Read time: 3 minutesJuly 22, 2022

LP Incentives: Everything you need to know

How to earn ~25% yield on your bluechip crypto assetsLP Incentives: Everything you need to know

Following on from our first product launch Perpetual Pools, Mycelium is 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 rewards, 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

ETH Rewards

We pay rewards in ETH. The trading fees are paid in USDC or the base asset. The protocol continuously swaps the base asset (or USDC) to ETH internally via the AMM. Trading fees are converted from whatever asset they currently are, to ETH each week and distributed to LPs weekly.

How does the Liquidity Pool and Rewards work?

Our 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 represent 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 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.

LP MEV Protection

We have contracted a proprietary trading firm to minimise any losses from the frontrunning of the oracle updates. Currently, LPs are subject to stale oracle prices which can cause an effect similar to impermanent loss in AMMs. With stale prices, fast traders have an advantage to make trades with the LP pool knowing the future price of the asset will be in their favour. To counteract this behaviour, protect and reward our LPs, the trading firm will be extracting any value from latent oracle feeds and returning profits to our LPs. This way, in the event that the liquidity pool has a stale price, 80% of the profits from Oracle Extractable Value will be distributed back to the liquidity providers.

Additionally, the proprietary trading firm will be conducting price (backrunning) arbitrage between the Mycelium AMM and other spot AMMs. Despite none of this value being extracted from liquidity providers, 80% of the profits will be distributed back to the liquidity pool!

MLP vs. MYC?

MLP is our liquidity provider token: LPs accrue 70% of the revenue fees, and can expect a 25% APR distributed.

MYC is our governance and utility token. MYC holders can stake their MYC to earn rewards via our MYC staking contracts.

Things to remember

Given the volatility of TVL in the liquidity pool, it will be difficult to consistently deliver the targeted APR to liquidity providers over the incentivised period. It is possible that some weeks will slightly undershoot the target, and some weeks will slightly overshoot the target.

LPs 🤝 Mycelium Perpetual Swaps

Trade with liquidity: our LPs are incentivised with competitive APRs

Trade with leverage: up to 30x

Trade with low fees: 0.03% entry and exit fees

Trade with low latency: optimised node infrastructure and connectivity to minimise latency

Trade with Mycelium.

Trade now!

Need more information about the mechanism? Read our docs here.

Mycelium Docs
The home of Mycelium’s documentation


All of Mycelium’s products are hosted on Ethereum Layer 2, Arbitrum. Users will need to bridge their assets to Arbitrum in order to trade Perpetual Swaps, Perpetual Pools, or Lend via MYC Lending.

Arbitrum is a secure, low-cost scaling solution that ensures our users can access low-cost derivatives in a safe, simple, and speedy environment.

If you need assistance bridging your assets, our team has prepared a guide here.

Mycelium Perpetual Swaps is a decentralised derivative platform, which allows users to open leveraged long and/or short positions on crypto-assets.

Perpetual Swaps are similar to a Future where traders can take a position based on the future price of an asset, the key difference being Perpetual Swaps mechanisms allows traders to take this position at an unspecified point in the future, making it ‘perpetual’ or unable to expire. Mycelium Perpetual Swaps allows traders to take a position on digital assets such as Bitcoin and Ethereum.

Mycelium Perpetual Swaps doesn’t use an order book model for leveraged trading. Rather, all traders trade against the Mycelium Liquidity Pool (MLP). The MLP is a basket of blue-chip assets and stablecoins pooled together (ETH, BTC, LINK, UNI, BAL, CRV, FXS, FRAX, USDT, DAI, USDC) 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 represent the LPs share in the diversified liquidity pool. By acting as a universal counterparty (AMM) to traders, meaning that it agrees to be the counterparty to any long or short trade at the given price, for an asset it holds, until it runs out of said asset.

In exchange for providing liquidity to the Mycelium Liquidity Pool (MLP), liquidity providers earn rewards. Primarily, MLP holders earn 70% of fees generated on the platform, which is distributed fortnightly in ETH and or esMYC.

  • ETH Rewards: The MLP pool earns 70% of fees generated from swaps and leveraged trading. These fees are converted to ETH, before being continuously distributed to MLP stakers.
  • Escrowed MYC Rewards: These are rewards in the form of a token which has the right to vest into $MYC when staked in the esMYC vesting vault.

The trading fees that make up this revenue are entry/exit fees, borrowing fees, and or a spot trading fees. For a full overview of the trading fees, visit this page.

Additionally, LPs earn rewards from a small bid/ask spread that is charged on long-tail assets (there is no spread on BTC or ETH). These rewards accrue as MLP, shown on our front-end as Market Making APR. These rewards can be redeemed at any time, in any asset form within the MLP basket of assets.

Yes. Perpetual Pools are a marketplace for leveraged tokens, while perpetual swaps simulate spot trading with margin. They are both derivatives, but Perpetual Pool tokens act most like a leveraged ETF, where positions are transferable.

Mycelium Staking is a program established by Mycelium to give utility to our governance token. MYC holders can stake their $MYC to earn ETH rewards. MYC Stakers effectively enter a loan agreement with the Mycelium Treasury to lend their MYC. The Loan Cycles occur fortnightly, meaning deposits and withdrawals are processed at the beginning/end of each cycle. Stakers can request withdrawals throughout the cycle, noting the withdrawal will be processed and distributed at the end of the cycle.

Don’t worry, you are earning rewards! The rewards only show at the end of the 14 day loan cycle.

The way the Perpetual Pool market calculates how much money to move from the losers to the winners prevents the loser from ever losing 100% of their money. The pool does this by, in extreme scenarios, sacrificing some of the gains of the winners in order to protect the losers from losing everything. This is why we say Perpetual Pool positions cannot be liquidated.

However; this does not mean you cannot lose money by trading with Perpetual Pools.

In August 2022, TracerDAO voted to transition and rebrand to core service provider Mycelium, and $MYC as the native token. All TCR holders are entitled to change their token 1:1 to MYC via this site:

The majority of TCR holders have migrated to MYC, but the site will remain active for approx. 3 years to ensure all TCR holders have the opportunity to migrate.

When a trader enters a short position, the liquidity pool will fully collateralise the position with stablecoins. For short positions, the liquidity pool is essentially a market maker that takes the opposite side of the position, increasing the long exposure of the pool. If the price of the base asset depreciates, the trader receives stablecoins from the liquidity pool. If the price of the base asset appreciates, the liquidity pool receives a portion of the user’s margin as compensation.

At close, the trader will only have to return the USD value of the initial notional value to the liquidity pool. Thus, the trader is effectively entitled to the inverse of the future “PnL” (Profit and Loss) of an asset.

With Perpetual Pools v2, users can deposit any sort of collateral for maximal optionality. Additionally, there is no minimum-commit size.

On Mycelium Perpetual Swaps traders can access up to 30x Leverage. On Mycelium Perpetual Pools traders can access up to 10x Leverage.

Swaps logo

More Leverage. Less Overhead