Ronin DEX Rewards to be Slashed by Half

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  • Ronin’s creator Sky Mavis has disclosed that it’s planning to cut its DEX’s liquidity provider rewards by 50%
  • The decision would cut the rewards by close to $6 million
  • The slashing will take place next month with another similar event expected to follow before year-end

Axie Infinity creator Sky Mavis has announced that it intends to cut the rewards paid to liquidity providers (LPs) on the Ronin blockchain-powered DEX Katana. The firm disclosed that it intends to take out 50% of the rewards which translates to about $5.72 million worth of RON tokens. Sky Mavis plans to cut the rewards by 75% but will first slash them by half starting next month with the next rate cut expected to follow this year, a move that’s likely to affect LPs willingness to provide liquidity on the decentralized exchange.

No Meaningful Outcome

In an announcement on Thursday, Sky Mavis said the move was meant to address the discrepancy between the rewards earned by LPs and the amount of tokens pooled. According to the Axie Infinity developer, an up to 70% increase in annual average rewards or APR hasn’t proportionally reflected on the number of tokens held in LP pools.

Sky Mavis noted that the discrepancy indicated the lack of “meaningful outcomes in DEX liquidity provision,” adding that the increase in rewards may have exceeded the “optimal level of incentives.”

Apart from curbing over-incentivization, the Axie Infinity creator intends to use the extra funds to incentivize other developments capable of boosting growth in the Ronin ecosystem.

Ronin Re-establishing Itself

The announcement comes barely a week after RON experienced extreme volatility during its listing on crypto exchange Binance. It also comes a month after Ronin Wallet announced support for an in-built web browser.

Ronin has lately been increasing its involvement in the web3 scene to re-establish itself in the space after suffering a $540 million hack conducted by the Lazarus group through a recruitment scam.

Although the community initially embraced Ronin’s move to cut LP rewards, it’s to be seen whether existing LPs will stick with the platform after the event.