We are excited to announce that LRC Staking is now available on Loopring. As a highly requested feature within our Layer-2 community, staking allows users to earn rewards by locking up their LRC tokens.
In December 2022, our community passed a vote via Snapshot, with an overwhelming 98% in favor of introducing staking for protocol fee rewards. As a result, 45% of protocol fees will now be allocated for anyone to stake and earn rewards. We believe this will incentivize more users to participate in the Loopring ecosystem and strengthen our community’s growth.
How to stake
The LRC staking mechanism offers users the flexibility to stake or unstake their tokens at any time. However, to be eligible for staking rewards, users must lock their LRC tokens for a period of 90 days.
Once the 90-day lockup period has ended, stakers can claim their rewards at any time. If a staker decides to unstake their LRC tokens before the 90-day lockup period has concluded, they will not receive any accumulated rewards. Instead, the unclaimed rewards will be added back into the distribution pool for the following day.
Staking rewards are calculated on a daily basis, based on the previous day’s protocol fee amount, and are distributed pro rata among stakers according to their contribution. Stakers can monitor their accumulated rewards on their dashboard.
LRC Staking rewards starts on April 1, 2023. To ensure you don’t miss out on the opportunity to earn from the very beginning, stake your LRC now and maximize your rewards.
A word on protocol fee rewards
Protocol fee rewards are an essential component of the Loopring ecosystem. These fees represent a percentage of the trading volume flowing through the Loopring protocol and are applied proportionally to any token in a trade, swap, or transfer. These fees are completely abstracted from end-users.
In addition to Protocol fees, L2 network fees are normal style fees charged to the user. These fees are paid to the Loopring operator, and contribute to the protocol fee, which is shared among ecosystem participants who support the network. For swaps, trades, and transfers, the protocol fee is set at 20% of the network fee, while NFT trading carries a 10% protocol fee.
All protocol fees are disbursed in LRC, and any fees accrued in tokens other than LRC are sold on the L2 network for LRC. This way, Loopring’s native token will always have a claim on every DeFi and NFT trade ensuring its consistent presence in the ecosystem.
You can read more about how the protocol fee is broken down for the various transaction types.
Changes to the Protocol Fee distribution
Following the approval of the DAO staking proposal, there have been significant changes to the distribution of protocol fees.
- 80% to liquidity providers (LPs), with 64% going to AMM LPs and 16% being reserved for order book liquidity mining campaigns.
- 10% to the Loopring insurance fund
- 10% to the Loopring DAO.
- 45% to LPs in qualifying AMM pools
- 45% to LRC stakers.
- 10% to the Loopring DAO.
These changes represent a significant shift in the allocation of fees, and their impact on the Loopring ecosystem will continue to be voted on by the DAO going forward.
Deploying Order book Mining Rewards
Order book mining was voted to no longer receive protocol fee rewards. Previously, 16% of the protocol fees were reserved for order book liquidity mining campaigns, resulting in a sum of 225,697.21 LRC. In the coming months will see the introduction of new features to our order book, and these funds will be used to incentivize liquidity provision for these features.
Changes to Allocation of Insurance Fund
As allocation of protocol fees has undergone a change, the insurance fund will no longer receive any funds. The insurance fund has accumulated 171,259.95 LRC, and the community will soon vote on how to allocate these funds.
With LRC staking, Loopring offers users an innovative way to engage with and profit from the growth of the ecosystem. The recent changes to the protocol fee distribution reflect the community’s feedback, and we are excited to see how these changes will impact the growth of Loopring. As adoption and activity on the rollup continue to grow, participants are positioned to enjoy greater benefits.
Loopring is an Ethereum Layer 2 zkRollup protocol for scalable, secure DeFi and NFT applications. Loopring builds non-custodial, high-performance products atop our L2, including the Loopring Wallet — a mobile Ethereum smart wallet, and the Loopring L2 web app — an L2 orderbook and AMM DEX. To learn more, follow us on Medium or see Loopring.org.