As of February 9, the popular NFT marketplace LooksRare has officially started its second phase of LOOKS emission reduction. In essence, this means there are now fewer $LOOKS tokens added to circulation.
Notably, this new phase also comes with an update in terms of LP staking rewards. Since the LOOKS Emission Phase 2 is already live, every user of the LooksRare platform should know the following upgrades.
What changes does the LOOKS Emission Reduction bring?
To begin with, the $LOOKS tokens emitted at block 14172012 will reduce significantly, from 800 to 380 LOOKS per block. This will affect two main areas:
- LOOKS staking rewards (reduced from 189 to 89.775 LOOKS / block)
- Trading rewards (reduced from 441 to 209.475 LOOKS / block)
What’s more, LOOKS stakers’ earnings will also reduce from 189 to 89.7750 LOOKS per block. Notably, users currently staking LOOKS-ETH LP tokens will stop receiving bonus LOOKS rewards starting February 15th, 10:50 am UTC.
In a recent statement, the LooksRare admins also mentioned they will cease the Liquidity Rewards Program at Ethereum Block 14211012 starting February 15th, 10:15 am UTC. This means that 2,660,000 LOOKS tokens will be reallocated as V3 liquidity.
Accordingly, the Uniswap V3 liquidity acts as a safety net, ensuring the long-term high liquidity of the LOOKS tokens. Considering that Uniswap V3 liquidity is more capital-efficient than its previous version, users might also experience lower slippage via Uniswap.
“We understand that this may be an inconvenience for those who provided liquidity for the sake of earning LP rewards on a longer timeframe, admins admitted.” However, they added that “we are confident that this change is for the best of both the project and LOOKS holders/traders long-term.”
What about WETH rewards?
As the LooksRare admins stated, “100% of platform fees (WETH) will continue to be earned by LOOKS Stakers.” Therefore, users will keep earning WETH based on the daily trading volume every 6,500 blocks.
Contrary to the LOOKS emission reduction, the value of the token itself still fluctuates daily. As a result, stakers still have a real chance of getting the same value of rewards even with a smaller amount of LOOKS tokens. Of course, it’s equally possible for the value of LOOKS tokens to decrease, thus reducing rewards too.
This is a major upgrade for the popular peer-to-peer marketplace, as well as its users. Earlier this month, the OpenSea competitor surpassed $8 billion in total trading volume. Part of its success could be allegedly due to a wash trading technique that allows traders to earn LOOKS tokens just by increasing the trading volume.
Notably, the daily US trading volume reported on LooksRare has exceeded that of OpenSea several times already. Over the next three months, traders will assess whether the Phase 2 LOOKS emission reduction will affect the success of the marketplace.
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