Since TGE, our approach to tokenomics has been simple: use LIT in ways that compound long-term value for the protocol, the product, and tokenholders.
Today, we want to share an update on buybacks, staking rewards, and how we are thinking about ecosystem tokens going forward.
Buybacks
Since TGE, the Lighter protocol has programmatically bought back ~15.5 million LIT using exchange revenues, representing ~6.3% of the circulating supply.
We have heard the community’s requests for more clarity on how these buybacks will be handled, and we are happy to announce that buybacks will be used to permanently reduce the LIT supply through burns.
These burns will be conducted by withdrawing LIT from the exchange and sending tokens to the burn address on Ethereum mainnet. We will execute the first burn in the weeks immediately following the end of Q2 2026.1
Staking
Since launching the program in January, staking yield has been bootstrapped with pre-TGE revenue. This allowed us to support stakers from day one while fully directing exchange revenue toward buybacks. To date, ~3.72 million LIT has been distributed to stakers, including ~170,000 LIT from the fee credits program.
This approach was useful for bootstrapping the program, but it cannot continue indefinitely as the main source of staking yield. Effective immediately, we will begin using remaining ecosystem tokens to support staking rewards.
We believe staking rewards are one of the most aligned ways to deploy ecosystem tokens: they flow directly to the set of current LIT holders with the longest time horizons.
We are initially targeting a 6% annualized staking yield, subject to adjustment at the team’s discretion based on market conditions, protocol performance, and long-term sustainability.
At the current level of roughly 125 million LIT staked, a 6% staking yield would distribute approximately 7.5 million LIT per year, out of the 250 million LIT remaining.
Treasury Management
Going forward, our goal is to balance four priorities:
- Reward long-term LIT stakers.
- Continue reducing supply through disciplined burns.
- Preserve tokens for potential future partnerships, points seasons, and other growth initiatives.
- Steward the treasury in a way that maximizes long-term value for tokenholders.
Lighter is still early. The ecosystem tokens exist to help grow the protocol, deepen liquidity, reward aligned users, and expand the ecosystem. We will continue to deploy it carefully, transparently, and with the long-term interests of LIT tokenholders in mind.
\Note on burn mechanics: Burns may be executed using undistributed LIT rather than the exact repurchased tokens. This is economically equivalent for LIT holders and allows Lighter to manage treasury operations efficiently and avoid unnecessary costs.*
