1. Basic introduction to MUX Protocol
MUX Protocol is a decentralized derivatives exchange deployed on five public chains, including Arbitrum, Optimism, BSC, Avalanche, and Fantom. The overall mechanism is similar to the well-known exchange GMX, but it is not an ordinary Fork project, but has unique innovations.
The investment lineup behind this project is quite luxurious, including Binance Labs, Multicoin Capital, and FENBUSHI CAPITAL. See the picture below for details👇
⚠️Irresponsible speculation, MUX may be expected to be listed on Binance
2. Basic functions of MUX Protocol
MUX Protocol has the basic features of similar competitors, including 👇
Supports up to 100x leverage
Zero Price Impact, you don’t need to worry about price deviation when opening a position
Compensation is paid in full, the size of the pool can support as much trading volume as possible, and the risk is low
Based on the above three points, MUX Protocol is on par with existing products on the market, but there is still some distance to surpass existing leading projects. Therefore, MUX Protocol has two remaining unique advantages.
3. Advantage 1: Sharing multi-chain liquidity
As mentioned above, MUX is a multi-chain project, and their products can be used on public chains such as Arb/OP/BSC/Avax/Fantom. Although the leading project GMX is also built on Arb and Aavx, the $GLP pool between the two chains cannot share liquidity, making the capital efficiency unable to be maximized.
However, what does it mean that MUX’s liquidity pool (MUXLP) can exchange what is needed?
For example, when a trader opens a position on Arbitrum, but the pool of the public chain is not deep enough, it does not matter. Because MUX Protocol can borrow the liquidity of the other 4 public chains to ensure the success of the transaction🏅️
4. Advantage 2: Contract trading aggregator
MUX Protocl is not only a perpetual contract trading platform, but also has a built-in aggregator function, which is different from ordinary competitors.
It is assumed that the function of "sharing multi-chain liquidity" still cannot meet the needs of users for opening positions, that is, the sum of the liquidity of the five chains is not enough. MUX Protocol can still ensure smooth transactions for users🤝
MUX Protocol will distribute transactions that it cannot undertake to other contract exchanges, such as GMX/Level FInance, to ensure user experience on the platform. Functional positioning similar to 1inch’s distribution of orders to Uniswap.
Simply understand, if you don’t want to compare and are looking for an exchange with sufficient liquidity, you can trade directly on MUX. In addition to mobilizing the liquidity of 5 public chains, MUX also cooperates with other exchanges to ensure that transactions can proceed smoothly.
5. Token Economy: Four Tokens
I have to say that MUX has four tokens, which may make you stunned at first glance. Please see the explanation👇
$MUXLP: The certificate of the liquidity pool, similar to $GLP;
$MCB: platform currency, freely circulated;
$MUX: The locked version of the platform currency cannot be traded in the market;
$veMUx: The only token that can enjoy platform sharing, converted from $MCB and $MUX;
To simply understand, $MCB/$MUX/$veMUX are essentially a platform currency and can be converted into each other. You can see the picture above for details.
If you really believe in the prospects of MUX exchange, you can lock $MCB/$MUX for up to 4 years to get $veMUX.
Locked for 4 years: 1 $MUX/$MCB = 1 $veMUX
Locked for 1 year: 1 $MUX/$MCB = 0.25 $veMUX
And so on...
As of the time of writing, 48.2% of the platform coins have been locked into $veMUX, with an average locking time of 812 days. The reason why a large number of users are willing to lock up their positions is that only $veMUX token holders can share in the platform profits, not $MUX/$MCB.
6. Token Economy: Profit Sharing
MUX Protocol's fee income in the past 24 hours is approximately US$75,000, which is good overall data. For specific details, please refer to the official data panel.
https://stats.mux.network/public/dashboard/13f401da-31b4-4d35-8529-bb62ca408de8
Whether a token is an air currency depends on whether it can share platform profits 💰 The profit sharing model of the MUX Protocol exchange is as follows 👇
70% profit: distributed to MUXLP (liquidity provider)
30% profit: Purchase MUXLP as "the protocol has liquidity"
It is worth mentioning that currently about 30% of MUXLP’s liquidity pool is “protocol-owned liquidity.” Therefore, these "protocol-owned liquidity" can also share 70% of the platform's profits and will be distributed to $veMUX holders.
Calculated based on the ratio of "protocol owned liquidity" to 30%, $veMUX can ultimately obtain about 21% of the platform's profit share. The specific relationship diagram can be found in the figure below👇
7. Comparison of the three major exchanges
In order to further explore whether MUX is undervalued, I summarized the important data of MUX, GMX, and Level Finance and got the following chart 👇
The current price-to-earnings ratio of MUX Protocol is equivalent to that of GMX, which is at a normal valuation level. However, considering that the full circulation market value of MUX is still small, only 78 million US dollars. There is huge room for growth in the future, and further expansion of the market cannot be ruled out.
It is worth mentioning that Level Finance on the BSC chain has an excellent "price-to-earnings ratio" of profitability and may be an undervalued project. However, it may also be because Level Finance adopts the "transaction mining" strategy to attract a large number of users to frequently place orders, which is a non-organic real income. We should continue to pay attention to future trends.
The chart also organizes the LP yield rates of the three major exchanges. Currently, only GMX’s GLP pool has greater liquidity, so the average annualized return is lower, only 24.26%. The liquidity pools of the other two platforms are smaller, and the annualized returns obtained by equal sharing are higher, 60% and 76% respectively.
Welcome everyone’s criticism and correction🙏
Author: CH/TalkChain
