ERC20 Token Migration & Staking App v2
By: Jonny Huxtable
Tags: Smart Contracts, Blockchain, Erc20, Chainlink

Once completed, you’ll see some celebratory fanfare and your balance will update to reflect the new total supply.

To earn rewards, you are required to stake your LPL within the owners’ pool. The new owners’ pool is different from the old, as rewards are distributed proportionately to all the current stakers as they’re sent to the contract. So if you’re not staked, you’ll miss any rewards, and the claimable LINK:LPL ratio will increase for the current stakers.

There is no time limit to migration, but it’s important to migrate as soon as possible to ensure you still earn rewards.

Rewards Distribution

As mentioned, the old token model had the benefit of holders not needing to pay any gas to receive their airdropped LINK. We’ve stayed as true to that as possible in the new model, as users will receive their rewards directly in their wallet in the form of a 1:1 LINK derivative with the ticker lpoLINK. Your lpoLINK balance will automatically increment in your wallet as your LINK rewards accrue. A user only needs to pay gas once to swap their lpoLINK for their earned LINK, and there’s no deadline or timeout on when a user has to perform the swap.

To give an example:

LPL holder stakes all their tokens within the owners pool

Over 18 months, 100 lpoLINK is accrued in rewards

User swaps all of their lpoLINK for LINK

You can forever leave your earned rewards within the owners pool, while your reward balance will automatically update when rewards are transferred in. The rewards that currently accrue originate from fees from the LinkPool Chainlink node, the Market and other services we offer.

The End of Bi-Weekly Distributions

In the old world, fees would be airdropped every two weeks to all LP token holders. These fees would be collected manually via a script from over 100 different smart contracts. That is no longer the case, as we’ve created a new contract-based mechanism that automatically transfers rewards based on a minimum LINK threshold.

The new world is leveraging Chainlink and Keep3r, in a contract we call the “KeeperSweeper”. Once rewards are over a certain threshold, currently 500 LINK, nodes will be incentivised to call a function on this contract that sweeps all of the rewards from all Chainlink feeds and transfers them to the owners pool. The beauty of this is that the process is now fully automated on-chain with incentives, dogfooding to show what can be done with Keep3r and its Chainlink integration.

With the new LINK rewards derivative token and automatic rewards distributions, holders can simply track how many rewards they’re earning within any wallet and watch it update on a semi-frequent basis. At current rates of LINK earned, that would be around once every 12 hours.

DEX Deprecation

Due to the migration to ERC20, we will no longer need the DEX to allow people to exchange the token. The UI will still be available at the same URL for people to close any open orders so they can migrate, but post-migration we anticipate seeing pairings created on AMM’s with liquidity for people to instantly swap LPL. A much improved aspect.

Staking Allowances

Like before, the new LPL token will still be required to gain a staking allowance on the LinkPool node. Although it works completely differently. Now, when you stake into the owners pool, in return you will receive what we call “allowance tokens” or LPLA. When you stake your LPL, you’ll receive an equal amount of LPLA. To begin with, that will be the linkLPLA variant and once staking is released, you will stake your linkLPLA alongside LINK to gain access to the pool. The more assets we support in staking that requires an allowance, the more allowance token variants we’ll mint.

An interesting aspect of this is that the LPLA tokens are ERC20, and you don’t need both LPL and LPLA to stake. If you have a balance of LPLA, then you can use that to stake in the LinkPool node without first having a balance within the owners pool. Although it’s very important to note that to withdraw LPL from the owners pool, you need to provide all of your allowance tokens to unwind the LPL.

This creates a scenario where there may be both liquidity in the LPL and LPLA tokens, where one may opt to simply swap assets into LPLA to gain a staking allowance, with LPL holders needing to buy back any sold allowance to withdraw LPL out of the pool.

The core reason for gating access to each pool with an allowance token is the ability to respond to demand for collateral while preventing dilution of yield for those already staking in the pool. After the launch of staking, the more work our Chainlink node gets, the more collateral it demands, the more LINK can be put to work, and the larger the LINK:LPLA ratio can grow, meaning the more each staker can stake.

Allowance Lending

After many thoughtful suggestions from our community, we’re happy to say that our new model will also support the borrowing and lending of any given allowance token. This will allow individuals with more staking allowance than stakeable tokens (e.g., more linkLPLA than LINK) to lend out their allowance to individuals with more of a given token than allowance. As a reward to allowance lenders, allowance borrowers will pay a variable share of their earned rewards to lenders. In this way, both parties earn yield on their holdings, increasing capital efficiency. Allowance lending isn’t yet live but will launch alongside staking.

The interest rates charged by the allowance lending pool will be determined by a bonding curve that we’ve created to balance between liquid LPLA available to be borrowed and its overall utilisation. Every LPLA holder will be able to stake their unused LPLA within the lending pool, allowing non-LPL holders to stake their LINK and for the lender to earn yield on their unused allowance. Allowance lending is the sole mechanism by which non-LPL holders will gain access to staking on the LinkPool node.

Over time the un-circulating supply of LPLA from the company’s LPL will be released into the lending pool to allow non-LPL holders to stake their LINK. The vesting schedule of that LPLA into the lending pool is not yet decided, but it will be based on how much LINK the LPL holders have compared to the collateral needed.