MLP Liquidity Pool
MLP rewards are derived from fees that are paid by traders on the Meridian Leveraged Trading interface. This includes both Leveraged Trading and Zero Slippage Swaps. These trades are transacted using the MLP multi-asset liquidity pool which is supported by investors depositing tradable tokens in return for a share of the pool and the fees that it generates. As well as earning fees, liquidity providers will also receive MST as an additional reward for supporting the protocol.
MLP rewards are calculated after the deduction of referral rewards and the network cost of keepers. Keeper costs are typically 1% of total fees. These net rewards are then converted to ETH and distributed to MLP token holders, MST stakers and the Treasury.
The current allocations are:
60% to MLP holders
30% to MST stakers
10% to Treasury
Investment Performance
Information on historic performance of MLP rewards can be found at https://stats.meridianfinance.net
Information on the current composition of the MLP pool can be found here
Information on the current price and APR for MLP investment can be found here
Information on the current price and APR for MST can be found here
How to Participate in MLP Rewards
Investors can provide liquidity and receive MLP tokens through the MLP Liquidity page. This allows users to deposit ETH or USDM tokens and in return mint MLP tokens. Buying and selling of MLP is discussed in more detail here.
Risks & Benefits
As trading liquidity is provided by the MLP, the MLP token price will change as a result of trading activity. When traders make a loss then an equal amount of the trade collateral is allocated to the MLP and the price of the MLP token will rise. Conversely when traders are successful then the profits for the trade will be taken from the MLP and the price of the MLP token will fall. Historic profit and loss performance for MLP can be tracked at https://stats.meridianfinance.net
Example
If a trader deposits $100 of collateral to go 5x long on ETH then $500 of ETH (5 x $100) will be reserved in the MLP. If the price of ETH subsequently falls by 10% then $50 of the opening collateral will be allocated to the MLP. In effect this means that the MLP holders do not suffer the downward movement in the price of ETH and therefore profit by $50. However, if rather than falling the price of ETH rises by 10%, then the MLP holders will not benefit from this rise in the price of ETH as the $50 of profit will be allocated to the trader.
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