Following the [post](https://twitter.com/mycelium_xyz/status/1638745726032412672) earlier today, Mycelium is sharing more detail about our intentions for how the Mycelium community will participate in the governance and growth of the Arbitrum ecosystem.

For transparency, once claimed, the $ARB tokens will be visible in the [Mycelium Treasury Multi-sig Safe address](https://app.safe.global/balances?safe=arb1:0x9F59e27Fd6c8D96DFb89da58C0C98Bac07E7A21a).

Arbitrum deeply considered what constitutes significant support of the Arbitrum Foundation, and [documented the actions that would be rewarded](https://docs.arbitrum.foundation/airdrop-eligibility-distribution). Anyone that has interacted with Tracer or Mycelium smart contracts, and met the eligibility criteria, would be rewarded directly by Arbitrum for their actions. In addition to the community Airdrop, [Arbitrum announced](https://twitter.com/arbitrum/status/1638163833624600584) an additional allocation to DAOs to foster the decentralisation of Arbitrum, and its governance as a DAO. Under this criteria, Mycelium is eligible for an Airdrop of 1,158,932 $ARB tokens. Through this Airdrop, Arbitrum has entrusted Mycelium’s community to determine how to participate in the governance and growth of the Arbitrum ecosystem. This does not mean that Mycelium will be then passing on a further distribution of tokens to community members, as many would have already met individual eligibility. Instead, Mycelium seeks to find acute alignment with Arbitrum regarding its decentralisation and future governance.

To encourage participation, Mycelium will take proposals from the Arbitrum DAO, present those options in the [Mycelium Discord](https://discord.com/invite/mycelium-xyz), and conduct polls on active sentiment. Mycelium will use a range of polling tools to engage the community and get consensus on desired outcomes, before committing to onchain voting. For each sentiment poll, Mycelium will set out criteria to match proposal outcomes, and set a deadline for each. At the time of deadline, Mycelium will capture a screenshot and keep a record for onchain vote integrity. Mycelium will share both the screenshot and onchain vote outcomes of the community in Discord, and keep a public record of the community decisions.

Mycelium looks forward to the growth of protocols and services building on Arbitrum’s Layer 2 and Layer 3 solutions and will play an active builder and advocate role. This approach is consistent with the [Arbitrum Community Values](https://arbitrum.foundation/), and ensures a technically and socially inclusive framework, that is sustainable, neutral, and open with broader Ethereum alignment.

Arbitrum’s Community Values:

- **Ethereum Aligned**: Arbitrum should be fundamentally aligned with the Ethereum ecosystem and a constructive member of the Ethereum community.
- **Sustainable**: Decisions about technology, fee economics, and resource allocation should optimize for the long-term health of the ecosystem.
- **Technically Inclusive**: Ordinary people with ordinary computers should be able to fully participate in the Arbitrum protocol.
- **Socially Inclusive**: The community should be open and welcoming to all people who wish to participate constructively.
- **Neutral and Open**: Arbitrum governance should not pick winners or losers, but should foster open innovation, interoperation, user choice, and health competition on Arbitrum chains.

Mycelium’s plan for $ARB token allocation

On January 7th, 2023, Mycelium shared details on an ETH-USD price arbitrage that impacted the value of MLP. The net effect of which was a loss of approximately 4.5%. A broader explanation regarding what happened was [published](https://mycelium.xyz/blog/post-mortem-of-recent-mlp-impact) on January 16th, 2023.

Today, we are sharing details on the methodology to compensate LPs, in a fair and equitable way.

The [snapshot](https://github.com/binodnp/erc20-snapshot) of LPs was taken at block 51210000 (12:01 PM JAN 6TH 2023 UTC). Where the [exploiting wallet address](https://arbiscan.io/txs?a=0x4A73046c9aF5bA9Fa8cfe1f96B5f190798823D24&p=1) was first noticed. The exploit was over by block 51310000 (9:56 PM JAN 6TH 2023 UTC). Which allows for a slight buffer period.

There is a total of 164 ETH being distributed. Which is made up from:
1. 157 ETH from fees collected over the exploit period + Mycelium’s share of fees from that entire fee week;
2. 5 ETH from Mycelium’s share of fees from the following fee collection period; and
3. 2 ETH from Mycelium’s share of fees from the next fee collection period.

A block-by-block analysis was completed to equitably allocate rewards issued to LPs on a pro-rata basis. Where the total number of blocks that LPs had exposure to MLP during the exploit was assessed and will be paid out based on the relative number of blocks exposed. Where an LP who held the entire duration of the exploit would be eligible for higher rewards than an LP that withdrew funds prior to block 51310000.

When you navigate to [https://swaps.mycelium.xyz/earn](https://swaps.mycelium.xyz/earn), under the Rewards section you will see an Airdrop Rewards section where eligible LPs can claim their eligible Rewards by clicking the “Claim LPs Airdrop” button.
![](https://www.datocms-assets.com/82482/1676437086-claim-lps-airdrop.png)

The total rewards collected during this (exploit) period was 182 ETH:
- 18.9 ETH distributed to LPs
- 4.05 ETH distributed to Stakers
- 1.35 ETH distributed to Traders
- 0.7 ETH distributed to Referrers
- 157 ETH from initial exploit + Mycelium eligible distribution directed to LPs

The total rewards collected during the following period was 62 ETH:
- 43 ETH distributed to LPs
- 9.3 ETH distributed to Stakers
- 3 ETH distributed to Traders
- 1.44 ETH distributed to Referrers
- 5 ETH Mycelium eligible distribution directed to LPs

The total rewards collected during the period two periods following the exploit was 32.314 ETH:
- 22.631 ETH distributed to LPs
- 4.84 ETH distributed to Stakers
- 1.6 ETH distributed to Traders
- 1.07 ETH distributed to Referrers
- 2 ETH Mycelium eligible distribution directed to LPs

All rewards not claimed within a 4-week period will be rolled over into MLP rewards over the following weeks (smoothed out proportionally to provide a multi-week boost).

Compensating LPs from MLP impact

With so much competition in onchain Perpetuals, it is very important that Mycelium continues to innovate and bring best-in-class features to products.

One such feature is Conditional Orders. Conditional Orders are those which will only be executed or activated in the market if certain criteria are met. Under Conditional Orders, Perpetual Swaps will support **Stop Loss** and **Take Profit**. A Stop Loss is a limit order that closes a position when it has suffered a certain amount of capital loss. A Take Profit is a limit order that closes a position when it has experienced a certain amount of capital gain.

Keepers will enable the the use of limit orders. Essentially, they will identify when the oracle price plus or minus the spread has surpassed an order's pricing conditions and execute the order. The fee for these orders will be more than a market order to pay for the keeper.

However, Conditional Orders are not guaranteed to be executed. This can occur in a few situations including but not limited to:
- Insufficient liquidity to execute the order;
- The mark price which is an aggregate of exchange prices did not reach the specified price;
- The specified price was reached but not long enough for it to be executed; and
- No keeper picked up the order for execution.

Additionally, Conditional Orders, once executed, are converted to market orders and are not guaranteed to settle at the trigger price. Being filled at the market price which will be better than or equal to the take-profit price, but, worse than or equal to the stop-loss price.

Instructions on how to use Conditional Orders can be found here: https://swaps.docs.mycelium.xyz/quick-start-guide/3.-how-to-trade-conditional.

![](https://www.datocms-assets.com/82482/1675895506-mycelium_blog_conditional-orders_blogpost_support-graphic-5.png)

In traditional markets, due to depenedencies on brokerage, it is very difficult to trade high volatility assets in this way. Once again demonstrating the potency of trading onchain with smart contracts.

The team was inspired by the work of Gains, the Perpetual platform that recently joined the [Arbitrum ecosystem](https://tokenterminal.com/terminal/projects/gains-network/composition-by-chain), expanding beyond Polygon. With Gains, Conditional Orders are critical, since it is not fully collateralised. To determine the total potential loss, based on trader profit, they need to have a Take Profit feature. The parameter for the total loss helps determine the spread for trading assets. Any additional risk in trading, is socialised in the system with extra fees. With the spread changing every day.

With an abundance of options for traders and LPs, people are often requesting that Mycelium introduce best-in-breed features, and this adds another unique element. By enabling Conditional Orders, we expect the benefit to flow immediately to traders, who can spend less time watching candles, managing admin and orders, and more time working on strategies and doing research. For the LPs, with the changes in MLP composition, [outlined here](https://mycelium.xyz/blog/mlp-composition-is-about-to-change), can generate a more accurate, predictable and safer return for their capital.

Will other competing Perpetual Swaps platforms follow suit with Conditional Orders? Unlikely in the short term. Depending on the model, the impact to active orders could be too large a risk to undertake in attempting to migrate.

*Please note that these services are unavailable if you are a resident of, reside in, a citizen of, incorporated in, or have a registered office in China, the United States, Antigua and Barbuda, Algeria, Australia, Bangladesh, Bolivia, Belarus, Burundi, Myanmar (Burma), Cote D’Ivoire (Ivory Coast), Crimea and Sevastopol, Cuba, Democratic Republic of Congo, Ecuador, Iran, Iraq, Liberia, Libya, Magnitsky, Mali, Morocco, Nepal, North Korea, Somalia, Sudan, Syria, Venezuela, Yemen, Zimbabwe.*

Conditional Orders now available

We’ve heard that most LPs would prefer a more simplified MLP composition. What’s better is that simple is also more secure, with more liquidity. One that focuses on the blue chip assets such as BTC, ETH and LINK whilst reducing long tail assets and limiting exposure to USDT. The challenge here is in balancing assets between traders who desire more assets to trade on-chain, and LPs looking to manage risk with the biggest digital assets. Whether part of a delta neutral strategy, simplification of risk, or a desire to concentrate on assets with more liquid markets, all valid reasons for the change.

We’re doubling down on our long term commitment to building stronger on-chain tools for traders.

So here is the change we are making. New MLP Composition:
- 35% — USDC
- 12% — DAI
- 3% — USDT
- 33% — ETH
- 15% — BTC
- 2% — LINK
![](https://www.datocms-assets.com/82482/1673921307-mlp-composition_piechart.jpeg)

Commencing this week, we are deprecating other assets currently supported in the MLP Composition (***UNI, FRAX, FXS, BAL** and **CRV***). During this transition period, there will be a gradual reduction in support for these assets. Meaning there will be increasing limits to trading the assets, and full support to swap the assets for USDC, DAI, USDT, ETH, BTC and LINK, both directly and through aggregators like [OpenOcean](https://openocean.finance/), until they hit zero composition and are removed entirely from MLP. The transition period may cause some volatility in MLP - which we will actively be monitoring in order to ensure it is performing as expected.

We look forward to further supporting our LPs who will now be able to generate a more accurate, predictable and safer return. Additionally, there will be a simpler ability to create delta neutral vault strategies on top of MLP due to no longer needing to hedge longer-tail, lower liquidity assets on other DeFi platforms.

MLP Composition is about to change

Per the [Tweet](https://twitter.com/mycelium_xyz/status/1611557640987086848) Mycelium posted on January 7th, the team is committed to providing more thorough information to detail the incident, how it happened, the impact, and the plan moving forward to prevent such an issue occurring again.

## The Incident

At approximately 2:50am AEST, members of the Mycelium community Discord raised an issue with the Mycelium Swaps platform.

At 3:57am AEST, the Mycelium Incident Response Team was notified and immediately began triaging the issue. It became apparent that there were issues in upstream data, causing a trader to rapidly trade against MLP, causing degradation in the MLP price as the trader was making profits.

At 4:40am AEST, the Team decided the best course of action was to prevent all trading on the platform to protect LPs. This decision was not made lightly, as it meant that traders were unable to update, open or close positions. The decision to limit trading on the platform was necessary and would limit damage while the issue was patched.

At 5:50am AEST, the Team had identified the cause of the issue, implemented a patch and were performing a full system review before re-enabling the platform for trading.

By 6:57am AEST, the team had shipped the fix to production, and fully re-enabled trading on the platform.

The final root cause of the issue was identified as the following:

- [api.binance.com](http://api.binance.com) was being IP blocked, and hence no data was being received from Binance for the ETH/USD fast price feed. This IP blocking was rolled out in late December;
- Bitfinex started reporting very volatile prices, with the price swinging 0.5-1% in quick succession;
- Due to there only being two price feeds, the average of the two feeds was used, causing the ETH/USD price to have large “death wicks” each time the Bitfinex price changed by a large amount. A trader was able to buy each of these dips, and sell back at the higher price, causing the slow drain of MLP;
- The Chainlink price feeds, which are used as a fallback within the system when the ETH/USD price falls outside a deviation threshold, were never activated since the price deviations were not large enough; and
- These issues combined to allow traders to arbitrage between Mycelium and other perpetual swap platforms, or to buy in the low price dips and sell back when the price returned to the actual ETH/USD price median.

![](https://www.datocms-assets.com/82482/1673825195-mycelium_blog_posteventaudit_150122_support-asset_address_screenshot_brand-colours-05.png)

## The Impact

As of the 5th of January, the MLP price was USD$0.877 (USD$0.825 without trading fees). The index price at this point in time was USD$0.843. After the incident, the MLP price was USD$0.842 (USD$0.774 without fees). The index price was USD$0.848. This represented a loss for MLP holders of 4.5% (the net decrease in MLP with fees, plus the missed gains from the index increasing).

A number of actions are being taken in an attempt to make LPs whole, while limiting disruption to other active Stakers and Traders.

They include:
- Fees earned on the specific day will be directed entirely towards LPs via rewards;
- There will be a claim period, where LPs will be able to claim these rewards, during a special 'rewards period', after which the rewards will expire. Details on the rewards period and how to claim will be published shortly; and
- Fees earned throughout the remaining period, will be distributed as follows:
	- 15% to MYC Stakers
	- 5% to Traders on Perpetual Swaps
	- 10% that is normally earned by Mycelium will be directed towards LP for the next 2 rewards cycles
	- 70% to LPs

## Mitigating Future Events

As part of a mitigation of future issues, the following changes have been rolled out:

- Monitoring and alerting on each individual data provider, rather than just on each asset price; and
- Restored Binance data using the read only API endpoint.

During the post mortem, the team reassessed all data providers, and have made the decision to remove FXS from the MLP composition. The fast price feed for FXS was reliant on a single data source, being Crypto.com, with a fallback to the price feed Chainlink oracle. While this might not be an immediate threat, it presents an unnecessary risk to MLP. Particularly in light of it’s historic underutilisation within the pool.

For fast price data feeds, the data providers for each are as follows:

**ETH**: Coinbase, Binance, Bitfinex

**BTC**: Coinbase, Binance, Bitfinex

**Chainlink**: Coinbase, Binance, Bitfinex

**Uniswap**: Coinbase, Binance, Bitfinex

**BAL**: Coinbase, Binance, Bitfinex

**CRV**: Coinbase, Binance, Bitfinex

There is a fallback to Chainlink price feed oracles if the price falls outside of a price deviation threshold. 

There will be more announcements coming soon relating to the product and enhancements, and we are excited to share these in the coming weeks.

Post mortem of recent MLP impact

# Mycelium Enters Chainlink BUILD Program to Accelerate the Adoption of Our DeFi Ecosystem

We’re excited to announce that Mycelium is officially joining the [Chainlink BUILD Program](https://blog.chain.link/chainlink-build-program/). As a part of BUILD, we aim to accelerate ecosystem growth and the long-term adoption of Mycelium’s DeFi products by gaining enhanced access to Chainlink’s industry-leading oracle services and high-quality technical support, as well as incentivizing greater cryptoeconomic security. In exchange, we will commit to paying network fees and offer other benefits to the Chainlink community and service providers, including stakers.  

Having operated a Chainlink node since 2019 and with a proven history of delivering data for over 1,000 data feeds to 10+ blockchains, Mycelium has long been an active participant and believer in Chainlink. Our participation in BUILD furthers the integration with Chainlink, with the added benefits of priority support from the Chainlink ecosystem, increased access to dApps needing Chainlink Price Feeds, and stronger incentive alignment between the Chainlink and Mycelium communities.

We’re confident that through enhanced support, enhanced access to secure off-chain services, and the backing of Chainlink’s vibrant community, we can accelerate awareness of Mycelium’s perpetual product offerings on decentralized environments. Through this, we hope to realize the widespread adoption of financial market infrastructure on public blockchains that is open, transparent, and accessible to all. 

# An Ecosystem of DeFi Services

Since 2019, [Mycelium](https://mycelium.xyz/) has been building smart contracts for the decentralized economy. Akin to Chainlink’s vision to connect individuals to new markets and information in a trust-minimized environment, Mycelium is committed to offering efficient and accessible financial infrastructure that unlocks new financial opportunities.

Chainlink decentralized oracle networks (DONs) play a powerful role for each Mycelium DeFi offering by providing secure, reliable, and decentralized market data needed to help power secure functionality. Whether it’s liquidations on Mycelium Perpetual Swaps or price-tracking for leveraged tokens built through Mycelium Perpetual Pools, Chainlink provides time-tested price data feeds necessary for us to operate to the standard that our users expect. Chainlink’s DONs will play a vital role in Mycelium’s long term vision to create financial infrastructure that changes existing economic relationships. Mycelium wants to improve access and efficiency to any financial market, and Chainlink is an integral partner in that infrastructure pipeline. 

# Why We Joined Chainlink BUILD

Mycelium joined BUILD to maximize the benefits of security and reliability that Chainlink’s oracle infrastructure provides. As part of BUILD, we will receive key benefits, including increased access to and integration of Chainlink Price Feeds, on-chain data security for select Chainlink Data Feeds provided through Chainlink Staking, access to new Chainlink product alpha and beta releases, and dedicated technical support by the Chainlink Labs team, among other benefits. 

In exchange for these services, Mycelium will make available economic incentives by allotting multiple percentage points of its token supply to Chainlink service providers, including stakers that secure oracle services relied upon by Mycelium Perpetual Swaps and Mycelium Perpetual Pools as well as future products. In turn, Chainlink service providers can participate in Mycelium DeFi and are further incentivized to contribute to the security and reliability of our DeFi services. These mutually aligned economic incentives enable both communities to support one another.

“We’re excited to have Mycelium join the Chainlink BUILD program, which aims to create a more robust incentive alignment between Mycelium and the Chainlink ecosystem. The enhanced support by the Chainlink ecosystem helps the team create secure DeFi products and aims to kickstart widespread adoption of Mycelium’s current and future DeFi offerings.“ — Johann Eid, VP of Go-To-Market, Chainlink Labs.

“We’ve been a part of the Chainlink ecosystem for a long time, first as a node operator and then as a data consumer. We’ve seen firsthand the ecosystem impact that Chainlink has brought to DeFi. This is why we’re excited to join Chainlink BUILD, which gives us increased access to Chainlink’s industry-standard oracle services, dedicated technical support, and a robust cryptoeconomic model that empowers us to build world-class DeFi offerings. We’re very pleased to continue our collaboration together and we welcome the Chainlink community to join the growing Mycelium network.” — Patrick McNab, Mycelium CEO and Co-Founder. 

**About Chainlink**

Chainlink is the industry-standard Web3 services platform that has enabled trillions of dollars in transaction volume across DeFi, insurance, gaming, NFTs, and other major industries. As the leading decentralized oracle network, Chainlink enables developers to build feature-rich Web3 applications with seamless access to real-world data and off-chain computation across any blockchain and provides global enterprises with a universal gateway to all blockchains.

Learn more about Chainlink by visiting [chain.link](https://chain.link/) or reading the developer documentation at [docs.chain.link](https://docs.chain.link/). To discuss an integration, [reach out to an expert](https://chain.link/contact). 


**About Mycelium**

Mycelium is the connective tissue for global digital markets. Since 2019 Mycelium has built core blockchain infrastructure, contributing to an ecosystem which delivers more accessible, equitable, and efficient financial markets to users. Establishing one of the first Verified Chainlink Oracle Node’s in 2019, and later launching two decentralized derivative products - Perpetual Pools and Perpetual Swaps - Mycelium’s mission is to provide trusted, secure tools that empower individuals to invest and create their own financial future on-chain. 

To learn more about Mycelium, visit [mycelium.xyz](https://mycelium.xyz/) or join our network on [Twitter](https://twitter.com/mycelium_xyz).   


Mycelium joins Chainlink BUILD

Here is a [link to Seamus' Presentation](https://www.youtube.com/watch?v=ULxwOXY-618), on Chainlink's YouTube account.

"In this SmartCon 2022 presentation, Seamus McNab, Mycelium's Head of Infrastructure, dives into the role Mycelium plays in the DeFi ecosystem, how Mycelium leverages Chainlink infrastructure, and what's next for the project.  

Chainlink is the industry-standard Web3 services platform and has enabled trillions of dollars in transaction volume across DeFi, insurance, gaming, NFTs, and other major industries. As the leading decentralized oracle network, Chainlink enables developers to build feature-rich Web3 applications with seamless access to real-world data and off-chain computation across any blockchain and provides global enterprises with a universal gateway to all blockchains." - Originally posted by Chainlink. 

Chainlink SmartCon 2022 presentation

### Overview

*The Arbitrum protocol's ability to pass messages between L1 and L2 can be leveraged to trustlessly move assets from Ethereum to an Arbitrum chain and back. Any asset / asset type can in principle be bridged, including Ether, ERC20 tokens, ERC-721 tokens, etc.[[1]](https://developer.offchainlabs.com/docs/bridging_assets#:~:text=The%20Arbitrum%20protocol%27s%20ability%20to%20pass%20messages%20between%20L1%20and%20L2%20can%20be%20leveraged%20to%20trustlessly%20move%20assets%20from%20Ethereum%20to%20an%20Arbitrum%20chain%20and%20back.%20Any%20asset%20/%20asset%20type%20can%20in%20principle%20be%20bridged%2C%20including%20Ether%2C%20ERC20%20tokens%2C%20ERC-721%20tokens%2C%20etc.)*

### Token Bridging 

Using Layer 2 solutions like Arbitrum will position Mycelium's infrastructure to support innovative market creation efficiently and help power the future of finance. However, as with any nascent technology, there are some additional steps required to interact with Arbitrum before using the Mycelium suite of products. 

As Arbitrum (L2) exists as a scalability solution for Ethereum (L1), the Arbitrum architecture naturally exists in part on L1 and in part on L2. Therefore, if a user has assets on the Ethereum (L1) mainchain, they will need to bridge their assets to Arbitrum (L2) in order to interact with the exciting new DeFi protocols such as [https://pools.mycelium.xyz/](https://pools.mycelium.xyz/)

In this guide we will walk you through the process of bridging your assets from L1 to L2. 

### Step 1: Add Arbitrum One to your Metamask

You can [read this documentation]
(https://pools.docs.mycelium.xyz/tutorials/tutorials/arbitrum-one) and follow along with the video.
<a href="https://www.loom.com/share/e6813f1281c94eba9e79193f201f2a98">
    <p>Watch - Adding Arbitrum to Metamask </p>
    <img style="max-width:300px;" src="https://cdn.loom.com/sessions/thumbnails/e6813f1281c94eba9e79193f201f2a98-with-play.gif">
  </a>


### Step 2:  Connect to Arbitrum

Head to [https://bridge.arbitrum.io/](https://bridge.arbitrum.io/)  and connect to your Metamask by signing a transaction. 
There should be no fee to do so. 
<a href="https://www.loom.com/share/1eaed2d0a62b4869a6b3402843d7d8c6">
    <p>Watch - Connect to Arbitrum One </p>
    <img style="max-width:300px;" src="https://cdn.loom.com/sessions/thumbnails/1eaed2d0a62b4869a6b3402843d7d8c6-with-play.gif">
  </a>

### Step 3: Transfer

Select the asset and how much you wish to deposit to L2. Click deposit and the Metamask window will appear. Now sign the transaction. 

Note: The bridging can take up to 10 minutes to process. 

### Step 4: Switch Networks

Now switch networks on your Metamask wallet. Your assets should be visible on the assets tab.

![bridging-assets-arbitrum (1).png](https://storage.googleapis.com/mycelium-bucket/bridging_assets_arbitrum_1_2e91a5178b/bridging_assets_arbitrum_1_2e91a5178b.png)

### Learn more about Arbitrum

For more information about visit [Arbitrum Documentation.](https://developer.offchainlabs.com/docs/bridging_assets)

NOTE: This blog post was originally posted by Tracer DAO. The DAO voted to transition to Mycelium in August 2021. As a result, we have updated all of our documentation and content including this post to reflect the change to Mycelium.

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