Loopring DAO: Phase 2, Updating Proposed Tokenomics & Future of Decentralized Governance for LRC token

2 min read

Loopring’s Byron has posted an update of the Looopring Decentralized Autonomous Organization (DAO) tokenomics. For true DAO, the governance of the token itself must be decentralized to ensure the ‘bottom-ups management framework’. Loopring proposes new LRC tokenomics structures with the aim of bossting the utility of LRC and enhancing the incentives for users to take part in the Loopring L2 ecosystem.

LRC Tokenomics v2

In May 2021, as part of the new LRC Tokenomics v2, Loopring Foundation began distributing protocol fees to LPs (liquidity providers) while reserving the remainder of fees as follows:

  • 64% directly to LPs in incentivized AMM pools
  • 16% reserved for future liquidity mining events
  • 10% reserved for DAO pool
  • 10% reserved for insurance pool

The 64% allocated to LPs has been distributed to liquidity providers in the designated AMM pools on a monthly basis. The 16% that has been accumulating for a larger liquidity mining event will be distributed in Q4 of this year (see below👇).

The remaining amounts, allocated to DAO + insurance, have been accumulating into pools and we now want to begin the process of turning these over to the wider community, giving everyone the ability to suggest and enact decisions about how to use these funds (see below👇).

Q4 Liquidity Mining Event

Sometime in Q4 2022 we will be sponsoring a liquidity mining event using the funds gained from the 16% of protocol fees that have been accumulating over the past months.

The pool of funds will be distributed to the following LRC pairs during the liquidity mining event:

⭐️ LRC / ETH

⭐️ LRC / USDC

On top of this, we will be having a DAO vote in October to decide what other pairs will get distributions during the event. Any pair with more than 10% of the vote will also be included in this event. Keep an eye out to the official Loopring Voting Portal to participate in this vote.

Anyone placing limit orders which get filled during this event (on the participating pairs) will receive a share of these funds (based on volume of liquidity provided) as an extra bonus for this liquidity provision to the order book on Loopring L2.

More details will come on this event in the coming weeks.

DAO + Insurance Pools

In September, Loopring Foundation set up two new multi-sig treasury wallets, which will be used to publicly control the DAO + Insurance funds that have been accumulating. These vaults can be seen here👇:

  1. DAO: 0xA2F59b33399Bf8FeE8A447D6fCca34CFB0fd9bE3
  2. Insurance: 0xce50381F000bf3D67Cd539aB217b2dA6Ab8f9c33

When protocol fees are distributed each month, any amounts designated to these pools will be sent to the vaults listed above. Once a formalized governance process is in place, any and all decisions about the use of these funds will be controlled by the Loopring DAO through formal proposals on the official Loopring Voting Portal. This new formalized governance process will be progressively implemented over the coming months.

Tokenomics: Moving Forward

Over the course of Q4 2022, the Loopring team will continue to make proposals aimed at revamping the LRC tokenomics to bring new utility and increased incentives to the LRC token and the overall Loopring L2 ecosystem.

One such proposal will be to re-introduce LRC staking, which will be implemented directly on L2, by allocating a percentage of each month’s protocol fees to users who choose to stake their LRC on Loopring L2.

You can participate in the upcoming votes through the official Loopring Voting Portal here.

Keep an eye out for upcoming votes happening early in Q4. This is an exciting time to be a part of the Loopring L2 ecosystem. We look forward to further decentralizing the ecosystem to garner more adoption and participation among the growing community💙

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