Welcome to Lithium
  • Lithium Protocol
    • Energy-Backed Finance
    • Challenges
    • Built on Quai Network
    • Energy Bonds
    • Liquid Mining Tokens
    • Protocol Flow
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  1. Lithium Protocol

Protocol Flow

PreviousLiquid Mining Tokens

Last updated 4 months ago

  1. Miners Earn Block Rewards Miners perform Proof-of-Work (PoW) to secure the network and earn block rewards (called "coinbase rewards"). These rewards usually have a waiting period (coinbase maturity) before they can be spent.

  2. Deposit Rewards into a Smart Contract Instead of waiting for their rewards to mature, miners can deposit them into a Lithium smart contract. They choose a lock-up duration (e.g., 2 weeks, 3 months, 6 months, or 12 months) to earn boosted yields (up to 25%).

  3. Receive Liquid Mining Tokens (LMTs) The smart contract issues LMTs to the miner. These tokens represent the locked rewards and their maturity value. LMTs are tradable, meaning miners can sell them to others for instant liquidity.

  4. Buy and Sell LMTs on a Marketplace LMTs are traded in a decentralized marketplace. A Request-for-Quote (RFQ) system matches buyers (traders) and sellers (miners) based on yield, maturity, and price preferences.

  5. Traders Benefit from LMTs Traders buy LMTs to earn yields backed by energy (mining). They can hold them until maturity to claim the rewards or use them as collateral in DeFi strategies, unlocking additional financial opportunities.

  6. Rewards Unlock at Maturity When the lock-up duration ends, the smart contract automatically releases the rewards to the LMT holder. If the LMT was traded, the new owner gets the rewards.