Mycelium Perpetual Pools

Derivatives

Mycelium (previously Tracer) is a decentralized perpetuals protocol that specializes in blockchain data and derivatives. Mycelium Perpetual Pools is a tool for making leveraged tokens.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Mycelium strives to democratize access to derivatives products so that risk management tools can be used by everyday people.
What we like less
The team still has control with only a 3/5 multisig and the native protocol token has limited usage beyond governance.
What it means for you
Offers you a simple way to buy and sell leveraged tokens that are non-liquidatable, fully collateralized, and fully fungible.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: MYC
  • Tags: Derivatives
Key Metrics
  • TVL: $293.3K (Rank #192)
  • TVL Ranking by Derivatives: #11
  • Blockchain: Arbitrum
  • Chain TVL
    • Arbitrum: $293.28K
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; code4rena audited in October 2021
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2022; maturity over nine months reduces technical risk as smart contracts are sufficiently battle-tested
  • Bottom 80% by total value locked increases risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
  • At least one critical governance issue documented
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to decentralized derivatives, such as LPs serving as the counterparty for all platform traders
  • Mycelium tokenizes perpetual contracts to help investors access leverage without margin calls; each of Mycelium`s assets can be thought of as a share of a leveraged mutual fund, and the token is valued at Net Asset Value
Things to know about Mycelium Perpetual Pools

How Mycelium works

Mycelium (formerly known as Tracer) is building an ecosystem of derivatives products that is open-source and permissionless. The first product introduced is Perpetual Pools, a new derivative primitive developed by Myeclium on behalf of Tracer. Perpetual Pools enable anyone to take a short or long position on any underlying asset. They are smart contracts that facilitates the transfer of value between long and short sides of a collateral pool, based on an underlying price feed. The value transfer is determined by the sigmoid leverage function which acts as a rebalancing mechanism (similar to how a funding rate is used in perpetual swaps). These positions are non-liquidatable, fully collateralized, fully fungible, and can exist perpetually without any upkeep required. User can take a position by depositing collateral into either the long or short side of a pool to mint fungible ERC-20 tokens that represent ownership of the pool assets. The amount of leverage desired differs by pool and is also displayed in the minted token. The value of these leverage tokens is determined by the proportion of collateral held in each side of the pool. Tracer will periodically transfer value from one side to another to mimic leveraged exposure. Tracer recently merged its platform with Mycelium to further expand its exchange platform and develop new products like Perpetual Swaps, which is a fork of GMX.

How Mycelium makes money

The protocol charges several fees for its Perpetual Pools products. A mint fee is take from a user's balance at entry. The funds are added to the corresponding side of hte pool (e.g. long mint fees are added to the long pool and short mint fees are added to the short pool). This fee is determined by the creator of the pool and can be set to anywhere from 0-100%. The management fee is collected on the aggregate balance of the pools at rebalance, and is set to 0-10% per year. A burn fee is subtracted from the total withdrawal amount of the user and redistributed back to the pool the user is burning from, and is set by the pool creator between 0-10%. For Perpetual Swaps, Mycelium charges an entry and exit fee of 0.03% of the trader's notional value. The fees are swapped to ETH before being sent to the fee pool. The protocol receives 20% of this revenue as 10% is used to buyback MYC and 10% is distributed to the Mycelium treasury.

How you make money on Mycelium

You can make money by placing directionally levered bets on the crypto market. If you have a more long-term view, you can earn a portion of all protocol generated revenues from staking the Mycelium liquidity provider token (MLP). The fee split is currently 70% paid to MLP stakers. 10% to trader rewards pool, 10% to buyback MYC, and 10% to the Mycelium treasury. Top 50% of traders also receive 10% of the platform's generated fees as a rebate to incentivize more trading on the platform.