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LooksRare one of the fastest-growing mystery in the cryptocurrency space with more than $7B in monthly volume is ending its reward program starting at 10.30 UTC on 15th Feb 2022. The platform is built based on a community-focussed revenue model where the revenue from NFT trading activity is directly shared with the $LOOKS and $LOOKS-ETH LP token stakers on the platform. The reward program for $LOOKS stakers will continue at an average APR of 250% but for the $LOOKS-ETH LP token stakers it'll be reduced to zero. The reward reduction is no panic for the $LOOKS stakers.
The irony of the cryptocurrency industry is that it gets affected by FUD and FOMO. Since the $LOOKS stakers was earning a juicy APR of nearly 1000% in the month of January 2022, it was reduced by their scheduled halving. The rewards halving made wash trading on the platform less profitable as the current token price doesn't promote wash trading and is less profitable. Almost 800% of the APR came from wash trading, with the reduction in the amount of wash trading happening on the platform, the APR came down to 250% which is still higher than any other proper platform out in the entire world but this caused a FUD among the retail holder that leads to continuous selling of $LOOKS tokens on the open market, especially on Uniswap.
The $LOOKS-ETH LP staking program coming to an end also added up to the current woes. The Liquidity providers added an average of $26M in liquidity for the token on Uniswap. With them not going to earn any rewards from staking on top of their liquidity fees will not benefit them greatly. So the sell-off continued nose-diving the token's price from $5 to $2 in less than 1 week.
For more information on the LP rewards program: Click Here
The founders also cashed out a whopping sum of 10,500 ETH earned from trading fees from the platform. The founders used tornado cash which is a privacy focussed network for private transactions on the ethereum network. This also created a panic among the retail investors causing the token price to fall more than 70%. The founder of the LooksRare platform has clarified that the funds are distributed to the core team who are claimed to be working on this product for more than 6 months without any pay whatsoever. Also he claimed some of them invested in the product. $3M salaries approximately for a 6-month work is not justifiable but is not wrong as we all don't know how the centralized corporations are getting paid. Transparency is adding more trouble to the core team which would vanish in due time provided the team improved the product greatly - which they're doing to date.
For more information on the transactions: Click Here
For the next 90-days, it's advisable to HODL your $LOOKS tokens. It is not advised to either buy the dip or sell the dip. After 90-days let's analyse the growth of the platform before making an investment in the token.
This article is the personal views of the author and is not an endorsement to invest in LooksRare platform or it's token. Please consult your financial advisor before making an investment on digital assets. Digital currencies are subjected to market risks, you can lose your entire invesment in less than few mintues.