Liquidity
MUX V3 Trading Protocol
MUX V3 offers a new multi-pool liquidity setup (P2Multi-Pool) to meet diverse risk-exposure preferences from LPs. LPs can supply liquidity based on their preferences through highly customizable collateral, market exposure and long/short-exposure options.
MUX V3 Pools (MUX3LP)
The liquidity pools from the P2Multi-Pool setup are MUX V3 elemental pools (MUX3LP). Each MUX V3 elemental pool supports different collateral, market exposure and long/short exposure options. Supported collateral options include stablecoins, yield-bearing tokens, volatile assets and liquidity re-staking tokens.
Trader’s positions will be automatically routed to one or more MUX V3 elemental pools through the MUX Aggregator to support the needed size while ensuring optimized trading cost. LPs will earn fees paid by traders.
Under the elemental pools, each supported market has separated long and short exposure, without pursuing mandatory long-short balance. The market determines the long-short ratio of each trading pair under the elemental pools.
For any given direction of a trading pair (e.g., longing BTC), the liquidity can be provided by multiple pools with different collateral assets. Each MUX V3 elemental pool can also provide liquidity to multiple trading pairs.
Buy/Sell MUX3LP
LPs can supply liquidity to MUX V3 by buying MUX3LP tokens using the supported collateral token from the preferred MUX V3 pool.
Holding MUX3LP Tokens
After buying MUX3LP tokens, the earned fees will be directly reflected in the MUX3LP token price. LPs don’t need to claim the fees separately.
Traders’ PNL and the price movements of the collateral token will also affect the MUX3LP token price.
Since each V3 Pool has only one collateral option and separated market and long/short exposures, LPs can supply liquidity while running external hedging to reach precisely neutral exposure.
MUX V3 Portfolio Pools (Coming Soon)
MUX V3 offers auto-rebalancing MUX3LP token portfolio pools for LPs seeking diverse portfolio strategies and exposure options. The V3 Portfolio Pools can be seen as the “V3 MUXLP.”
Each portfolio pool consists of multiple MUX3LP tokens with a target weight. LPs can buy MUX3LP tokens and then supply them to the portfolio pool; the portfolio pools will automatically re-balance the MUX3LP tokens based on the target weight.
The MUX V3 portfolio pools are built on top of Balancer V3. The MUX3LP tokens from the portfolio pools are supplied to Balancer V3.
MUX3LP Profits & Risks
MUX3LP Profits Sources:
Position open & close fees
Position borrowing fees
Liquidation fees
MUX token rewards
MUX3LP Risks
Since the MUX V3 elemental pools are the counterparty of traders, MUX3LP has positions holding related risks and can suffer losses.
Pooled collateral token price drawback.
MUX V1 Trading Protocol
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 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 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 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
Liquidation penalties
MUX token rewards
MUXLP Risks
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, 15% 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.
MUX V1 Degen Protocol
The MUX Degen Protocol has its own liquidity pool: the DegenLP pool. Traders will trade against the DegenLP pool on the MUX Degen Protocol. The DegenLP pool is stablecoin-only. Due to the high-risk exposure, the DegenLP pool will only be open to whitelisted sophisticated traders and LPs to supply liquidity.
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