Lumi Finance

Lumi Finance is a financial core protocol on Arbitrum built around a bonding-curve-minted store-of-wealth token (LUA). It combines an automated market maker with dynamic minting, a balancing token (LUAB) required for minting, and a stablecoin (LUAUSD) redeemable 1:1 for USDT, serving as the financial backbone for the broader Lumi ecosystem including the Lumiterra game.

Lumi Finance's yield system revolves around its main token, LUA, which is created through a special pricing mechanism called a "bonding curve." This curve sets the minting price based on supply.

How LUA is created (minted):
To mint new LUA, a user must provide two things at once: a stablecoin (USDT or the project's own LUAUSD) plus a second token called LUAB. The minting price normally rises over time as more tokens are minted. However, the protocol guarantees a minimum floor price by keeping stablecoin reserves in its treasury.

What happens when market demand shifts:

• If demand is high (market price > minting price): Traders can buy LUA on the open market and mint new LUA at a cheaper price, making a profit. This arbitrage also boosts demand for LUAB and encourages activity in apps built on Lumi.

• If demand is weak (market price < minting price): The protocol uses its earnings to buy back LUA gradually (through a time-weighted automated system called TWAMM) and burn it — removing tokens from circulation. This reduces supply and slowly pulls the minting price back down toward the floor, which is around $2.49.

Fees and how they flow to holders:

• A 3% fee is charged every time someone mints LUA.
• A 1% fee is charged on swaps in the official Uniswap pool for LUA.

Up to half of all trading fees collected across the Lumi ecosystem (both Lumi Finance and the Lumiterra game) are used to buy 2CRV — a Curve liquidity pool token. These 2CRV tokens are then distributed to veLUAG holders — people who have voted with and locked up the LUAG governance token.

How to earn LUAG and voting power:

Users earn the LUAG token by:

• Minting or staking LUA
• Completing airdrop campaign tasks (like swapping tokens or trading on the marketplace)
• Interacting with the Lumiterra game

Locking LUAG into a vote-locked position (veLUAG) not only qualifies you for the 2CRV rewards mentioned above, but also gives you voting power in the Lumi Ecosystem DAO, which governs the protocol.