Lighter (LIT) experienced a significant upswing of over 20% on Monday, reaching $2.6, marking its highest price point since January. This surge came after the perpetuals exchange announced a comprehensive update to its tokenomics, which includes permanent token burns and an improved staking framework.
Following this announcement, LIT became the leading gainer among the top 100 cryptocurrencies, continuing a positive trend that has seen the token rise approximately 40% over the past week, significantly outperforming the overall market.
Details on the Tokenomics Overhaul
The recent changes introduced by Lighter involved using exchange revenue to repurchase LIT tokens. As part of this initiative, the exchange has bought back around 15.5 million LIT, equating to approximately 6.3% of the circulating supply. These repurchased tokens are intended for permanent supply reduction through scheduled burns.
This burning process will involve sending LIT to a designated burn address on the Ethereum (ETH) mainnet. Lighter plans to initiate its first burn a few weeks after the conclusion of the second quarter. The exchange also indicated a potential preference for burning undistributed LIT over the repurchased tokens, stating that this approach would be economically neutral for LIT holders and facilitate better treasury management.
Shifts in Staking Rewards
In addition to the tokenomics update, Lighter has revised its method for funding staking rewards. Since the launch of its staking program in January, about 3.72 million LIT has been distributed using pre-TGE revenue, which included around 170,000 LIT from its fee credits. However, this approach is being phased out.
Moving forward, staking rewards will be funded from the remaining ecosystem tokens, which total 250 million LIT. The protocol aims to offer a 6% annualized staking yield, and with approximately 125 million LIT currently staked, this could result in around 7.5 million LIT distributed annually.
Despite recent gains, LIT's trading price remains considerably lower than its previous high of $7.86 reached in December. The sustainability of this upward trend may depend on whether trading revenue can maintain its strength in the upcoming months.
