Ronin Network to cut RON liquidity rewards on Katana by 50%

The Ronin Network team has provided an update revealing the blockchain platform’s developer firm Sky Mavis will reduce the total amount of rewards offered to liquidity providers (LPs) on its decentralized exchange platform Katana.

In their 2024 Q1 Katana Liquidity Mining Program update, the Ronin team said the adjustment to liquidity rewards available to the community begins a “new era” for RON.

The announcement referenced the recent listing of the Ronin (RON) token on the Binance exchange as a factor that has increased visibility and accessibility of Ronin’s native token to millions of users across the world. An increase in the token’s depth for traders and investors has necessitated the adjustments Sky Mavis has outlined for its DEX platform, the Ronin team wrote in a blog post.

2024 Q1 Katana Liquidity Mining Program Update ⚙️

Announcing our latest strategic updates:

• New RON reward emissions for LPs
• Phase 1 begins March 1st
• Phase 2 start date TBD

Full announcement 👇

📜 : https://t.co/xXUhgav79F pic.twitter.com/5yfWudde9C

— Ronin (@Ronin_Network) February 15, 2024

In particular RON rewards available to LPs on Katana will reduce by 50% in phase 1 set to occur on March 1. The platform will also adjust the rewards in phase 2, (date to be determined) cutting it by another 50%.  This phased reduction will significantly reduce RON emission levels, with long-term impact on supply and demand dynamics.

Notably, the cut in RON liquidity rewards will not change Ronin’s maximum supply of 1 billion RON, but will reduce the rate of increase for the token’s circulating supply.

Impact on RON price

According to the announcement, while the average APR in Katana liquidity pools rose by 50%, the rate of increase did not match the surge in RON price. Data from CoinGecko shows that the price of RON has surged by 56% in the past 30 days and over 260% in the past year.

“This means the increase in reward value did not drive meaningful outcomes in DEX liquidity provision and may have gone past the optimal level of incentives,” the team stated.

Implementing the new rewards rate will see Katana’s emission reduce from approximately 10.9 million RON per quarter to 5.5 million. That means phase 1 implementation will cut the DEX’s emissions by more than 60,000 RON per day, or 5.4 million RON per quarter.

Sky Mavis believes curbing the “over-incentivization” has the potential to slash the sell pressure from inflationary rewards, which could be crucial to the RON token’s value. It also means more RON can be earmarked for other ecosystem campaigns and user growth.

RON price traded at around $2.91 on Thursday afternoon, about 7% up in the past 24 hours.

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