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On Jan. 27, The Loopring (LRC) team revealed the new tokenomics model for the protocol, which is better designed to reward those who contribute towards the growth of protocol.
- The goal of the new model is to incentivize behavior that supports the growth of the protocol, as opposed to v1, where the team realized that most fees were being earned by market-savvy users who knew the rules better
- The initial protocol fee will be 20% of Layer 2 transaction fees, and these will be paid to the protocol’s stakeholders, namely liquidity providers, insurers and the Loopring DAO
- Specifically, users will earn 0.02% on AMM swaps, 0.046% on order book trades, 0.004% on stablecoin-stablecoin trades, and $0.01 on transfers
- Because the earnings are made on L2, users will need to spend less time claiming rewards and can avoid spending gas fees on transactions to bring it from L1 to L2
- Liquidity providers will receive 80% of the fees, while the remaining stakeholders will receive 10% each
- The protocol fees will be distributed on L2 and on a monthly basis
- Prior to the latest announcement, Loopring had informed users that it would end support for staking on Loopring v1, with all future rewards to be distributed on Loopring v2
- The new tokenomics model is one of a slew of features released in the past 6 months, which include the Loopring Wallet and a protocol upgrade to v3.6
