The layered lithium-rich transition-metal oxides with the general formula xLi₂MnO₃·(1-x)LiMO₂ (M=Mn, Co, Ni, etc.) have been the focus of intense research interest as one of the most promising cathode materials for high-energy-density lithium-ion batteries. However, these materials suffer from poor rate capability and voltage decay during cycling. In the present work, we extensively investigated the effect of the content and stacking faults of Li₂MnO₃, and Li/M ratio on its microstructure and electrochemical profile, such as voltage decay and cycling stability etc. The electrochemical degradation of xLi₂MnO₃· (1–x)LiMn_1/3Ni_1/3Co_1/3O₂ electrodes upon cycling not only results from the remarkably increase in impedance caused by the damage of the electrode surface, in particular for low Li₂MnO₃ content; but also arises from structural rearrangement, especially for high Li₂MnO₃ content. Upon cycling, high Li₂MnO₃ content in the crystal structure of lithium-rich transition metal oxides can stabilize the electrode\electrolyte interface at high potentials, facilitates the rapid formation of cracks and porosity in the cycled electrodes, and promotes the distortions and breakdown of the original well-layered lattice. We prepared the layered 0.5Li₂MnO₃. 0.5LiMn_1/3Ni_1/3Co_1/3O₂ cathode materials with various degrees of stacking faults via a facile molten-salt method using a variety of fluxes including KCl, Li₂CO_3, and LiNO₃. The frequency of the stacking faults is highly dependent on the temperature and molten salt type used during the synthesis. A well-crystallized nanomaterial with a larger amount of stacking faults synthesized at 800 ^oC for 10 h in an inactive KCl flux delivers a high reversible capacity of 310 mAh/gat room temperature, while the samples prepared in the chemically active fluxes with a smaller amount of stacking faults show poor electrochemical performance. We also employed several approaches, including surface modification, ion-doping and morphology control, to stabilize its structure and performance. The P₂O₅ treatment results in forming a uniform nanoscale coating layer of ionic conductive Li₃PO₄ and spinel-like material on Li-rich layered oxide, thus greatly improves its rate capability and charge/discharge columbic efficiency for the first cycling.