shares.


The longer you stake, the more you make. The formula is (days staked – 1) / 1820. It looks complicated but comes out 20% per stake year (the contract uses 364 days/year). The “minus 1” accounts for the minimum stake period of 1 day.


The larger your stake, the more you make. The bonus formula is HEX/150*10^7, capping at 10% for stakes of 150,000,000 HEX. Note: the percentage is capped, the bonus HEX is not. Example Stakes

  • 1,000,000 HEX = 0.0667% bonus, or 667 HEX bonus
  • 10,000,000 HEX = 0.667% bonus, or 66,667 HEX bonus
  • 100,000,000 HEX = 6.67% bonus, or 6,666,667 HEX bonus
  • 200,000,000 HEX = 10.0% bonus, or 20,000,000 HEX bonus

The Origin Address

The contract specifies an ETH address as the Origin Address. This address is paid HEX by the contract in a few ways

  • The Origin is paid ½ of all HEX reclaimed by penalties (the other half going to the payout pool)
  • The Origin is paid a copy of all bonus payments
    • Speed claim bonus
    • Referral bonus
    • We Are All Satoshi increments
    • Critical Mass/Virality bonuses