LSK 2.0: Migration to an ERC-20 Token

Since its inception through the Lisk ICO back in 2016, the LSK token has played a foundational role for all of us. Over the past eight years, Lisk has weathered market fluctuations and emerged as a stalwart supporter of the blockchain ecosystem. It is now time to enter a new era.

A Brand New Reality Lisk's integration with Optimism’s Superchain as a Layer 2 (L2) is a monumental leap forward that brings a multitude of benefits to the Lisk ecosystem and community. The LSK token will be one of the prime beneficiaries of this transition, as it will be migrated to become an ERC-20 token on the Ethereum Layer 1 (L1). With that, it will soon become seamlessly interoperable with the entire Ethereum ecosystem and any project or company that supports the ERC-20 token standard. This will allow for the LSK token to be used on any DeFi protocol, like DEXs or lending platforms, all Ethereum wallets, and many more dApps and tools across the Ethereum ecosystem while also enabling a more frictionless integration with centralized exchanges, cryptocurrency custodians, and other services. This new reality is something that the community has long asked for, and will immediately enhance the LSK token’s accessibility, usability, utility and liquidity. This exciting move unlocks a world of possibilities, but also requires us to adapt and innovate to ensure continued success.

-> LSK 2.0 moves towards a fixed supply.

Token Utility & Infinite Supply: Initially designed as a utility token to bolster protocol security and facilitate transaction fees on the L1 blockchain, LSK’s former infinite supply no longer aligns with current needs and would undermine future growth.

LSK 2.0 aligns with improved token standards. By tackling these challenges head-on, we're setting the stage for Lisk's explosive growth in the coming years.

New LSK Token Allocations Of the new LSK tokens, 70% or more will be allocated to initiatives that directly benefit the Lisk community, and the vast majority of the new tokens will be vested over a 3 to 10 year period, ensuring responsible allocation and alignment with the long-term success of Lisk. This strategic increase in the total LSK supply ensures we have the resources needed to support projects, developers, and initiatives that contribute to Lisk's long-term growth through incentive programs and partnerships that many in the community have repeatedly asked for, such as:

Airdrops (to ensure a growing community and active ecosystem of dApps and users)
Market making (to ensure healthy liquidity, tight bid-ask spreads and more exchange listings)
Venture capital investors (to ensure strategic leverage and access to a wider network)
Integrations with top dApps (DEXs, lending protocols, NFT marketplaces, and others) To ensure our updates to the LSK token are as robust as possible and in alignment with industry standards, we partnered with the leading Web3 accelerator and venture capital firm, Outlier Ventures. For the past months, they have consulted Lisk on its new tokenomics.

Full LSK Supply & Vesting Schedule With the token migration, the circulating supply of LSK will increase by roughly 30% from currently around 153 million LSK to nearly 200 million LSK. The increase in circulating supply, representing 46 million LSK, is composed of the following:

5,000,000 LSK for the Ecosystem Fund
6,250,000 LSK to seed the DAO Fund
10,000,000 LSK to seed the Strategic Investor Fund
10,000,000 LSK for Liquidity and Market Making
15,000,000 LSK for Airdrops After the token migration, the circulating supply will gradually increase as shown in the following graph. The detailed vesting schedule is described in the table below.

Summary

The LSK token will be moving from an infinite to a fixed supply.
The LSK token will become an ERC-20 token on the Ethereum mainnet, allowing for interoperability across all dApps within the Ethereum ecosystem.
There will be a DAO vote to burn 100m of the LSK tokens 2 to 4 months after the migration.
There will be an airdrop campaign running in 2024 and 2025.
There will be a staking campaign running before Lisk’s move to decentralized sequencers.