LP-0055Finaltokenomicsemissionvestingsupplyburn

LP-055: LUX Tokenomics

Abstract

LUX is the native token of the Lux Network. It is used for staking, gas fees, governance, and as collateral across DeFi protocols. The total supply is capped at 1 billion LUX. Emission follows a decreasing schedule over 10 years, with 50% allocated to staking rewards. Transaction fees are partially burned, creating deflationary pressure as network usage grows.

Specification

Supply

| Allocation | Amount | Vesting |

|---|---|---|

| Staking rewards | 500M (50%) | 10-year emission schedule |

| Team + advisors | 150M (15%) | 4-year vest, 1-year cliff |

| Ecosystem fund | 150M (15%) | 5-year linear unlock |

| Foundation | 100M (10%) | 3-year linear unlock |

| Public sale | 50M (5%) | Immediate |

| Seed / private | 50M (5%) | 2-year vest, 6-month cliff |

Max supply: 1,000,000,000 LUX (1 billion). No minting beyond this cap.

Emission Schedule

Staking rewards follow a half-life emission:


annualEmission(year) = 500M * 0.5^(year / 4)

| Year | Annual Emission | Cumulative |

|---|---|---|

| 1 | ~84M | 84M |

| 2 | ~71M | 155M |

| 3 | ~59M | 214M |

| 4 | ~50M | 264M |

| 5-10 | decreasing | 500M total by year ~15 |

Rewards are distributed per-epoch to validators and delegators proportional to stake weight and uptime.

Fee Model

Transaction fees on all Lux chains are paid in LUX:

Base fee: EIP-1559 style with target block utilization of 50%
Priority fee: optional tip to validators
Burn: 50% of base fee is burned (permanently removed from supply)
Validator share: 50% of base fee + 100% of priority fee goes to block proposer

Burn Mechanics

The burn address 0x000000000000000000000000000000000000dEaD accumulates burned LUX. Burned tokens are subtracted from circulating supply. At high network utilization, daily burn can exceed daily emission, making LUX net deflationary.

Staking Economics

Current APR: variable, approximately 8-12% for validators (decreasing as total stake increases)
Delegation APR: validator APR minus delegation fee (minimum 2%)
Slashing: equivocation results in 1% stake slash; extended downtime results in reward withholding (no slash)
Compounding: rewards can be restaked automatically via liquid staking (LP-045)

Governance Weight

LUX staked (directly or via sLUX/xLUX) counts toward governance voting power:

1 staked LUX = 1 vote
Delegation preserves voting rights (delegator votes, not validator)
Vote-escrowed LUX (veLUX via LP-058) has boosted weight

Cross-Chain Gas

LUX is the gas token on all Lux chains (C-chain and all L1s / L2s, per LP-018). L1 / L2 chains can optionally use a chain-specific gas token, but LUX is accepted universally via automatic swap at the protocol level.

Security Considerations

1. Inflation attack: max supply cap prevents unlimited inflation. Emission schedule is immutable in genesis.

2. Concentration risk: team and investor allocations are vested to prevent early dumping. Vesting contracts are non-upgradeable.

3. Fee burn manipulation: burning 50% of base fees creates a floor on deflationary pressure. The other 50% incentivizes validators.

Reference

| Resource | Location |

|---|---|

| Token contract | github.com/luxfi/standard/contracts/token/LUX.sol |

| Vesting contracts | github.com/luxfi/standard/contracts/vesting/ |

| Fee burn implementation | github.com/luxfi/evm/core/state_transition.go |

Copyright

Licensed under the MIT License.