LEVELING UP: 1.5 Upgrade Part Two [2/3]

MOTIVATION

LEVEL 1.5 Upgrade Part II aims to expand utility for LVL token, improve accessibility to LEVEL, and systematically deepen liquidity across the protocol.

From first principle LEVEL was designed with two fundamental ideas in mind: user owned liquidity marketplace and real economics. With that we’ve managed to deliver the most capital efficient perps DEX with a best in class user experience.

When Outlook 2023 was released, we couldn’t have been more pleased with the results. As one of the fastest growing liquidity centers in the industry and the second most successful project on BNB less than 30 days in, we didn’t think it was possible to get much more done in one month. We were wrong.

LEVEL turns two (months) old, and we blew January out of the water. At the time of writing, the protocol facilitated 3.4bn of trades, generated over 4m of economics for the community and overcame its first set of technical challenges. 4100 new wallets have discovered the protocol, many joining the BNB ecosystem for the first time. This includes Satoshi’s most rambunctious disciple, dipping a toe into LEVEL while still misplacing advocacy. Suppose we’ll just have to bribe him with coconuts.

On the matter of nuts, February came with an overwhelming number of requests from strategics looking to get exposure to LEVEL via direct investments into the DAO Treasury. There have also been a handful of FUDsters ranging from impersonators of the Dev team, photoshoppers of CM handles, to click farmers that were alarmingly bad at math. As to the former, we would like to remind the community to remain vigilant and verify the source of communications whenever possible. As to the latter, we will be releasing a series of simple calculation tools for those struggling on Twitter.

To recap; LVL is the platform’s utility token, and currently the only way to access Governance is by staking LVL. As a utility token, its intrinsic value is entirely dependent on the purpose it facilitates. The LVL token’s purpose is to enable access to the LEVEL ecosystem. With 1.5 upgrade, we propose to further expand functional utility of LVL to also include:

4/12: Direct participation in protocol fees via LVL staking Making protocol revenue directly accessible to LVL holders: allocate 10% of daily protocol revenue to those who wish to derive a yield from owning LVL.

5/12: LGO Dutch auction via burning LVL LGO emission is intentionally flat to ensure an entirely fair start. Given the amount of momentum the project has been gathering, we want to make sure that Governance remains accessible to all users. At the current rate, there are 1400 days left on the LGO emission. As long as protocol revenue continues to accrue and that the dollar redemption value of LGO is not significantly impacted, we want to open up an additional avenue for the community to gain access to LGO in a way that is not dilutive to existing LGO holders. Details on implementation along with the anti-dilution formula will follow in a subsequent post.

6/12: Risk tranche redesign We are currently in the process of re-working the original tranche design. Implementation details will follow in a subsequent post, but the idea is to bring better alignment of risk/rewards across the three existing tranches.

7/12: Improving trader incentives Traders are the lifeblood of LEVEL. We want to substantially improve the rewards structure for our most active users by transitioning from the existing static lyLVL rewards to a dynamic leaderboard-based incentive structure (total emission remaining unchanged). Under the re-worked incentives scheme, locked LVL and staked LGO will also count towards lyLVL accumulation. Final distribution will be based on leaderboard position. Taking into account both the volume of trades as well as LVL staked on the protocol. More details will follow.

8/12: LVL Dutch Auction Similar to the LGO schedule, there are roughly 1755 days of LVL emission left at the current rate. Demand for LVL has vastly outstripped the rate of emission, and with the upcoming upgrades to the overall utility of the LVL token, LVL itself needs to be more accessible to the community. We propose a DAO Treasury auction of LVL tokens where the proceeds (X$) will be used to deepen protocol liquidity in the following way: - 25% of X$ will be paired with LVL from the treasury to create a new LVL/USDT liquidity pool - 75% of X$ will be added to the Senior tranche Quantity of LVL auctioned will be capped to a small fraction of the previous day’s trading volume. As always, all proceeds from Treasury auctions will be 100% owned by the DAO and redeemable as and when deemed fit by the burning of LGO tokens.

Taking community feedback into account, we have begun to improve on LEVEL’s original design. The upgrade to 1.5 represents a series of material improvements to the protocol and will be implemented over the course of the next 60 days. In addition to working closely with the Quantstamp team, we are also in the process of onboarding additional security resources and will likely conduct a third audit after both 1.5 as well as upgrades from the current Quantstamp audit are fully implemented.

VOTING OPTIONS Choose one of the following options to vote on:

YES - Agree with these proposals. NO - Take no action.

ELIGIBILITY Only LGO token holders are eligible to vote.