Context
The MUXLP pool is a multi-asset pool that serves as traders’ counterparty. LPs will earn a portion of the protocol fees and additional MUX token rewards but also bear positions holding related risks. To meet the demands of LPs with different risk-exposure preferences, MUX has released a risk-free senior tranche and leveraged mining junior tranche on top of the MUXLP pool.
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Senior Tranche
- The senior tranche is a delta-neutral USDC-only pool that will lend liquidity to the junior tranche. The senior tranche’s yield will derive from a portion of the junior tranche’s income. LP’s principals in the senior tranche won’t be affected by market volatility; the junior tranche strategies & liquidation setup will ensure the principals supplied from the senior tranche won’t bear any losses.
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Junior Tranche
- The junior tranche, a MUXLP leveraged mining pool, offers the potential for exciting leveraged MUXLP yield. Its strategies will use up to 2.5x leverage, amplifying LP’s potential returns. However, junior tranche LPs will also face default and auto-deleveraging risks, and there are liquidation risks associated with using the junior tranche. Junior tranche LP’s principals will be affected when liquidation happens.
The MUXLP senior and junior tranches have been released and are currently in beta-testing mode. Both tranches are currently only open to whitelisted LPs and will be open to more LPs in the future.
Proposal
MUX contributors propose allocating liquidity from POL to the senior and junior MUXLP tranches to further improve POL capital efficiency.
- Proposed amount to add to MUXL tranches: Up to 100% of POL
- 100% is the cap, and the liquidity-adding process will likely be gradual instead of happening all at once
- The proportion of liquidity being added to senior and junior tranches is not determined and will be adjusted based on market conditions, risk exposure, and MUXLP performance.
Next Steps
- Community discussion surrounding this proposal
- Community members vote to approve/disapprove of this proposal
