Switch

What is Moola Switch?

Moola Switch is a feature within the Moola ecosystem designed to enable users to convert reward-bearing tokens into reward-earning tokens for the same underlying asset. For example, it allows switching from mLP-Reward (a reward-bearing token) to mLP-Liquid (a reward-earning token) on Berachain. This functionality provides $MOOLA stakers with flexibility, ensuring their Liquid Staking Tokens remain adaptable to their financial strategies while supporting Berachain’s PoL framework.

What Are Reward-Bearing and Reward-Earning Tokens?

These are specialized tokens issued by Moola when you stake $MOOLA through Moola Staking on Berachain. Both types of tokens are pegged to your staked $MOOLA at a 1:1 ratio, representing your stake and its associated benefits.

• Reward-Bearing Tokens (e.g., mLP-Reward): These Liquid Staking Tokens encapsulate the value of your staked $MOOLA plus all future staking rewards accrued via Berachain’s PoL. The number of mLP-Reward tokens in your wallet remains constant, but their value increases over time relative to $MOOLA as staking rewards accumulate. When you redeem your stake, you receive your original $MOOLA plus the accumulated rewards. For instance, 1 mLP-Reward might start equal to 1 $MOOLA but grow to be worth 1.2 $MOOLA after a year of staking rewards.

• Reward-Earning Tokens (e.g., mLP-Liquid): These tokens also represent your staked $MOOLA but are designed for active liquidity and DeFi participation. Unlike reward-bearing tokens, mLP-Liquid tokens can increase in quantity through periodic rebasing to reflect staking rewards, maintaining a stable 1:1 value with $MOOLA. This makes them ideal for trading or providing liquidity, as their number grows rather than their individual value.

Supported Tokens

Currently, Moola Switch supports switching for $MOOLA-based tokens on Berachain. While the ecosystem is initially focused on $MOOLA, future expansions may include additional Berachain-native assets. The current supported switch is:

• mLP-Reward → mLP-Liquid

This reflects Moola’s initial focus on optimizing $MOOLA staking, with plans to potentially integrate switches for other assets like BERA or HONEY as the ecosystem evolves.

Why Moola Switch?

Moola Switch addresses a critical need within the $MOOLA staking framework by offering users the ability to adapt their token types to their preferences and market conditions. It aligns with Berachain’s PoL by ensuring staked assets remain liquid and versatile, enhancing their utility across the ecosystem.

User Benefits

The primary advantage of Moola Switch is the ability to transition from mLP-Reward to mLP-Liquid tokens. Here’s why this matters:

• Maintaining Liquidity: mLP-Reward tokens, while valuable for long-term holders due to their growing value, are less suited for active DeFi participation because they don’t increase in number and are less widely supported by Berachain DEXs. Switching to mLP-Liquid tokens ensures your assets remain liquid and usable in liquidity pools (e.g., $MOOLA/BERA) or for trading. For example, converting 1,000 mLP-Reward to 1,000 mLP-Liquid allows you to deposit them into a pool and earn swap fees, something less practical with mLP-Reward.

• Adapting to DeFi Trends: As Berachain’s DeFi ecosystem grows, some platforms may phase out support for reward-bearing tokens like mLP-Reward in favor of reward-earning tokens like mLP-Liquid, which are better suited for liquidity provision and rebasing mechanics. Moola Switch future-proofs your holdings by letting you transition to the more widely accepted mLP-Liquid, ensuring continued compatibility with emerging DeFi opportunities.

• Flexibility in Strategy: Whether you prefer to lock in value growth (mLP-Reward) or prioritize liquidity and compounding rewards (mLP-Liquid), Moola Switch empowers you to adjust your approach without unstaking your $MOOLA. For instance, a user might hold mLP-Reward during a low-activity period to accrue value, then switch to mLP-Liquid to farm HONEY rewards during a high-yield opportunity.

Why the Transition?

Moola is gradually shifting focus toward mLP-Liquid as the primary Liquid Staking Token due to its alignment with Berachain’s liquidity-driven PoL model and broader DeFi compatibility. While mLP-Reward tokens remain functional, their static nature limits their utility in dynamic DeFi environments. Moola Switch facilitates this evolution, encouraging users to adopt mLP-Liquid to keep their assets active and liquid, thereby supporting both individual profitability and Berachain’s ecosystem health.

Example Scenario

Suppose you stake 5,000 $MOOLA with Moola and receive 5,000 mLP-Reward tokens. After six months, their value grows to reflect a 6% staking reward, making 1 mLP-Reward worth 1.06 $MOOLA. You decide to use Moola Switch to convert these to 5,000 mLP-Liquid tokens. Now, you can deposit them into a $MOOLA/HONEY pool on a Berachain DEX, earning 0.3% swap fees and 50 HONEY in farming rewards over a month. Later, as mLP-Liquid rebases, your holdings might grow to 5,300 mLP-Liquid, reflecting additional staking rewards—all without losing access to your assets.