Lighter's mandatory staking revolution! LIT tokens become the threshold, with 200 billion in trading volume dominating perpetual contracts

Lighter launches LIT staking feature, with a ratio of 1:10 (1 LIT unlocks 10 USDC recharge). Effective immediately for new users, existing users have a two-week grace period until January 28. Launched in October, by December, the trading volume exceeded 200 billion USD, surpassing Hyperliquid and Aevo. Raised 68 million USD at a valuation of 1.5 billion USD, led by Founders Fund.

Revolution in the Mandatory Staking Threshold at a 1:10 Ratio

Decentralized perpetual trading platform Lighter has introduced a staking feature as an “important use case” for its recently launched native token LIT. Lighter announced this update on Wednesday, making staking a core tool for platform access, initially applied to the Lighter Liquidity Pool (LLP). Users now must stake LIT to deposit into LLP, with a ratio of 1:10, meaning 1 LIT can unlock up to 10 USDC of deposits. New users can immediately experience this new feature.

This mandatory staking mechanism is extremely rare and controversial in the DeFi space. Most decentralized exchanges allow anyone to freely deposit liquidity without token holding thresholds. Major DEXs like Uniswap, Curve, and Balancer operate permissionlessly. Lighter’s mandatory staking effectively turns the open liquidity pool into a “membership system,” where only users holding and staking LIT are eligible to participate.

What does a 1:10 staking ratio imply? If a user wants to deposit 10,000 USDC into LLP to earn yields, they must first stake at least 1,000 LIT. At the current LIT price of $2.07, 1,000 LIT is worth $2,070. This means users need to invest an additional approximately 20% of their funds to buy and stake LIT before they can use the liquidity pool. This extra cost significantly raises the participation threshold.

Three Major Impacts of the Mandatory Staking Mechanism

LIT Demand Surge: Depositing liquidity requires LIT, directly creating token demand

Threshold Increase: Additional 20% capital cost filters for long-term participants

Value Binding: LLP holders and LIT holders have aligned interests, reducing sell pressure

Existing LLP depositors have a two-week grace period until January 28. During this time, they can maintain their deposits without staking LIT. After the deadline, staking LIT will be required to retain funds in the pool. This grace period provides existing users with a buffer, preventing panic and negative publicity from forced withdrawals. However, the January 28 deadline means everyone must choose: buy and stake LIT or withdraw liquidity.

“This will align the interests of LIT holders and LLP holders more closely, thereby increasing LLP’s risk-adjusted returns,” said Lighter. The logic of this interest binding is: when liquidity providers are also LIT holders, they are more committed to the Lighter ecosystem and less likely to frequently enter and exit due to short-term profit fluctuations. This stable liquidity benefits traders.

200 Billion in Trading Volume Dominance Supported by 1.5 Billion Valuation

(Source: The Block)

Access to liquidity pools remains crucial as it helps generate yields and provides insurance during liquidations. “We will introduce similar mechanisms for other public funding pools to realize our vision of democratizing on-chain hedge funds,” added Lighter. This statement about expanding from LLP to “other public funding pools” indicates that mandatory staking is not a one-time experiment but part of Lighter’s long-term strategy. In the future, Lighter may require all features to involve staking LIT.

Other benefits of staking include: when staking at least 100 LIT, withdrawals and transfers are fee-free. Stakers will also earn yields, though the annual rate has not been announced. This “staking equals VIP” design offers extra value to LIT holders but also raises fairness concerns: could it become a “rich get richer” system? When large holders enjoy lower costs due to holding more LIT, the relative disadvantage of small users is amplified.

In the coming weeks, Lighter will also adjust premium fees for market makers and high-frequency trading firms, increasing overall fees but offering discounts tied to LIT staking—making the lowest fee tier comparable to current levels. Lighter states that retail trading remains free on the platform. This differentiated pricing strategy aims to balance “charging professional users” and “being friendly to retail traders.”

Since launching in October, Lighter has quickly become one of the most popular crypto exchanges. According to data from The Block, by December, its monthly trading volume exceeded 200 billion USD, surpassing Aevo’s 177.5 billion USD and Hyperliquid’s 169.3 billion USD. Achieving this in just two months indicates a strong product-market fit. A monthly volume of 200 billion USD translates to roughly 6.6 billion USD daily, enough to generate substantial fee revenue.

Lighter recently completed a 68 million USD funding round, with a valuation of 1.5 billion USD, led by Founders Fund and Ribbit Capital. The 1.5 billion USD valuation is about 7.5 times its monthly trading volume, a reasonable multiple for a perpetual contract exchange. In comparison, Hyperliquid’s fully diluted valuation (FDV) is around 7 billion USD, with a monthly volume of about 170 billion USD, resulting in a valuation-to-volume multiple of approximately 41, significantly higher than Lighter’s.

Market Concerns Over 2.56% Price Drop of LIT and Long-term Logic

According to The Block’s cryptocurrency price page, LIT’s price has fallen 2.56% in the past 24 hours, to $2.07. This decline coincides with the mandatory staking announcement, indicating the market’s initial negative reaction to this policy. Investors may worry that mandatory staking could lead to user attrition or see the policy as too aggressive.

However, from a long-term perspective, mandatory staking should be positive for LIT’s price. When every user wanting to use LLP must buy and stake LIT, the demand for LIT will directly correlate with Lighter’s user growth. For example, if LLP deposits reach 100 million USDC, a 1:10 ratio requires 10 million LIT to be staked. If LLP grows to 500 million USDC, staking demand rises to 50 million LIT. This linear demand growth provides a solid fundamental support for LIT.

Following Lighter’s recent launch of a mobile app, the staking feature will expand to mobile users in the coming days. Last month, Lighter launched its native token, allocating 50% of the supply to the ecosystem, including airdrops and funding future incentives and strategic partnerships. On January 5, Lighter announced it had begun repurchasing LIT, as previously outlined in its tokenomics. The buyback mechanism, combined with mandatory staking, creates a dual compression effect—reducing circulating supply and increasing locked-in demand—potentially pushing prices higher.

The current price decline may be a short-term market digestion phase, and investors need time to understand the long-term impact of the new mechanism. Once the January 28 grace period ends and existing users are forced to make a choice, the true demand for LIT will be revealed. If many users choose to buy LIT to continue participating, a rebound could occur.