What is Mugen Finance? Will the money flowing into Arbitrum through platform protocols like GMX and Dopex continue to flow to applications like Mugen? Let’s find out in the article below.
What is Mugen Finance?
Mugen works like one Yield Aggregator (Optimize profits) Applying the 2 token system helps investors access high profit sources in the market while still maintaining effective risk management. Mugen started on the Arbitrum ecosystem and in the future will continue to expand to other blockchains.
What Are Mugen Finance’s Products?
Yield aggregator products are strategies to optimize profits for investors’ assets and Mugen Finance is no exception. Currently, Mugen has launched its first strategy providing liquidity on GMX and is in the process of developing new strategies.
Besides, in the future Mugen will integrate more features Crosschain Swap of Omnichain on Layerzero.
Specifically, the core products that Mugen Finance provides include:
Treasury Operations
Mugen uses assets in the treasury (loaded by users) to invest according to pre-optimized strategies and then distributes profits back to users or reinvests. At Mugen, DAO will vote to decide the investment capital ratio and select projects to participate in the treasury.
Users start using Mugen Finance by depositing USDC into Treasury and minting MGN tokens – the main token of the project.
MGN is an ERC-20 token built on LayerZero with an unlimited total supply. Besides mint MGN in USDC, users can own this token through other AMM exchanges such as Uniswap and 3xcalibur.
The amount of assets used to mint 1 MGN will always increase over time because the project applies the bonding curve according to the formula y= x^(1/4).
For example, when the project first launched, minting 1 MGN would require $13 USDC and as of now this number is $158 USDC. Over time, the price of MGN mint will increase almost continuously.
xMGN
xMGN is a staking token, users will mint or burn xMGN through depositing/withdrawing MGN at the staking vault. When unstaking xMGN, users will receive MGN back immediately and the corresponding profit generated by treasury during the staking process. This reward is paid in wETH and has a vesting period of approximately 30 days to avoid manipulation and fraud.
In addition, Mugen also has another additional token stMGN with the same function as xMGN, however, the wETH profits from stMGN will be continuously compounded – buy more MGN and stake.
Special Features of Mugen Finance
Mugen Finance has a relatively special tokenomic mechanism.
Besides not distributing tokens to VCs or development teams, all MGN must be minted via treasury, at Mugen Finance, MGN always has two prices that exist in parallel and are rarely equal that is: Mint price at Treasury always increases with the bonding curve and transaction price on Dex depends on the market.
These two types of prices are tools to guide investor behavior, thereby maintaining sustainable growth for MGN supply.
However, the existence of two prices in parallel also becomes a major barrier to the price growth of the MGN token in the short term, because the price increase will encounter a large resistance area at the mint MGN price range in the treasury.
Development Roadmap
The project has a roadmap divided into specific phases as follows:
- State 1: Launched the first yield strategy, allowing staking and focusing on increasing assets in treasury.
- Phase 2: Deploy new strategies and increase income from quality protocols.
- Stage 3: Implement cross-chain and add lending/borrowing functionality to xMGN
- Long-term: Launch of grants, increased project decentralization.
Core Team
The Mugen development team is completely anonymous.
Tokenomics
Information about Mugen tokens
Token Allocation
All MGN tokens are held by users. The number of MGN at the time of Mugen launch was 0 and only increased when someone deposited USDC into treasury to mint more tokens. Therefore, the division of MGN is relatively fair when everyone has the same opportunity to own this token.
Token Use Case
Exchanges
Currently, besides minting directly, you can trade MGN tokens at: Uniswap and 3xcalibur.
Mugen’s Information Channel
- Website: https://www.mugenfinance.com/
- Twitter: https://twitter.com/MugenFinance
- Discord: https://discord.com/invite/ZMsfadQ5YD
- Mugen Tracking:
Summary
Hopefully this article has helped you understand more What is Mugen Finance? Yield aggregator projects have always been an important part of DeFi as they help generate additional income for investors as well as strengthen liquidity for the underlying protocols.
Although currently in the early stages of development, Mugen is receiving a lot of negative attention in the Arbitrum ecosystem when it can generate an average APR of about 30% despite only applying 1 strategy on GMX. Hopefully, in the near future, with more strategies and integration on other blockchains, Mugen will be able to develop TVL and APR even more strongly.