In this article, we will explain how Light DeFi’s liquidity system (LIGHT) works. With proof of stake mechanism, the LIGHT token does not need mining to complete transactions.
Instead of mining to generate new data blocks, the proof of stake mechanism uses the token itself to provide liquidity for the entire network. In this Light DeFi protocol, a portfolio is maintained with a fixed balance in LIGHT tokens, used to complete transactions through smart contracts.
This portfolio receives 1% of the value of all fees that are recorded in Light DeFi (LIGHT). That is, with this continuous injection of tokens, the liquidity system is constantly replenished.
At 1% of the network fee, a wallet with LIGHT tokens is kept in locked mode. That is, no one can access the device to move the balance that is there.
The function of this portfolio is to provide liquidity for transactions involving Light DeFi in the market. The more transactions, the more balanced the wallet will receive to maintain the LIGHT token liquidity pool.
Rather than creating a staking program where users could keep the balance in LIGHT to provide liquidity to the network, Light DeFi preferred maintaining a locked liquidity pool.
Although users do not receive rewards without a staking program, part of Light DeFi’s network is redistributed among token holders on a proportional basis.