Following on from our first product launch Perpetual Pools, we’re excited to be adding another suite of derivative contracts to our platform: Perpetual Swaps.
Traders on the platform can enjoy trading leveraged positions with extremely low entry and exit fees (0.03% of notional value) with no price impact on a range of assets: BTC, ETH, LINK, BAL, FXS, & CRV!
We know the number one priority for our traders is trading with liquidity, so we’re looking to bootstrap our Liquidity Pools and incentivise quality LPs to help deliver the best trading experience in DeFi.
Our mechanism is optimising returns for our LPs. 70% of fees generated are rewarded to MLP holders, 10% to Mycelium, 10% for token buybacks, and 10% to our active traders.
What LPs can expect from providing liquidity?
FEE SPLIT: 70% of all trading fees
TARGETED YIELD: 25% APR for first month of the protocol
The LP pool earns 70% of fees generated from swaps and leveraged trading. These fees are converted to ETH, before being continuously distributed to MLP stakers.
How does the Liquidity Pool and Rewards work?
The MLP (Mycelium liquidity pool) is a basket of blue-chip assets and stablecoins pooled together, which acts as a global AMM for leveraged trading. Liquidity providers can deposit any whitelisted asset into the MLP pool in return for MLP tokens, which represents the LPs share in the diversified liquidity pool.
Additionally, LPs are incentivised to redeposit their ETH rewards over time using the ‘compound’ function, which allows LPs to earn MLP rewards at a compounding rate.
Liquidity providers can deposit any of the whitelisted MLP assets for traders to trade against. Fees for depositing MLP assets are dynamic to incentivise the pool to stay in line with its target. The graphic below outlines the initial target weights of assets in the MLP pool:
How do we calculate rewards?
For the first month of Perpetual Swaps launch, we will be boosting MLP returns to a targeted 25% APR through esMYC (escrowed MYC) distributions. The following month’s APR will be boosted to a targeted 20%. The esMYC will vest into MYC linearly over 6 months.
The boosted APR is inclusive of ETH rewards, so if the ETH rewards APR is greater than the targeted APR, no esMYC will be distributed.
MLP vs. MYC vs. esMYC?
MLP is our liquidity provider token: LPs accrue 70% of the perpetual swap revenue fees, and can expect a return close to the Targeted Yield (starting at 25% APR) distributed in ETH and esMYC.
MYC is our governance and utility token. 10% of trading fee proceeds are used to buyback MYC on the open market, shoring up buy pressure for the token.
esMYC (escrowed MYC) is a token which has a right to vest into MYC when staked in the esMYC vesting vault on the "Earn" page. The vesting period will be linearly over 6 months. MLP stakers will earn rewards in the form of esMYC.
Things to remember:
Given the volatility of TVL in the liquidity pool and fluctuations in market price of ETH and esMYC, rewards it will be difficult to consistently deliver the Targeted Yield to liquidity providers. It is possible that some weeks the protocol will undershoot the Targeted Yield, and some weeks will overshoot the Targeted Yield.
Makers 🤝 Mycelium Perpetual Swaps
Trade with liquidity: our LPs are incentivised with competitive APRs