Sky Mavis Plans to Cut Katana Exchange Rewards to Curb Inflation & Save Costs
Summary:
GameFi developer Sky Mavis plans to reduce liquidity provider rewards on its Ronin blockchain-based Katana exchange by 75%. The move aims to balance growing APR in Katana’s liquidity pools and the absence of proportionate increase in the total tokens pooled. The reductions will help Ronan save 2 million RON ($5.72 million) in Q1 2024. Despite a partial recovery after a hack two years ago, Ronin's Total Value Locked (TVL) is yet to attain the previous $1 billion mark.
Sky Mavis, a GameFi developer utilizing blockchain technology, plans to halve the rewards given out through its Ronin blockchain-based Katana decentralized exchange (DEX). A 50% reduction will be implemented in phase 1 from March 1, followed by another 50% reduction during phase 2, overall decreasing reward levels by 75%. The decision comes in light of average Annual Percentage Rates (APRs) in Katana's liquidity pools leaping from approximately 20% to 70% in recent months, as outlined in a February 15 announcement. The company highlighted an imbalance, noting that the rising APR has not been accompanied by an increase in the total tokens pooled in Ronin liquidity pools, even as the Ronin token (RON) price has surged by 59% since the start of the year. The escalating reward value, the company said, has not significantly boosted DEX liquidity provision, possibly surpassing the ideal incentive level. The scheduled reductions in liquidity provider rewards will enable Ronin to cut costs by 2 million RON ($5.72 million) in Q1 2024. "Diminished emissions result in less inflation in circulating supply," Ronin explained, emphasizing the fixed nature of the token's 1 billion supply cap. Currently, over 99% of Ronin’s $200 million total value locked (TVL) is held by the Katana DEX. Despite recovery of the RON token, its TVL is still struggling to reach the $1 billion height prior to a catastrophic hack from North Korea two years ago. However, with a Binance listing secured recently, the ecosystem has shown signs of recovery.
Published At
2/15/2024 8:53:58 PM
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