The LOAN Token Halving (Early Liquidity and Stability Provider Rewards)

The LOAN Token is DISINFLATIONARY.

Meaning that it inflates, but the rate of inflation decreases over time.

This provides really interesting tokenomics for the LOAN Token and the Liquid Loans protocol as a whole.

Read on to learn more about the LOAN token and the impacts of the disinflationary tokenomics.

What is the LOAN Token?

The Loan Token is one of two tokens which are generated from the Liquid Loans protocol.

It is the yield-bearing token which captures the revenue from the borrowing and redemption fees when it is staking in the LOAN Staking Pool.

The LOAN token halving refers to the fact that each year, LOAN token emissions to the Stability Pool are cut in half.

This means that each year, the LOAN token becomes hard and hard to get.

How To Get LOAN Token

Other than buying LOAN token off the market, there are two ways to get LOAN token:

1. The LP Rewards Program. During the first 42 days, holders of both PLS and USDL have the opportunity to provide liquidity on the PLS:USDL pair on PulseX v2. If they take their LP tokens to the Liquid Loans dApp, they can earn LOAN token rewards on an emission schedule. Consequently, after the 42 days expires, there will be only one final way to get LOAN token other than buying off the market.

2. Providing Stability for USDL in the Stability Pool. As a Stability Provider, you earn PLS from liquidations as well as LOAN token emissions on a time-based schedule. The time-based schedule halves every year. Meaning if there are 1 million LOAN emitted in year one, there will be 500,000 in year two, 250,000 in year three, and henceforth.

The Implications of the LOAN Halving

Unlike all of the fiat currencies, which are endlessly inflationary, the LOAN token is disinflationary. 

This means that the supply inflates, but the rate of inflation decreases rapidly over time.

The price of an asset is determined by supply and demand. 

Therefore, if an asset becomes more scarce (i.e. less inflation), then it increases the probability for positive price action.

Nobody knows how the price of a cryptocurrency will perform, but better tokenomics beat worse tokenomics everytime.