Now that Loopring 3.0 has been deployed to Ethereum mainnet, let’s talk LRC staking.
Loopring Foundation is staking its own LRC. We’ve created a “golden staking window” which opens now and will close at the end of January 2020. This window can be beneficial to LRC holders, as you will read below. If you hold LRC and do not plan to sell them within 90 days, we encourage you to consider taking advantage of LRC staking to earn Loopring’s protocol fees.
For every trade settlement, Loopring DEX operators will pay the protocol a tiny protocol fee (0.05%), exacted from the tokens being traded.
DEX operators can stake LRC in a particular way to get a protocol fee discount. This is referred to as the 3rd staking type in this post about LRC utility.
Protocol fees are unrelated to whatever trading fees DEX operators may charge their users — that is a business decision for them. The protocol fee is simply an operational cost paid to the open protocol, which ultimately feeds into the Loopring and LRC ecosystem in the following manner:
All protocol fees will be converted to LRC, then,
- 10% burned
- 20% allocated for a future Loopring DAO
- 70%, the staking rewards, is to reward users who staked LRC for more than 90 days
Users receive LRC rewards proportional to their accumulated points. For example, imagine there are only two staking users, Alice, and Bob. Alice has staked 10K LRC for 6 months and Bob has staked 5K LRC for 8 months, the total reward will be split to them as:
- Alice：10*6/(10*6 + 5*8） = 60%
- Bob：5*8/(10*6 + 5*8） = 40%
The points are the product of the amount of staked LRC and the average staking period of each token. The earlier and more LRC a user stakes, the more he/she will get out of the staking rewards.
Whenever a user claims his/her staking reward, all the user’s points will be cleared to maximize the user’s return. All claimed LRC reward would be staked automatically, and all staked LRC would be locked for 90 days.
Golden Staking Window
On the smart contract level, LRC staking does not have restrictions on the timing or the LRC amount. Loopring Foundation has already staked 10 million LRC through the following two transactions:
Loopring Foundation will stake even more LRC in February 2020. But before we do that, we would like to give LRC token holders a chance to stake LRC before us, so they may take advantage to accumulate more points per token. We call the period from now to the end of January the golden staking window.
Importantly, the amount staked from the 2 txs above came from Loopring’s Ecosystem Advancement Fund (LEAF). Starting February 2020, though, the LRC we stake will not come from LEAF, but the allotment of the Loopring team itself. This portion, representing 20% of the total supply, was locked for 2 years — from inception of LRC until September 2019. Two months ago, it began vesting on a monthly schedule, which lasts 2 more years (1/24th vested monthly). However, we have not and will not be withdrawing the vested LRC to sell it — we are locking it further in the v3 staking contracts, a testament to our faith and commitment to the protocol and LRC holders.
How to stake?
Below we use etherscan.io to demonstrate how you can stake LRC. You can also use MyEtherWallet or MyCrypto.
- Step #1
Visit the LRC contract: etherscan.io/address/lrctoken.eth#writeContract, and click “Connect to Web3” to unlock your wallet using MetaMask.
- Step #2
Fill in the approve function form with 0xF4662bB1C4831fD411a95b8050B3A5998d8A4A5b as the value of _spender, and the amount of LRC you want to stake (with 18 extra 0’s) — the example below staked 12,345 LRC. Then click “Write” to sign and send the transaction. Wait for 1 confirmation.
- Step #3
Visit the LRC Staking contract *this is a different contract than above*: etherscan.io/address/stakingpool.lrctoken.eth#writeContract, and unlock your same wallet again as in step #1, if necessary.
- Step #4
Fill in the stake function form with the same amount you used in step #2, click “Write” to send another transaction, then wait for 1 confirmation.
- Step #5
That’s it. To verify you did it correctly, visit etherscan.io/address/stakingpool.lrctoken.eth#readContract, and fill in the getUserStaking function form, input your Ethereum address and click “Query”. You will see the amount of LRC you have staked in total, and the time you need to wait (seconds) before you can claim LRC reward, and the time you need to wait (seconds) before you can withdraw staked LRC.
We know a UI that handles this behind the scenes would be nice, and we will certainly build one. More than likely, so too will the DEXs themselves that build on Loopring as a convenience to users. For now, however, given it is early days for v3, and the first platform to launch (WeDEX) is only gearing up, it is not a top priority. When the volume starts rolling, it will become one.
We are excited to have the LRC staking functionality live and ready to go, and for holders & long-time supporters to be able to benefit. Keep in mind, this is just one staking function of LRC — the user/holder facing one. LRC is also staked by DEX operators, for economic security guarantees, and for protocol fee reductions. Again, see here.
Please note, when we say we encourage LRC holders who have no plans to sell within 3 months to consider staking their tokens now, it is because this golden window is a benefit to earn more points before the Foundation re-locks more of the team’s tokens. This is not financial advice, and we can make no assurances what the price will be like 1 or 3 months from now, or ever.