Ronin Announces Reduction of Token Rewards for Liquidity Providers
Ronin, an Ethereum sidechain focused on blockchain games, revealed plans to decrease RON token rewards paid to liquidity providers on its Katana decentralized exchange (DEX) starting in March. Sky Mavis, the company behind Ronin and Axie Infinity, intends to reduce liquidity pool token emissions in multiple stages, cutting daily rewards by around 50% each time. This move aims to address the discrepancy between the increase in reward value and the lack of proportional growth in tokens pooled for liquidity. By reducing rewards gradually, Ronin hopes to achieve better equilibrium for token prices and allocate more tokens for other growth initiatives.
Phased Reduction of Rewards
The reduction will take place in phases, with the first phase scheduled for March 1. During this phase, emissions will be reduced by over 60,000 RON per day or approximately 5.4 million RON per quarter. At current prices, this translates to a cut of over $174,000 worth per day or $15.6 million worth each quarter. Subsequent phases throughout 2024 will continue decreasing rewards progressively.
Market Reaction and User Growth
The market responded positively to the announcement, causing the price of RON to surge shortly after. CoinGecko data shows that Ronin’s price increased by 7% on the day, reaching $2.90. This news coincided with RON being listed on major crypto exchange Binance earlier in the month. Ronin has experienced a significant rise in active users recently due to the migration of Pixels, a blockchain-based farming game, from Polygon in October. Pixels is set to launch its own PIXEL token on February 19.
Hot Take: Ronin Adjusts Token Rewards to Enhance Liquidity and Price Equilibrium
Ronin’s decision to reduce RON token rewards for liquidity providers reflects a strategic move to address the over-incentivization of liquidity provision on its DEX. By gradually decreasing rewards, Ronin aims to establish better equilibrium for token prices while freeing up more tokens for other growth initiatives. This adjustment is expected to enhance liquidity and promote sustainable growth within the Ronin ecosystem. The market has responded positively, with RON’s price experiencing a surge following the announcement. With ongoing user growth and the upcoming launch of PIXEL token, Ronin is poised for further development and expansion in the blockchain gaming space.
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