Later this month, trading will begin on the Leverj platform. This will lead to fees being sent to the Staking Contract that creates and distributes FEE tokens to LEV holders who stake in the same time period. The contract process is complex but the user experience should be seamless. It is important that Leverj users get to understand LEV staking properly now, so you can decide if staking is for you.
Staking of LEV is one of the most innovative features of Leverj as a project. Staking periods occur perpetually, one after the other, where users can send their LEV tokens to the Staking Smart Contract and receive FEE tokens based on platform volume.
Here is a visualisation of how the Staking process works in infographic:
Infographic to Provide a Visualization of a LEV Staking Period
When you stake your LEV tokens, you are sending your LEV to a Staking Contract address built by the Leverj team and audited numerous times, both internally and externally. The contract is coded to give you back your LEV tokens at the end of the staking period no matter what.
There is an expected flow in FEE tokens from the LEV you stake for η blocks. However, there is a solvency risk ρ that the Staking Contract is insecure and could be hacked to steal the LEV and ETH inside it. If you believe ρ > 0 then it is safer for you to keep your LEV in a hardware wallet or paper wallet with the private key safe in your possession.
If you believe that the reward outweighs the risk that your LEV disappears in the staking process, then staking might make sense for you.
You also have the market risk that LEV price drops during time η while you are staking and unable to sell. Traders are at the mercy of liquidity and if your tokens are locked up then you are facing significant market risk in volatile episodes. If you value being nimble in the market then you won’t want to lock your tokens up too long by staking. However, by not staking you are foregoing the FEE disbursement that you would have received — which represents how how much you value that freedom to move LEV.
In the end it is about personal preference and risk tolerance. Some people will prefer to just HODL offline to avoid the hassle, some people will prefer to stake perpetually, some people will prefer to stake sometimes, trade other times. As the trading platform gets more successful, the incentive to stake will rise, as people want a piece of the pie in the form of FEE tokens.
All trading fees on Leverj, in FEE token or ETH, go through the Staking Contract. It is a fully self-regulating system that only produces new FEE when the market value of FEE is so high that people prefer to pay fees in ETH. The Staking Contract:
ETH is only logically going to be sent to the Staking Contract if FEE tokens are for sale at coupon value or more. Otherwise, users would rationally buy FEE for less and get a discount on trading activity instead of paying in ETH.
This is one of the most common questions regarding the LEV staking system. The simple answer is that it varies from period to period so there is no way to make it fixed or more certain. The amount of FEE you receive when staking your LEV over a certain period depends on many variables: the amount of LEV you are staking, amount of total LEV being staked, how long you are staking, how long the other LEV stakers are staking, and how many platform fees are processed. This boils down to three main factors in how much FEE you receive:
Those are the main three considerations. If you want to maximise the FEE you receive, just stake as much LEV as you have for as long as the staking contract is alive. The more volume the Leverj platform does, charging more fees, the more FEE tokens will be created and redistributed to LEV stakers.
Leverj is an ERC20 spot and derivatives exchange that charges all fees in ETH. Each FEE token gets you 0.0010 ETH worth of trading fees on Leverj, and a free market for FEE/ETH is available to buy and sell FEE (we will be charging 0% for this pair). For example, if you make an trade which costs you 0.033 ETH, then you can pay this in 33 FEE instead of in ETH. This means if you can buy FEE tokens from the FEE/ETH orderbook for, say, 0.0008 ETH, then you pay 0.0264 ETH for the 33 FEE that will cover your trading cost. That saves you 0.0066 ETH by buying these “coupons” from LEV stakers who are not interested to use them to trade on the platform right away.
In the early stages, FEE may be trading at erratic prices, as the platform initially won’t require users to buy FEE. If there is no FEE for sale at below 0.001 ETH then a user will just pay ETH for their fees on Leverj ERC20 spot exchange (all fees are charged in ETH).
As the FEE market matures, it should stabilise at a discount, anywhere from between 60–95% of the coupon face value of 0.0010 ETH.
A market will be made between:
As an ERC20 token, FEE can be traded anywhere that chooses to list it as well, however our platform will be integrated into our own FEE market to make market operations easier. There will be slowly introduced a mechanism that forces users to buy FEE from the Leverj FEE/ETH orderbook if the price is cheaper than paying in ETH. This will provide an adequate flow of demand for FEE in case stakers are aggressively selling.
There will be a constant flow of FEE that traders on Leverj buy, which is redistributed to LEV stakers, and a market for FEE will ensure that minimal, if any, ETH will end up being sent in the long-run as all fees will be paid in FEE tokens.
Leverj is doing a lot of cool things:
And don’t forget:
And if you haven’t already watched the Staking Contract Webinar, check it out here.
Want to learn more?
