The universal liquidity pool on MUX holds a portfolio of assets, and each asset has a targeted weight in the pool. Pooled assets will be utilized for MUX margin trading and third-party DEX mining to earn fees.
Users can provide liquidity by buying MUXLP with assets allowed by the portfolio. MUXLP tokens are minted when buy orders are filled and burnt when sold. The MUXLP token price is calculated by dividing the MUXLP pool value by the total MUXLP supply. After buying MUXLP tokens, users can stake the tokens to earn protocol income and MUX rewards.
Liquidity-related metrics can be seen on the MUX Statistics.

Buy / Sell MUXLP

Users can buy MUXLP tokens on all deployed networks with assets allowed by the portfolio.
After placing a buy or sell MUXLP order, it takes an extended pending time (currently set as 18 minutes) for the order to be filled. The order will be filled with the price at the order submission time.
The pending time serves two purposes:
  • Prevent potential arbitraging that can harm LP
    • Since the MUXLP pool holds a portfolio of assets and allows users to buy MUXLP with any supported assets, there is potential arbitrage room if front-runners execute quick buy and sell orders with different assets. The pending time can help to eliminate this room for arbitrage.
  • Ensure the protocol can correctly calculate the universal liquidity across four networks
    • The MUX protocol needs to consider different network latency and finalization times when calculating the universal liquidity; the pending time helps ensure correct calculation and proper token allocation for MUXLP buyers and sellers.

MUXLP Staking

After buying MUXLP tokens, users can stake them on Arbitrum to earn protocol income(fees and external mining yield) and MUX rewards. Please check the incentives section for detailed rewards distribution formulas.

MUXLP Pool Portfolio

The MUXLP pool holds a portfolio of blue-chip assets and stablecoins, each having a targeted weight in the pool. When the asset weight moves above or below its target, the fees for buying or selling MUXLP with this asset will adjust accordingly.
  • If the weight is below target, buying MUXLP with this asset requires lower fees; selling MUXLP into this asset requires higher fees.
  • If the weight is above target, buying MUXLP with this asset requires higher fees; selling MUXLP into this asset requires lower fees.
Liquidity composition, weight and multiplexing statistics can be seen on the MUX Liquidity page.

MUXLP Profits & Risks

MUXLP Profits Sources:
  • A portion of the protocol fees
  • Funding payments
  • Multiplexed third-party DEX mining income
  • Liquidation penalties
  • MUX token rewards
  • Since the MUXLP pool is the counterparty of traders, MUXLP has positions holding related risks and can suffer losses
  • Pooled assets price drawback

Protocol-Owned Liquidity (POL)

Sufficient liquidity is crucial for trading protocols, as deeper pools can support higher open interest. However, acquiring and maintaining liquidity can be costly and unstable if solely reliant on liquidity providers (LP). Therefore, instead of “renting” all liquidity from external sources, the MUX protocol implements the POL mechanism to become gradually self-sufficient.
The MUXLP pool consists of liquidity from two sources, LP and POL. Upon genesis, the protocol purchased MUXLP tokens with funds raised from previous rounds; also, 30% of protocol income will go to POL. POL is the base of the MUXLP pool and will grow sustainably with cumulative trading volume. The proportion of POL in the total liquidity is protocol owned ratio (POR.) Furthermore, if someday the POL is sufficient enough, the proportion of the income distributed to the LP might be reduced.