Lighter (LIT) surged more than 20% on Monday, climbing to $2.6 and reaching its highest level since January. The rally was triggered by the announcement from the perpetual contracts exchange about a major overhaul of the project’s tokenomics.
The team introduced a new model that includes permanent token burning and an updated staking system.
Thanks to this surge, LIT became the fastest-growing asset among the top 100 cryptocurrencies by market capitalization. The rally actually began several days ago: over the past week, the token has gained about 40%, significantly outperforming the rest of the market.
Lighter (LIT) token price dynamics. Source: CoinMarketCap.
Lighter Unveils Updated Tokenomics
After launching the token, the Lighter team began buying back LIT using exchange revenue. According to the team, since the project launched, the exchange has managed to buy back about 15.5 million LIT. This is about 6.3% of all tokens currently in circulation.
Some of these coins will eventually be permanently removed from circulation. To do this, Lighter plans to use a burn mechanism, gradually reducing the available token supply.
The first stage is planned for the coming weeks after the end of the second quarter. The tokens will be sent to a special address on the Ethereum network, which is inaccessible, so they cannot be returned to the market.
The company clarified that it does not necessarily have to burn the repurchased tokens. Instead, undistributed coins from the project reserves may be used for burning.
Also read: How Bitcoin’s Price Rose Above $63,000
At Lighter they believe that for token holders, this approach makes no difference economically, but it allows the company to manage treasury operations more efficiently and avoid unnecessary expenses.
Staking Rewards Will Now Be Paid from the Reserve
The changes also affected the staking program. Since January, when Lighter launched this system, users have received about 3.72 million LIT as rewards. Funding came from revenue earned before the token launch, including about 170,000 LIT distributed through the trading fee compensation program.
This scheme will now be discontinued. Going forward, staking rewards will be paid from the project’s ecosystem reserve, which currently holds 250 million LIT.
The team is targeting a staking yield of around 6% per year. With the current amount of staked coins, which is about 125 million LIT, this means distributing about 7.5 million tokens per year.
Despite the recent growth, LIT is still trading well below its all-time high of $7.86, reached in December. Whether the new model can support further demand for the token will largely depend on whether the exchange maintains its current trading volumes and revenue levels in the coming months.
