Sky Mavis is reducing rewards for liquidity providers on its Katana decentralized exchange by 50% in two phases.
The blockchain Sky Mavis, the developer of GameFi has announced that it will reduce the benefits that its Katana decentralized exchange (DEX) offers liquidity providers by 50%.
The developer of GameFi, Sky Mavis has built this DEX on the Ronin blockchain. Sky Mavis announcement on February 15 stated that the awards would be decreased by 50% in phase one beginning on March 1 and then by 50% further in phase two resulting in a total reduction of 75 percent from the present emission levels.”
Over the past few months, the average APR [annual percentage rate] in Katana liquidity pools has increased from 20% to 70%.” While pointing out that the total number of pooled tokens in Ronin liquidity pools has not increased in proportion to the price of Ronin tokens (RON) to balance out the annual percentage rate (APR), Ronin wrote to justify the reduction in the payout.
Tokens of the RON cryptocurrency have seen a value growth of 59% since the start of the year. According to Ronin employees, “This means the increase in reward value did not drive meaningful outcomes in DEX liquidity provision and may have gone past the optimal level of incentives”.
In the first quarter of 2024 alone, Ronin anticipates that the proposed reductions in LP will result in a savings of 2 million RON equivalent to $5.72 million.
Ronin stated that Fewer emissions mean lower inflation in circulating supply pointing out that the number of fixed tokens is set at 1 billion.
At this moment, Katana DEX accounts for more than 99 percent of the total value locked (TVL) in Ronin which is now $200 million. Although the RON token has just regained its 2022 highs, its TVL has not yet rebounded to the levels of one billion dollars that were seen before a disastrous hack that occurred by North Korea two years ago.
Despite this, the ecosystem has since rebounded and earlier this month, a listing on Binance was carried out which was eagerly anticipated.
