MUX Protocol

MUX Protocol is a decentralized perpetual trading aggregator and protocol suite that automatically routes trades across multiple perp liquidity sources — including its own native MUX V3, V1, and Degen pools, plus integrated third-party protocols such as GMX and Gains — to offer optimized composite trading costs, up to 100x leverage, and deep aggregated liquidity. It serves traders with features like smart position routing, 0% spread and price impact on BTC/ETH pairs via the multi-asset native pool, and one-click trading, while also offering liquidity providers highly customizable LP strategies with selectable market and long/short exposure options across multiple collateral types.

MUX Protocol generates yield for liquidity providers (LPs) and token holders from several fee sources built into the protocol's design.

Where the fees come from

• Opening and closing positions — A small fixed fee (0.06% on V1 and V3, 0.032% on the Degen protocol) is charged each time a trader opens or closes a position. These fees are shared among MUX3LP holders, MUXLP stakers, veMUX holders, and the Protocol-Owned Liquidity (POL).

• Borrowing and funding fees — Traders who borrow pool assets for leveraged positions pay hourly fees. On V1 and V3, the rate depends on how much of the pool is being used (utilization) and ranges from a base of 8% per year up to a cap of 40%–50% per year. On the Degen protocol, borrowing costs a flat 5% per year of position size, plus an extra dynamic funding fee (up to 50% per year) charged on the side of the market that has more open positions when long and short traders are imbalanced.

• Liquidation fees — When a trader's position gets liquidated, a 0.06% fee is collected. The liquidation threshold (maintenance margin) is 0.5% of the position. Any leftover margin goes back to the trader.

• Referral rebates from the aggregator — When trades are routed through MUX's aggregator to other protocols like GMX or Gains, the referral fees MUX earns from those protocols go 100% to veMUX holders.

• MUX token rewards — 1,000 MUX tokens (non-transferable reward tokens) are minted each day and distributed to veMUX holders and MUXLP stakers, based on the staking ratio (veRate) and the Protocol-Owned Liquidity ratio (POR).

How the income is split

• Total protocol income is divided as: (85% × POR + 15%) goes to veMUX holders (paid in ETH). POR stands for Protocol-Owned Liquidity ratio — as the protocol's own liquidity share grows, a bigger slice flows to veMUX holders.

• V3 trading income × 85% × (1 − POR) goes to MUX3LP holders, reflected automatically in the MUX3LP token price (no separate claim needed).

• V1 trading income × 85% × (1 − POR) goes to MUXLP stakers (paid in ETH, must stake on Arbitrum).

• 15% of total protocol income goes to POL (Protocol-Owned Liquidity), which buys MUXLP tokens to grow the protocol's self-owned liquidity, reducing reliance on external LPs over time.

• MUX rewards (1,000 per day) are split as: 1000 × (1 − veRate) × (1 − POR) for MUXLP stakers, and the rest for veMUX holders.

• Degen protocol income: 85% of the DegenLP pool's income goes to veMUX holders, and 15% goes to buy DegenLP. If whitelisted LPs participate, 70% of their income goes to them (in USDC) and 30% joins the DegenLP pool income.

Who earns what

• MUX3LP holders (V3 pool) — Earn position fees, borrowing fees, liquidation fees, and MUX rewards. All fees are automatically reflected in the token price, so there's nothing to manually claim. Each V3 pool uses a single collateral type and has defined market and long/short exposure, letting LPs run their own external hedges if they wish.

• MUXLP stakers (V1) — Earn a portion of protocol fees (in ETH), funding payments, liquidation penalties, and MUX rewards. You need to buy MUXLP (using supported portfolio assets) and stake on Arbitrum.

• veMUX holders — Earn ETH from protocol income across V1, V3, and Degen, plus 100% of aggregator referral rebates, plus MUX rewards. veMUX is obtained by locking MCB or MUX tokens for anywhere from 2 weeks to 4 years (the longer the lock, the more voting power).

• POL — The protocol's own liquidity pool, which grows by receiving 15% of protocol income, gradually reducing the protocol's dependence on external liquidity providers.

No venture capital investors, private sale rounds, or institutional backers were disclosed on any of the official MUX Protocol sources reviewed (mux.network, docs.mux.network, and the MUX Protocol Medium blog). The protocol appears to have been built without publicly disclosed VC fundraising; its tokenomics center around the MCB token (supply cap: 4,803,144) and the non-transferable MUX reward token, with no mention of seed, strategic, or private sale allocations. The only grant noted is a 6M $ARB grant from the Arbitrum DAO Short Term Incentives Program (STIP) and a 1.9M $ARB STIP Bridge grant — these are DAO grants, not equity or token-sale investments from funds.