Sky Mavis reduces Ronin’s DEX liquidity rewards by 50%.
Blockchain GameFi developer Sky Mavis is reducing Liquidity Provider (LP) rewards by 50% on its Katana decentralized exchange (DEX) built on the Ronin blockchain. According to the notification issued on February 15, awards will be reduced by 50% in phase 1 from March 1 and by 50% in phase 2, which is 75% less than the current emission rate.
“Average APR over the past few months [annual percentage rate] “In Katana, liquidity pools have increased from ~20% to 70%,” explaining Ronin's reward termination, noting that the total pooled tokens in Ronin's liquidity pools have not increased in proportion to the price of Ronin tokens (RON). Since the beginning of the year, the value of RON tokens has increased by 59%.
“This means that the increase in reward value did not have a meaningful effect on DX liquidity and probably exceeded the optimal incentive level,” Ronin's staff concluded. As a result of the planned LP reduction, Ronin expects to save 2 million RON ($5.72 million) in costs in Q1 2024 alone. “Less issuance means less inflation in the floating supply,” Ronin said, noting that the supply of fixed tokens is at 1 billion.
Currently, Katana DEX represents over 99% of the $200 million total value (TVL) in Ronin. Although the RON token has since reached 2022 highs, its TVL has yet to recover to the $1 billion level it reached before the disastrous North Korean hack two years ago. However, the ecosystem recovered with the much-anticipated Binance listing earlier this month.
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