Decentralized Perpetuals Part 2: Mycelium and Gains Network

As covered in part 1 GMX and dYdX are the dominant players today in decentralized perpetuals, but there are more than a few protocols looking to topple the kings. Gains Network and Mycelium on Polygon and Arbitrum respectively are two keen on this mission. Both similarly allow traders leveraged long or short exposure to crypto tokens perpetually but with different methods to achieve the goal.

Mycelium Overview

On August 11, Tracer DAO transitioned into Mycelium. While some of the mechanisms employed and trading options changed drastically, the core idea remains the same: leveraged perpetual exposure to crypto assets. Mycelium offers two products: perpetual swaps and perpetual pools.

Perpetual Pools

Perpetual pools were the original product offered by Tracer and are still supported by Mycelium. Purchasing pool tokens allows for simple long or short exposure to an asset at a set leverage. Today, 3x leverage pools are available for BTC and WTI (crude oil) and 3x or 10x leverage pools are available for ETH. Pool tokens are minted with USDC which is then stored in the pool. The balance of USDC in the short and long portions of the pool rebalances as the price of the underlying changes per a Chainlink data stream. When the price of the asset goes up, USDC gets transferred into the long side of the pool and downward price movements result in USDC moving to the short side. Some assets have optionality in rebalancing intervals and how the asset price is calculated, such as using an eight hour SMA in place of spot price and choosing between 12 and one hour rebalancing. Pool tokens can be minted or bought on the secondary market through Balancer. Anyone can deploy a pool in a permissionless manner as long as Chainlink offers price data for the asset. Tokens can be sold on the secondary market or burned for USDC.

Source: https://www.tracer.finance/radar/tracer-perpetual-pools-eli5/