LOOKS - Post reward halving

Asset covered: LooksRare (LOOKS)

Chart: https://app.santiment.net/s/QJOaSSVG
Metrics: Price, Supply on Exchanges, Exchange Flow Balance, Network Growth, Active Addresses (1hr)

In a previous post, we looked at the launch of LOOKS. Now that we hit the first major event (halving of rewards), let's take a look at how things are.

The Rewards Halving

So, the day is finally here.

LOOKS' rewards are now slashed by 50% as it enters Phase 2, which will last for 585,000 blocks (3 months).

• Trading rewards will reduce from 441.00 → 209.475 LOOKS per block.
• LOOKS staking rewards will reduce from 189.00 → 89.775 LOOKS per block.

Besides the reward halving, there will be a reallocation of LOOKS from the LP staking reward program towards long-term Uniswap V3 liquidity to avoid a drop-off in liquidity for the LOOKS-ETH trading pair.

LOOKS-ETH LP token stakers will no longer receive bonus LOOKS rewards starting from 2022/02/15, 10:15 AM (UTC).

You can learn more about the Phase 2 emissions here.

Besides the next rewards halving in 90 days, it's also worthwhile to note that LooksRare team's Treasury tokens will be unlocked and tradable sometime in 2nd week of April

Market is likely going to be pricing in this as we get closer to the unlock date.

Post halving stats

With the rewards halving, things seems to be off to a rough start, with LooksRare pretty much seeing its lowest figures for User Count, Trading Vol and Generated Fees in the past 1 month according to hildobby.

While it's expected to see a drop in overall activity due to the reward halving, Twitter user mooncart2878 speculates that all things considered, the APR will still be attractive enough for wash traders to stay and keep the flywheel effect going....at least for the next 90 days.

Only time will tell.

Price

Well well, LOOKS been on a downtrend after topping out at around $7, making a lower high at $5.60s before breaking the $3.30 support area......only to bounce back up with strong volume.

This move has broken the downtrend line for now, it still remains to be seen whether momentum is there to bring us back above $5.60s.

Price action suggests that most people were pricing in the uncertainty of what would happen to LOOKS' price once the halving of rewards kicks in, with most expecting it to dump on the day itself.

But once the halving event came, the very opposite happened. So, instead of "Buy the rumor, Sell the news", we are getting a "Sell the rumor, Buy the News".

Supply on Exchanges

So far the correlation between Price action and Supply on Exchanges is quite apparent - A sharp drop in Supply on Exchanges precedes a price rally, and a sharp rise in Supply on Exchanges meant price onslaught incoming.

The persistent rise in Supply on Exchanges since 2nd Feb (where the local top occurred) continues to apply strong sell pressure. That said, post reward halving, there's a slight slow down and a drop.

Exchange Flow Balance

Exchange Flow balance saw huge spikes near the recent price bottom, followed by a outflow spike.

Could we be seeing an exchange of weak hands to the strong?

Network Growth

Network Growth has taken a huge fall since topping out in late Jan 2022. Probably due to most people having claimed their LOOKS and moving on. Currently, there's just not enough new demand to prop up the prices.

Active Addresses (1hr)

While Network Growth is looking weak, Active Addresses 1hr doesn't seem that bad and appears to be normalizing.

Staking contract historical balance

The staking contract continues to grow even when the price of LOOKS was going down, which may suggest that whales and strong hands are not fazed by the price action.

Post rewards halving, we are also seeing large inflows to the staking contract. Currently, 84.8% of LOOKS are staked according to hildobby.

While is this encouraging, one does wonder where is the sell pressure coming from.