Staking

Let's start with breaking down what it means when we say "stake".

What is Staking?

Staking is the primary value accrual strategy of Luxor. Stakers stake their LUX tokens on Luxor Website to earn rebase rewards. The rebase rewards come from the proceed from bond sales, and can vary based on the number of LUX staked in the protocol and the reward rate set by monetary policy.

Staking is a passive, long-term strategy. The increase in your stake of LUX translates into a constantly falling cost basis converging on zero. This means even if the market price of LUX drops below your initial purchase price, given a long enough staking period, the increase in your staked LUX balance should eventually outpace the fall in price.

When you stake, you lock LUX and receive an equal amount of Lumens. Your Lumens balance rebases up automatically at the end of every epoch. Lumens is transferable and therefore composable with other DeFi protocols.

When you unstake, you burn LUMens and receive an equal amount of LUX tokens. Unstaking means the user will forfeit the upcoming rebase reward. Note that the forfeited reward is only applicable to the unstaked amount; the remaining staked LUX (if any) will continue to receive rebase rewards.