Topic: How staking LEV tokens covers trading fees on the Leverj platform (Read 198 times)

How staking LEV tokens covers trading fees on the Leverj platform

The main purpose of the LEV token is to provide Leverj platform users with a licensing mechanism to pay for trading fees on the exchange.

Staking LEV for weekly periods entitles the user to receive FEE tokens (a secondary Erc20 token) in rough proportion to the trading fees paid to Leverj over the period for trading activity.

In the base case where the FEE generated is strictly equal 1:1 to the trading fees generated, the percentage of your trading fees that are covered by your staked LEV is governed by this formula:

% Fees Covered = (100 * %Staked)/%TradingActivity

This means if you want a certain percentage of fee coverage, and you know that you are going to have a certain proportion of trading volume on Leverj, you can stake the % of staked tokens necessary to make this coverage. You can estimate the trading activity of the platform and then what your anticipated volume would be as a % of total trading activity.

Example 1

For example, say you want to ensure that 50% of your fees are covered, and you are only going to have 5% of the total trading volume on Leverj.

Rearrange the above formula:

%Staked = (%FeesCovered * %Trading Activity)/100

Plug in the numbers:

%Staked = (50 * 5)/100
%Staked = 2.5

You would have to buy and stake 2.5% worth of the amount of LEV tokens being staked. (Note: NOT THE TOTAL SUPPLY!)

Example 2

Or let’s say you want 100% of your fees covered but you are only going to be trading a modest 0.50% of the platform volume.

%Staked = (100 * 0.50)/100
%Staked = 0.5%

Then you would need to stake 0.5% of the LEV tokens being staked to generate the FEE tokens, which can be sent to your account address on Leverj to be drawn down for paying trade fees.

The way a user can target the %Staked figure is by monitoring the staking contract and seeing what is the typical amount of LEV tokens being staked. This will give a reasonable estimate to base your staked tokens upon in order to meet your fee coverage target for your trading activity, as it must be in terms of % of all LEV tokens staked.

Disclaimer: As we learn more, we expect these system designs to evolve and change overtime with more experience and testing. The details of the parameters of the above designs are subject to change.

https://blog.leverj.io/how-staking-lev-tokens-covers-trading-fees-on-the-leverj-platform-6e15cbfa355f