TIP32 - Proposed changes to LON Tokenomics

Tokenlon
  • Updated

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Background

  • Based on the LON whitepaper, all trade fees accumulated on Tokenlon will be used to buyback LON from the open market. For one LON bought back, one LON will be minted and distributed to all ecosystem participants, such as traders, market makers and relayers
  • 40% of the LON bought back goes to the LON treasury and 60% goes to users who stake LON
  • Definition of current parameters
    • Lfactor is the percentage of tokens transferred to the LON treasury from feeToken. Rfactor is the amount of LON distributed to the LON treasury from each buyback. The minting ratio is determined by the parameters during LON buyback
    • Based on the results of TIP10, 80% of feeToken from WETH enters the LON treasruy directly. This is to reimburse relayers for the gas fees, with WETH Lfactor set at 0.8
    • 60% of LON bought back is distributed to stakers and 40% is distributed to the LON treasury, with an Rfactor of 0.4
    • L/RFactor applies to all feeToken tokens and is set individually for each token
  • Current Issue
    • In this bear market, the trade fees Tokenlon receives from the list of feeToken is fluctuating greatly
    • The LON treasury is made up mostly of LON, which makes it difficult to weather the bear market
    • If no changes are made to the LON tokenomics, the value of trade fees and LON treasury will continue dropping

Aim

  • Let the community decide on the proposed changes to LON tokenomics, to better weather the bear market

Proposal

  • Distribute ETH, USDT and other main tokens from feeToken to the LON treasury, to improve the robustness of the LON treasury
  • Move all feeToken altcoins back to the LON treasury and make adjustments to the LON treasury portfolio accordingly
  • Make the following adjustments to LON tokenomics to better weather the bear market
    • Changes to L Factor parameters
      • L = 1 for ETH, with all ETH allocated to the treasury
      • L = 0.2 for USDT, where 20% is allocated to the treasury, 80% used to buyback LON
      • L = 0 for all other altcoins, 100% is used to buy back LON
      • L=1 for Altcoins that meet the requirements. Token to be allocated to the treasury and the portfolio to be managed accordingly
    • Changes to R Factor parameters
      • As the amount of feeToken bought back has been reduced, staking APY will drop. To address this, we need to increase the token amount distributed to the staking pool
      • We suggest to decrease the Rfactor from 0.4 to 0.3, to maintain the APY level, as stakers will receive a larger percentage from the trade fee pool
    • The ratio of minting LON remains the same at 1:1. Changes may be made in the future, depending on market conditions

Action Item

  • Based on the voting results, make adjustments to the LON tokenomics. Timeline for the changes to come into effect will be announced via our official channels

Voting Rules

  • Only holders of LON, xLON or LON LP tokens can vote

Voting Options

  • Support
  • Reject

Join the Voting

If you meet any problems while voting, feel free to join our Discord to contact us.

 

Tokenlon Team,

2022.07.01

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