Crypto Gloss

Mycelium

Mycelium is an Arbitrum perpetuals protocol that emerged from the rebrand of Tracer Finance — pivoting from its original rebalancing token derivatives to a fork of GMX’s GLP-based perpetuals architecture, offering MYC-incentivized perpetuals trading with its own MLP liquidity pool.

Overview

Originating as Tracer Finance in 2021 with an innovative but complex non-custodial derivatives product (Perpetual Pools using rebalancing tokens), the project rebranded as Mycelium in 2022 and forked GMX’s perpetuals codebase for its primary product. By adopting GMX’s proven GLP-style LP-as-counterparty model with its own MLP token and MYC governance token, Mycelium prioritized market fit over novel mechanism design — offering Arbitrum users an alternative perpetuals venue with differentiated tokenomics and fee structures.

From Tracer Finance to Mycelium

The following sections cover this in detail.

Tracer Finance (2021)

  • Long/short token pairs — users minted 3L-BTC (long) or 3S-BTC (short) tokens representing leveraged exposure
  • Rebalancing mechanism — at each rebalance interval, gains from winning side were transferred to the winning token by buying it with losing-side collateral
  • No liquidations — unlike traditional leveraged products, Perpetual Pools couldn’t force-liquidate (losing tokens rebalanced toward zero value instead)
  • Funding rate analog — power transfer rate (losing side paid winning side continuously) controlled effective leverage

Despite its elegance, Perpetual Pools attracted limited traction due to complexity, funding rate unpredictability, and the counterintuitive rebalancing mechanic.

Mycelium Rebrand (2022)

  • GMX fork — forked GMX’s smart contracts to launch Mycelium Perpetual Swaps
  • MLP — parallel to GLP; the Mycelium Liquidity Pool token represents the LP-as-counterparty position
  • MYC token — governance and incentive token replacing TCR (Tracer’s original governance token)
  • TCR → MYC migration — existing TCR holders could migrate to MYC through an announced conversion process

MLP: Mycelium Liquidity Pool

MLP functions identically to GMX’s GLP:

  • Multi-asset composition — accepts ETH, WBTC, USDC, and other major assets
  • LP exposure — MLP holders are the net counterparty to all open positions; trader profits reduce MLP value, losses increase it
  • Fee distribution — MLP holders earn 70% of platform fee revenue (opening/closing fees and funding income)
  • Token price — tracks the NAV of pool assets adjusted for unrealized trader PnL

The 30% of fee revenue not going to MLP holders is directed to MYC stakers.

MYC Token

MYC is the Mycelium governance and staking token:

  • Platform fee revenue — 30% of all trading fees distributed to staked MYC holders
  • Governance — voting on protocol upgrades, fee adjustments, and new market listings
  • Escrowed rewards — esMYC (escrowed MYC) issued as vesting rewards reduces immediate selling from incentive distributions
  • Migration — converted from TCR at a fixed ratio for existing Tracer Finance community members

Differentiation from GMX

As a GMX fork, Mycelium’s differentiation was primarily in:

  • Fee structure — slightly different opening/closing fee basis points
  • Token distribution — MYC allocation and emission schedule reflected Mycelium’s community airdrop design rather than GMX’s original distribution
  • Community and branding — different community, partnerships, and marketing targeting Arbitrum-native users
  • Governance philosophy — more active DAO governance over fee parameters

Mycelium’s TV and volume remained substantially below GMX throughout its operation, but provided a genuine alternative for users seeking diversity within the Arbitrum perpetuals ecosystem.

Sources

  1. Mycelium Documentation and Rebrand Announcement — Mycelium / Tracer Finance Team, 2022. Covers the Tracer Finance to Mycelium rebrand rationale, GMX perpetuals fork deployment on Arbitrum, MLP product specification, and TCR → MYC migration terms.
  1. Tracer Finance Perpetual Pools Whitepaper — Tracer Finance, 2021. Specifies the original rebalancing token mechanism: power transfer between long/short token holders, no-liquidation design, and the mathematical derivation of effective leverage from the rebalancing interval and power setting (e.g., 3× power).
  1. “GMX Forks: Ecosystem Diversification or Fragmentation?” — Delphi Digital, 2022. Surveys GMX forks across multiple chains including Mycelium (Arbitrum), Morphex (Fantom/BNB), and others, analyzing whether forked liquidity creates genuine competition or merely fragments TVL without adding user value.
  1. “Perpetuals DEX Landscape: Arbitrum Edition” — Messari Research, 2023. Maps all Arbitrum perpetuals platforms by TVL and volume, placing Mycelium in the lower-tier relative to GMX and Gains Network but noting its role in the ecosystem as an alternative option for users preferring its fee structure.
  1. Mycelium Governance Forum and TCR Migration Records — Mycelium DAO, 2022. Governance proposals covering TCR → MYC migration ratio, esMYC vesting periods, MLP reward splits, and early market addition decisions for Mycelium Perpetual Swaps.

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