Layer-3 technology is becoming increasingly popular, and Onyxcoin — optimized and designed with both retail and institutional users in mind — is one of the platforms leading the charge. This guide covers everything you need to know about the Onyx blockchain and its Onyxcoin (XCN) crypto in 2025.

What is Onyx?

Onyx, commonly known as the XCN Ledger, is a scalable layer-3 blockchain network based on the Arbitrum stack. It is designed for performance, security, and cost efficiency. 

Onyx has an institutional-grade infrastructure designed to support large-scale applications and enterprise adoption. However, everyday consumers and developers can also use Onyx. 

Consumers can use it for decentralized applications, as a payments ledger, and more. Meanwhile, developers can build any EVM-compatible application. 

History

Adam Ludwin, a venture capitalist who founded Chain.com in 2014, was instrumental in the creation of Onyxcoin (XCN) and its associated blockchain. The project was initially backed by major firms like Nasdaq and Citigroup, with over $40 million in funding raised.

The company was acquired by Lightyear Corp. (part of the Stellar Development Foundation) in 2018. Since 2021, it has operated as a privately held corporation and eventually rebranded from Chain to Onyx in January 2023.

How does XCN Ledger work?

As mentioned earlier, Onyx is built using Arbitrum rollup technology, specifically Arbitrum Orbit. It also uses AnyTrust’s data availability model and Base layer-2 for settlement. This design optimizes transaction throughput while maintaining security guarantees.

Arbitrum Orbit is a feature within the Arbitrum ecosystem that allows developers to launch their own customized layer-2 or layer-3 chains, essentially allowing them to create highly tailored blockchains with specific functionalities.

XCN Ledger features

Utilizing Arbitrum’s technology and AnyTrust, XCN comes with features like governance, gas tokens, and data availability configurations customized to the user’s needs.

Ok, it's Monday, but did you read the $XCN Ledger onepager yet? 👇https://t.co/NX6zt1R8aG pic.twitter.com/xqfUnB3GWu

— Onyx (@OnyxDAO) February 24, 2025

Onyx uses dynamic gas metering, which adjusts gas costs in real time based on network congestion and computational load. 

When this feature is coupled with XCN Ledger amortizing individual transaction costs through batch transactions (as a feature of rollups in general), this creates a cost-efficient environment, especially during high-traffic periods. 

A portion of each transaction fee is burned, reducing the overall supply of XCN over time. This mechanism aims to make Onyxcoin (XCN) net deflationary with increased network usage, which could be advantageous for its long-term price performance. 

Execution

The execution environment is Onyx’s backbone; it processes transactions, executes smart contracts, and ensures network efficiency. One interesting characteristic is its ability to provide dedicated execution environments. 

These environments allow financial institutions and enterprises to deploy applications and protocols without the congestion and competition for resources found on generalizable blockchain networks.

Transaction processing

Using the Arbitrum Nitro stack, Onyx processes transactions and executes smart contracts that are compatible with the Ethereum Virtual Machine (EVM). 

To improve transaction throughput, Onyx supports parallel execution, allowing multiple transactions to be processed simultaneously without conflicting state dependencies. 

The execution engine is designed to batch transactions that do not share state dependencies into separate processing threads, reducing bottlenecks and increasing overall network efficiency.

Data availability

Onyx utilizes AnyTrust’s Data Availability Committee (DAC). This format ensures that transaction data remains verifiable and accessible while minimizing trust assumptions. It also reduces the reliance on Ethereum for data availability.

AnyTrust is a data availability solution supported by Arbitrum. It uses a permissioned data availability committee that ensures the integrity and accessibility of transaction data off-chain while maintaining censorship resistance.

Using AnyTrust’s DAC enhances network efficiency and cost-effectiveness and enables institutions to conduct high-frequency transactions without incurring excessive fees or delays. 

Moreover, the integration of AnyTrust prevents data withholding and ensures that data is retrievable for validators and users.

In the event of a DAC failure or an attack withholding data, Onyx has implemented a trustless fallback mechanism that allows users to recover transaction data from Ethereum.

Settlement

Coinbase’s Base blockchain is the settlement and economic security layer of Onyx. 

• Onyx uses an optimistic rollup model, combining and settling several transactions. Fraud-proofs guarantee that state changes are accurate.

The fraud-proof system utilizes a delayed execution window. This mechanism gives validators time to dispute fraudulent activity before finalizing the state. To ensure that invalid state transitions can be challenged and corrected, Onyx implements multiple rounds of interactive dispute resolution. 

The optimistic rollup format allows Onyx to batch multiple transactions before finalizing them on the layer-2 (Base) and, eventually, layer-1 (Ethereum) blockchains, significantly reducing network congestion and improving scalability.

In this way, Onyx-based applications can achieve high throughput and cost-effective execution without compromising decentralization. This architecture reduces congestion and allows Onyx users to benefit from fast finality and low gas costs.

Settlement process

Base’s reliance on Ethereum’s trust model ensures that transactions remain verifiable and immutable. The settlement process is the following:

1. Transaction execution on Onyx L3:

1. Transactions are processed within Onyx’s execution environment using Arbitrum Nitro.
2. Sequencers verify transactions and collect them into batches.

2. Batch submission to Base L2:

1. The Onyx rollup sequencer periodically submits state updates (batches) to Base L2.
2. The sequencer posts the state commitment hash representing the new state of the Onyx chain to a settlement contract on Base L2.

3. Finalization on Ethereum L1:

1. After a challenging period, the finalized transaction data from Base is submitted to Ethereum.
2. Due to Ethereum’s decentralization and economic security, Onyx users do not have to worry about chain reorgs, irregular state transitions, or liveness failures, ensuring censorship resistance and immutability.

Sequencer

A sequencer is an important component in rollups. It manages and processes transactions and is comparable to validators on layer-1 blockchains.

Onyx’s sequencer processes transactions before they are posted to the rollup contract (on Base), maintaining deterministic (consistent and predictable) ordering. 

This is because it processes transactions in an equitable, first-in, first-out (FIFO) order and submits them to the rollup contract. 

Interoperability and cross-chain connectivity

Onyx’s architecture facilitates interoperability between multiple blockchain networks, enabling cross-chain communication and asset transfers.

Blockchain ecosystems struggle with fragmented liquidity and isolated smart contract execution. Fragmented liquidity means that the supply of an asset is spread across multiple blockchains, making it difficult to acquire.

Liquidity Fragmentation: The Silent Killer of DeFiLiquidity fragmentation is one of the biggest problems in crypto, scattering trading volume across multiple platforms and blockchains. The result? Fragmented pools instead of a consolidated market.🧵1️⃣Market Inefficiency:… pic.twitter.com/godoXuFLkJ

— Crypto Pragmatist (@cryptoprag) September 10, 2024

Isolated smart contract execution is similar; the smart contract can only interact with other smart contracts and accounts on the blockchain on which it is deployed. Both of these scenarios result in a poor or restricted user experience.

Onyx solves this problem by bridging layer-1 and layer-2 networks. This ensures that decentralized applications (DApps) are composable and can function across different protocols with minimal friction.

Onyx establishes a highly connected infrastructure by integrating with Ethereum, Arbitrum, and Base. Assets, data, and transactions can flow freely between these networks, unlocking new opportunities for decentralized finance (DeFi), gaming, and enterprise.

What is Goliath? A new layer-1 blockchain product

On March 3, 2025, Onyx launched the Goliath testnet, a new layer-1 blockchain designed specifically for financial institutions. According on Onyx, the network will offer transaction speeds comparable to networks like Visa, which is able to process 24,000 transactions per second.

Onyx Goliath is a revolutionary Layer 1 blockchain aimed at reshaping global finance. Designed for banks and financial institutions, it promises unmatched scalability, security, and speed. Read about Goliath and the new $XCN Ledger points system below 👇🔜https://t.co/0aKTc96shJ

— Onyx (@OnyxDAO) March 3, 2025

Goliath will operate independently as a layer-1 blockchain but will also remain interoperable with existing financial networks. The mainnet launch will take place in early 2026. 

What about Onyxcoin (XCN)?

Onyxcoin (XCN) is an ERC-20 token deployed on Ethereum. It is the Onyx blockchain’s utility, governance, and gas token.  In March 2022, it was rebranded from CHN to XCN. 

XCN is the center of Onyx’s economic model and is instrumental to its staking and governance mechanisms. This model reinforces the decentralized nature of the ecosystem through Onyx DAO, the official decentralized autonomous organization (DAO).

As a result, Onyx ensures that its endeavors remain aligned with its users by allowing token holders to participate in decision-making. 

Governance

Only addresses with more than 100,000,000 XCN at the time of submission are eligible to start governance suggestions. 

By limiting voting access to only those who had enough XCN prior to the proposal’s introduction, this feature guards against manipulation through token acquisition after the proposal has been made.

This criterion ensures that only parties with a substantial stake in the protocol may suggest changes, preserving governance integrity and avoiding unserious proposals.

This function ensures that only those who held sufficient XCN before the proposal’s introduction can participate in the voting process, preventing manipulation by acquiring tokens post-proposal.

The Onyx Protocol’s governance is facilitated through four core components.

Core components

1. XCN token: The governance token used for protocol participation. Token holder’s voting weight is proportional to their staked balance.

2. Staking module: This is a mechanism that allows users to stake XCN.

3. Governance module (a.k.a. The Governor): This is the primary contract responsible for processing governance proposals and vote execution.

4. Timelock contract: A security mechanism that ensures approved proposals are subject to a compulsory delay before execution, allowing the community to react if necessary.

Guardian Wallet

Onyx Governance’s Guardian Wallet acts as a vital defense against malicious proposals. It guarantees that even if a proposal acquires the required number of votes by coercive or fraudulent tactics, it can be revoked prior to implementation. 

A security council and smart contract logic that can identify governance threats control this wallet. It constantly monitors governance proposals and tracks voting patterns to identify potential threats.

Do Onyx and XCN have staying power?

Onyx (XCN Ledger) is a high-performance layer-3 blockchain that uses modular technology to benefit its users. While it boasts low fees and fast transactions, it also benefits users in other, such as community-driven governance via the Onyxcoin token (XCN). Lastly, while Onyx is fast and cheap enough to support the average user, its fine-tuned specifications make it resilient enough to support large-scale enterprise services, too. However, while XCN experienced a historic rally in January 2025, the crypto’s long term price performance can not be guaranteed, despite the solid fundamentals.

Frequently asked questions