GM, this is your Daily Bolt briefing.
Perpetuals is the most popular medium of trade when it comes to derivatives in crypto. Whether it’s GMX or Gains Network, these protocols have seen significant volume and fees flow through their platform. In this edition, we’re providing you with notes on MUX protocol, a perps trading platform that also aggregates through GMX and Gains in order to provide the lowest costs possible.
Keep your guard up in the markets.⬇️
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In a post-FTX world, securely trading with leverage and earning real yield in a decentralized manner has never been more important.
aiPX offers cutting-edge risk management for liquidity providers, leverage trading, and a suite of products between perpetuals, binary options, and synthetics.
Earn passive yield and trade with leverage straight from your wallet.
Take the step, join aiPX.
Optimistic Podcast - Introduction of MUX Protocol
In this episode of Optimistic Podcast, Subli invites Jean from MUX Protocol to discuss the MUX Protocol, the state of perpetual protocols, MUX’s growth trajectories, and features. Read our notes below to learn more.
Background
Subli (Host) - host of Optimistic Podcast and Optimism Ambassador.
Jean Miao (Guest) - core contributor for marketing and operations at MUX Protocol
MUX Protocol - a leveraged trading platform on Arbitrum, Avalanche, BNB Smart Chain, Fantom, and Optimism.
Introduction of MUX Protocol
Jean says that MUX Protocol is a perpetual trading protocol with specific features that make it different from the world's perpetual trading ecosystem.
She provides a brief history of MUX Protocol, which was previously known as MCDEX, a protocol that has been around since 2019.
She says that the team launched MUX Protocol last August (2022) and explains that MUX Protocol allows for decentralized perpetual swaps at 100x leverage with zero price impact and zero counterparty risks for traders.
She acknowledges some feedback and bottlenecks they have received and witnessed, such as low liquidity and the team is addressing these concerns.
MUX Protocol as an Aggregator
Jean explains that MUX Protocol is an aggregator of decentralized perpetual swaps.
Jean says that they have integrated with GMX and Gains Network. They also have their native pool, MUXLP. 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.
She states that by integrating with several decentralized perpetual swap protocols, the team at MUX Protocol believes that they can provide optimized trading costs for traders.
She says that they also aggregate liquidity, meaning MUX Protocol has the ability to provide deep liquidity. According to her, positions can be routed to either GMX, Gains, or their native MUXLP pool.
Jean compares MUX Protocol to a "1inch of decentralized perpetuals" and aims to provide one-stop access for perpetual traders.
She says that in the past month, the daily average trading volume on MUX has been approximately $100 million, and their liquidity has doubled to around $45 million.
Subli agrees with Jean's comparison of MUX Protocol to "1inch of perpetuals."
Growth of MUX Protocol
Subli comments on the impressive growth of MUX Protocol, noting that its total value locked (TVL) in mid-March was approximately $12 million to $15 million and has since grown significantly.
He asks Jean about the catalyst for this growth. Jean attributes the growth to both external and internal reasons.
She explains that externally, the trading volume in DeFi perpetual market as a whole has been growing due to market volatility.
She says that internally, they have found a product-market fit. More traders are realizing the benefits of trading on MUX Protocol, such as lower trading costs and seamless trading.
State of Perpetual Protocols
Subli asks about the current state of the DeFi perpetual markets and its future. He thinks that the perpetual ecosystem is maturing in terms of technology, but there is still much to achieve to attract the volume seen on centralized exchanges.
Jean reflects on the journey of decentralized derivatives, noting that UI/UX has greatly improved in the last two to three years.
She acknowledges that decentralized perpetuals are still a bit more expensive compared to centralized ones like Binance, but decentralized perpetuals offer other benefits such as self-custody of assets and no need for KYC.
She believes that the future competitiveness of decentralized perpetuals will rely on DeFi composability, with more protocols built on top of one another to enable more financial tools.
She mentions that there are ongoing discussions with other protocols that are interested in building on top of MUXLP, which could provide more financial tools and options for liquidity providers (LPs) who have different risk tolerances.
MUX Protocol's Growth Trajectories
Subli notes that there are two ways for MUX Protocol to grow: as a perpetual aggregator and also as a perpetual trading platform.
He mentions that MUX Protocol is one of the cheapest protocols for users to trade.
He asks about the MUXLP liquidity pool, which is composed of several tokens from different chains.
Jean explains that this is possible thanks to a unique feature, Universal Liquidity. She provides an example: if there are 10 $ETH on each chain (Arbitrum, Optimism, Fantom, Avalanche, and BNB Smart Chain), the total liquidity on MUX's native pool is 50 $ETH. This liquidity can be utilized by traders from any ecosystem. However, this liquidity is only available for the MUXLP pool.
Speaking about MUX's role as an aggregator, she says that positions can be routed to either GMX, Gains, or their native pool, aggregating those liquidities and providing the deepest liquidity for traders.
Leverage on MUX Protocol
Jean clarifies that the maximum leverage on MUX is 100x but this only applies to the native MUXLP pool; GMX maintains its own maximum leverage of 30x and Gains maintains its own maximum leverage of 50x.
However, she states that MUX provides a feature on GMX called the Leverage Booster, which boosts the leverage from the original maximum of 30x to 50 - 100x by lending more assets as collateral to traders.
She says that MUX charges an asset borrow interest rate for using this feature. This rate is variable and depends on the initial margin, maintenance margin, and funding fee of the partner protocols like GMX and Gains.
Competing with Other Protocols on Trading Fees
Subli asks about MUX Protocol's plan to stay competitive with other protocols that are lowering their fees to attract trading volume.
Jean acknowledges the traction Kwenta has gained due to its aggressive fee structure and incentives.
She mentions that MUX Protocol has also received a grant from Optimism and has plans to use those incentives, but not as aggressively as Kwenta.
She says that they might offer rebates to traders, for example, giving back 20% of the transaction fee.
She believes in finding sustainable ways to attract loyal users and improving the trading experience MUX offers.
MUX Protocol's Competitive Edge
Subli mentions that MUX Protocol was granted a new Optimism grant of about 250,000 $OP tokens.
Subli discusses the potential of MUX Protocol's rebate on trading fees. He suggests that if the rebate fees are integrated into MUX's aggregator product, MUX's native product could become the cheapest perpetual product among all integrated protocols.
Jean says that MUX Protocol is currently the cheapest among the integrated protocols. However, she notes that this could change as protocols adjust their fees to boost user adoption.
She mentions that they are in the process of integrating GMX V2; V2 will lower GMX’s fees.
Future Developments for MUX Protocol
Jean shares that they are in the process of integrating GMX V2 and Synthetix.
She says that they plan to dive into the Optimism ecosystem and conduct more marketing events and campaigns.
She explains that in the long term, the MUX team is working on the next version of MUX to address the limitation of their pool. They hope to achieve more decentralization by listing more assets.
She says that they also aim to expand their influence in other ecosystems, with a particular focus on the Optimism ecosystem.
Integration of Synthetix Perps
Subli states that the integration of Synthetix perpetuals would allow trades to be routed on any of the platforms that MUX Protocol has listed.
Jean says that one of their goals is to integrate with the major protocols in the decentralized perpetual space and become one-stop access for all perpetual traders.
She praises Synthetix's robustness and ability to support other protocols.
Fees on MUX Protocol
Subli asks if users have to pay a fee to MUX Protocol when their trades are routed to other protocols like GMX or Gains.
Jean clarifies that they don't charge any fees for positions routed to GMX or Gains.
Jean says that MUX Protocol receives a referral rebate from these protocols as protocol revenue, which doesn't affect the users.
Revenue Sharing
Jean explains that 30% of the revenue goes to protocol-owned liquidity to support traders in the long term without inflating their tokens.
She states that the remaining 70% is split between MUXLP and $veMUX holders, who are $MCB, MUX’s native token, stakers.
Building During a Bear Market
Subli asks about the experience of building a protocol during a bear market. Jean shares that they launched their first perpetuals protocol right before the 2020 DeFi summer.
She notes that the bear market has given them more time and space to focus on building.
She says that they have a healthy cash flow from previous fundraising and transaction fees, allowing them to focus on the growth of the protocol.
Important Links
aiPX is the official sponsor of the Daily Bolt by Revelo Intel
In a post-FTX world, securely trading with leverage and earning real yield in a decentralized manner has never been more important.
aiPX offers cutting-edge risk management for liquidity providers, leverage trading, and a suite of products between perpetuals, binary options, and synthetics.
Earn passive yield and trade with leverage straight from your wallet.
Take the step, join aiPX.