Lux token, what is Luxor project? Financial tools to grow your wealth – stake and earn compounding interest.
LUX token provides access to financial tools to grow your assets and earn compound interest.
In crypto news, it’s important to talk about the first decentralized reserve currency protocol available on the Fantom Opera network based on the LUX token.
Each LUX token is backed by a basket of assets (e.g., DAI, LUX-FTM LP Tokens, etc.) in the Luxor treasury, giving it an intrinsic value that it cannot fall below. Luxor also introduces economic and game-theoretic dynamics into the market through staking and minting.
The goal of this ecosystem is to build a policy-controlled monetary system native to the FTM network.
In the long term, we believe this system can be used to optimize stability and consistency so that the LUX can function as a global unit of account and currency of exchange.
LUX token, FAQ:
Why do we need Luxor in the first place?
Dollar-pegged stable coins have become an essential part of crypto due to their lack of volatility as compared to tokens such as Bitcoin and Ether. Users are comfortable with transacting using stable coins knowing that they hold the same amount of purchasing power today vs. tomorrow. But this is a fallacy. The dollar is controlled by the US government and the Federal Reserve. This means a depreciation of dollar also means a depreciation of these stable coins.
Luxor aims to solve this by creating a non-pegged stable coin called LUX. By focusing on supply growth rather than price appreciation, Luxor hopes that LUX can function as a currency that is able to hold its purchasing power regardless of market volatility.
Is LUX a stablecoin?
No, LUX is not a stable coin. Rather, LUX aspires to become an algorithmic reserve currency backed by other decentralized assets. Similar to the idea of the gold standard, LUX provides free-floating value its users can always fall back on, simply because of the fractional treasury reserves LUX draws its intrinsic value from.
How does it work?
At a high level, Luxor consists of its protocol managed treasury, protocol owned liquidity, bond mechanism (minting), and high staking rewards that are designed to control supply expansion.
Bonding in the “Mint” page generates profit for the protocol, and the treasury uses the profit to mint LUX and distribute them to stakers. With LP bond, the protocol is able to accumulate liquidity to ensure the system stability.