By staking LON, LON holders can receive LON rewards based on the number of LON staked, therefore sharing Tokenlon’s growth. The staking reward comes from the LON bought-back on the open market by the protocol.
For each buyback, the number of LON tokens allocated to the staking reward pool is determined by the following formula:
stakingRewardLON = buybackLON * stakingRewardFactor
Note: stakingRewardFactor is currently at 0.6, therefore, for each LON bought-back, 0.6 LON goes to the staking reward pool
Users who participate in the LON staking can obtain xLON tokens as a proof and a tool to capture staking rewards. The ratio of xLON that can be exchanged for LON will continue to rise as the distribution of staking rewards from the Tokenlon protocol increases. Also, xLON tokens can be transferred freely.
When LON stakers withdraw from the staking, they need to return xLON to the staking contract to redeem the staked LON and the LON rewards obtained during the period. It is worth noting that the user needs to apply for unlocking before exiting to trigger the 7-day unlock period’s countdown, and the LON can be retrieved after the countdown ends.
LON stakers who need to exit during the countdown period can do so but will have to pay a 5% fine, and it linearly decreases to 0% with the countdown of the unlock period. The fine will remain in the staking pool as an additional reward for other stakers.
Note: Holding xLON at the moment can’t enjoy the Tokenlon fee discount yet. The core team will make a governance proposal for the change and let the community decide.
If you run into any questions or have any suggestions on Tokenlon, you are welcome to join our Discord group and chat with us.