Lighter, the decentralized futures exchange, is shifting its operational strategy with the introduction of a compulsory staking model for its native cryptocurrency, LIT coin. This policy change, revealed on Wednesday, links participation in liquidity pools directly to staking, revamping incentives within the exchange. Initially, this impacts the Lighter Liquidity Pool, compelling users to stake their LIT coins, aiming to optimize the equilibrium between yield creation and risk allocation.
Mandatory Staking's Impact on Lighter's Liquidity Pools
Individuals intent on investing in the Lighter Liquidity Pool (LLP) are now required to stake LIT coins, operating under a 1:10 ratio. This means each staked LIT allows investment of up to 10 USDC in the pool. This policy was put into immediate effect for new investors, establishing precise entry prerequisites. Existing members have a grace period until January 28 to comply by staking their LIT coins, ensuring their continued participation in the pool.
The liquidity pool is pivotal for generating yields on the platform while also serving as a safety net during liquidation phases. According to Lighter’s leadership, this alignment of interests between LIT coin holders and pool participants is set to enhance risk-adjusted returns. Similar procedures are intended to be implemented in other pools, with the aim of expanding the user base of sophisticated financial structures within the Blockchain framework.
Additional Benefits for Stakers
In addition to pool access, staking 100 or more LIT coins will exempt users from withdrawal and transfer fees, alongside providing staking returns, the rate of which will be disclosed soon. For market makers and high-frequency trading entities, adjustments in premium fees are being contemplated, with expectations of general fee increases. Nevertheless, LIT staking-related discounts aim to maintain basic fees near current levels. Platform transactions will remain free of charge.
Lighter’s mobile app will soon integrate these updates, following the recent release of the app. The previous month saw the debut of LIT coin with half of its total supply allocated to AirDrop, incentive schemes, and strategic alignments within the ecosystem. The coin buyback process commenced on January 5. Having launched its public mainnet in October, Lighter documented December’s transaction volume at over 200 billion dollars. A substantial investment of 68 million dollars, valued at 1.5 billion dollars, was secured from Founders Fund and Ribbit Capital. LIT coin’s price has declined by 2.56% in the past 24 hours, settling at 2.07 dollars.
Key updates include:
- •New Lighter Liquidity Pool rule: 1 LIT staked for 10 USDC investment.
- •Staked users enjoy zero fees on withdrawals/transfers.
- •Expansion strategy involves similar practices for other pools.
- •December’s transaction volume surpassed 200 billion dollars.
A spokesperson for Lighter expressed optimism, stating,
We’re building a stronger foundation for our stakeholders, where risk and reward are more balanced. This is just our first step in a series of enhancements to make Lighter a leading player in the decentralized exchange ecosystem.