Lumino: Framework for Merge Staking Protocol Rewards.
Readers already familiar with the Lumino project tokenomics and incentives will be aware of the Lumino two-stage ISPO and how ADA and LMN token rewards from staking ADA with Lumino are distributed and allocated to participants. In this article we look at some improvements made to the ISPO dashboard and discuss the Merge Staking Protocol rewards framework, and how to register an interest to accumulate LMN rewards if you’re not already doing so.
First, let’s delve into recent improvements to our ISPO dashboard interface.
Dashboard Improvements.
The Lumino ISPO Dashboard is accessible via the Lumino website by navigating the menu to Products | ISPO. Upon loading, one of the first things to notice is that the Lumino ISPO is transitioning. The transition phase has a unique reward structure, and the current transition reward incentive, TRI50 is live.
During TRI50, the base rewards of 0.5 LMN per 1000 ADA staked increased by 50%, so the reward becomes 0.75 LMN per 1000 ADA staked for every epoch that the ADA in your wallet is stake delegated to AA1.
Also, as the AA1 pool margin parameter is at 50% during TRI50, the pool rewards ADA relative to the Cardano protocol block rewards at 50%.
The reward calculator for looking up and claiming rewards shows ADA and LMN rewards per epoch. If you participated in stage 1, unclaimed stage 1 and transition rewards are displayed. Claiming LMN rewards will be available after the token generation event (TGE)
Delegation history shows epoch number ADA delegated LMN earned and ADA earned. The latest update improved the delegation history and LMN reward calculation speed. Displaying 0 was replaced with a dash, and we added Pending and Producing status. These improvements result in rewards getting calculated and displayed a lot quicker.
Merge Staking Protocol rewards framework.
There are many reasons for developing a two-stage ISPO, for instance, to incentivize community engagement through an incentive reward for participation in the Lumino ecosystem, and to create an innovative way to fundraise and invest in projects with minimal risk.
As an ISPO distribution method, Merge Staking distributes project tokens in a targeted way while at the same time being an incentive, utility and value addition.
The first stage of the Lumino ISPO that enables the community to accumulate an assignment of native LMN tokens from delegating ADA to Lumino’s stake pool (Astarter AA1) is transitioning so that the accumulated LMN tokens may be utilised in the second stage of the ISPO, Merge Staking.
Tokenomics
LMN token is the heart of Lumino, which acts as a governance token and native utility token for the community and project infrastructure.
LMN tokens staked within the Lumino staking ecosystem can contribute towards merge-staking rewards in the second stage of the ISPO (Merge Staking Protocol). The Lumino staking ecosystem is multifaceted with elements and functions that include Launchpad tier-level access, Lumino Decentralised Exchange (ADEX) AMM liquidity provisions, Money Market yield-generating lending, and collateralized borrowing.
At the same time, the LMN token is also an additional reward token of Lumino stake pool (Astarter AA1). See here for more on Lumino Tokenomics.
Merge Staking Protocol
In addition to the Lumino ISPO stake pool, we also introduced two MSP programs, partner and associate, these programs enable SPOs to participate in the second stage. The difference between these two programs is; that partner MSP pools hold an allocated LMN and earn MSP partner rewards. The initial number of associate and partner pool slots is limited to allow the protocol to scale over time.
Merge Staking Protocol Rewards
In regards to the second stage of the ISPO Merge Staking Protocol rewards, there is a two-step process to earning LMN through Merge Staking as follows;
1) Delegation of ADA to an MSP pool, This is ADA delegated to earn Cardano protocol staking rewards or other rewards depending on the chosen pool.
2) Staking LMN in the Lumino staking ecosystem, the Lumino staking ecosystem is multifaceted in that it has different rewards and incentives specific to each core product.
The combination of 1) ADA delegated and 2) LMN Staked in the steps above is a combined requirement for Merge Staking LMN rewards. Merge staking LMN rewards come on top of any delegation or staking reward in 1 and 2 above.
While the exact formula is not as simple as ADA Delegation + LMN Stake, the combination of the two produces a computation of a virtual stake.
AvgStake x N = Virtual Stake
AvgStake is the average amount of LMN the user has staked within the Lumino ecosystem.
N is the sum of multipliers and includes a merge staking multiplier incremental to the combined ADA delegation to an MSP pool and LMN stake within the Lumino ecosystem.
This adaptive approach allows for additional multipliers to increase the Virtual Stake and subsequent LMN rewards earned; for example, early participation, duration, NFT, or Multi Token multipliers.
Example Rewards
Data modelling potential rewards under different scenarios based on the framework outlined in this article produces some interesting results and while still in development and subject to change the following example demonstrates potential rewards.
The amount of LMN distributed per epoch adjusts depending on the sum of all Virtual Stakes (of all participants) so that more participants and LMN staked can result in balanced rewards over time. There is a forecast of between 30% — 300% expected APR for Merge Staking LMN.
For every participant, the average LMN staked in the Lumino ecosystem multiplied by the sum of all multipliers will give a virtual stake:
AvgLMNStaked * SUM(Multipliers)= Virtual Stake
To calculate participant LMN rewards per epoch during stage 2 Merge Staking. The system divides the Virtual Stake by the sum of all Virtual Stakes (of all participants) and multiplies each share by the amount of LMN distributed each epoch.
LMN rewards = Virtual Stake / Sum(All Virtual Staked) * LMN rewards per epoch
Example Scenario
An early participant delegating 1000 ADA to Lumino MSP stake pool (Astarter AA1) has collected an AWL NFT and holds it in the same delegating wallet. When merge staking begins, the participant stakes 500 LMN in the Lumino staking ecosystem.
The 500 LMN stake multiplied by 2.274 (the sum of multipliers) gives a Virtual Stake of 1,137
There is a total Virtual Stake by all users of 1,534,222
The MSP reward pot for the epoch is 12,153 AA
1,137 divided by 1,534.222
Multiplied by 12,153
9.007 LMN rewards (132% APY)
Introduction to Merge Staking Protocol multipliers
Multipliers determine the amount of virtual stake through simple multiplication. Therefore the greater the number of multipliers, the greater the virtual stake and subsequent token rewards.
The maximum bonus multiplier, at least for now, is four and includes the following multipliers;
- Basic Bonus Multiplier
- Merge Stake Multiplier
- Early Bird Multiplier
- NFTs Held Multiplier
Basic Bonus Multiplier
This Multiplier gets granted to all Merge Skating participants delegating ADA to an MSP pool and Staking LMN in the Lumino staking ecosystem.
Merge Staking multiplier
The Merge Staking multiplier is relative to the combined ADA/LMN stake. Delegated ADA and staked LMN thresholds are combined to achieve the Merge Staking multiplier.
After the stage 2 Merge Staking starts, participants will earn MSP LMN rewards based on the amount of ADA delegation to Lumino LMN1 or a participating MSP Pool and the amount of LMN staked in the Lumino staking ecosystem.
More ADA delegated to Lumino LMN1 or an MSP pool, and the more LMN staked to the Lumino ecosystem, will increase the Merge Staking multiplier.
Merge Staking multiplier
The Merge Staking multiplier is relative to the combined ADA/LMN stake. Delegated ADA and staked LMN thresholds are combined to achieve the merge staking multiplier.
After the stage 2 Merge Staking starts, participants will earn MSP LMN rewards based on the amount of ADA delegation to Lumino LMN1 or a participating MSP Pool and the amount of LMN staked in the Lumino staking ecosystem.
More ADA delegated to Lumino LMN1 or an MSP pool, and the more LMN staked to the Lumino ecosystem, will increase the Merge Staking multiplier.
Earlybird Multiplier
The first early participation bonus applies to delegators participating from epoch 366–369 with a sustained average delegation over a specific time after stage 2 Merge Staking starts.
More ADA delegated to Lumino LMN1 or an MSP pool during a period will give a higher Earlybird multiplier.
NFT Multipliers
Lumino AWLs NFT series is packed with ISPO and Merge Staking Protocol utility, and while still being developed, the basic principle of this utility is thus;
Holding Lumino NFTs in the same wallet that is delegating ADA to Lumino LMN1 or an MSP pool and Staking LMN in the Lumino ecosystem will result in an NFT multiplier. NFT Multipliers are specific to Lumino NFT collections and are awarded based on the number of NFTs held up to a maximum.
Transition to Merge Staking
As we transition into merge staking, several project dependencies exist, including the distribution/claiming of LMN tokens. While the latter might be achievable with an auto-merge staking feature, tokens will, naturally, be available for claiming after the token generation event (TGE). Extending the ISPO to include community stake pools is something we are also considering, and we have begun collecting staking wallet addresses, for pre registration from those interested in participating.
Pre-registration helps us gauge the level of interest within the extended Cardano community for participation in Lumino Merge Staking, Web3, and DeFi incentive programs. We have had some positive feedback thus far.
If you are interested in participating, please express an interest by completing the form here. There is no requirement other than delegating ADA with a pool participating in the Lumino Merge Staking program.
There are already fourteen community stake pools plus the Lumino project pool (Astarter AA1). In the future, we will add more community stake pools, and there’s even an option to nominate your pool for inclusion if it isn’t already listed. We will endeavour to add the pools that receive the most nominations for inclusion as slots become available.
Thank you for reading and please stay tuned to Lumino social channels for more updates and announcements of events and activities taking place.
Follow this link to join one of our upcoming Lumino open discussion events, or reach out to us in reply to this article for more information.
You can find our website and other links at https://linktr.ee/LuminodeFi
