# Simple Guidance of Using Mooncake All Mooncake features are available directly through the Mooncake App. Whether you want 10x leveraged SPL tokens (LT), funding-yield mUSD(FT), or to earn trading fees by providing LT/FT liquidity(LP), you can do everything in one place. Users can deposit the underlying token into Mooncake to mint either Leveraged Tokens (LT) or mUSD (FT). When users deposit the underlying token, the protocol mints LT and mUSD in proportions determined by the target leverage of that LT market. *** #### What is LT (Leveraged Token)? LT is a token that automatically maintains leverage — it amplifies gains when the market goes up and amplifies losses when it goes down. Think of LT as holding a constant 3x or 5x long position, without manually leveraging, without margin calls, and without liquidation risk. * If the underlying goes up 1%, a 3x LT goes up \~3% * If the underlying goes down 1%, a 3x LT goes down \~3% * No liquidations * You only take volatility drag Holding one LT = holding a perpetual L-times leveraged long position. *** #### What is FT (mUSD)? LT is borrowing money to go long. FT (mUSD) is the token that lends money to LT. Borrowers pay funding. Lenders receive funding. It’s that simple. * FT = a token that earns the funding paid by LT holders * It’s USD-denominated and yield-bearing * The yield comes from LT’s leverage demand (not from subsidies or Ponzi mechanics) You can think of FT as: “Lending to traders who want leverage and collecting their funding payments.” Stable, uncorrelated yield — independent of market direction. *** #### What is LP? LP splits the underlying token into LT + FT, forms the trading pair, and provides liquidity for LT traders and mUSD buyers. In simple terms: LP is a long-term, yield-enhanced strategy on the underlying token, earning trading fees and funding fees from market activity. # Introduction Mooncake is a **permissionless leveraged token** market. It uses a structured design to split the USD value of any token into two components: a Leveraged Position and a Funding Position. * **Leveraged Position**: Tracks the price fluctuations of the underlying token in USD terms. Holders of Leveraged Positions gain exposure to market volatility but need to pay a funding fee.
* **Funding Position**: Earns the funding fees paid by Leveraged Position holders, denominated in USD.
This structure allows users to create leveraged exposure without liquidation risk while offering yield opportunities for funding providers. $$ Underlying\ Token\ Value =Funding\ Position\ Value + Leveraged\ Position\ Value $$ This formula means that the dollar value of one underlying token can be split into two parts: * Funding Position: A stable USD-denominated claim that earns funding fees. * Leveraged Position: A residual claim that amplifies the price exposure of the underlying asset. \ **Example: 2X Leveraged SOL** Suppose the underlying token is SOL, and the target leverage of the Leveraged Position is 2x If 1 SOL = $200, we can split it as: $$ SOL\ ($200) = Funding\ Position\ ($100) + Leveraged\ Position\ ($100) $$ * The Funding Position is like a stable $100 note, collecting funding fees. * The Leveraged Position represents the “risky” part of SOL. Because it only costs $100 but still moves with the full $200 SOL price, it effectively gives 2x leverage. If the price of SOL increases from $200 to $220 — a 10% gain — then the value of a leveraged position would rise from $100 to $120, representing a 20% increase. #### Leveraged Tokens (LT) Leveraged Tokens are the receipt tokens of the Leverage Vault, and their price is denominated in USD. Each market has its own independent Leverage Vault, which holds Leveraged Positions for that market. Leveraged Tokens are a packaged form of leveraged exposure to an underlying asset. #### mUSD (Funding Token) mUSD, also known as the Funding Token, is the receipt token of the Funding Vault, and its price is denominated in USD. Each market has its own independent Funding Vault, which holds Funding Positions for that market. When a Funding Vault is fully composed of Funding Positions, the price of mUSD behaves similarly to a yield-bearing stablecoin — it continuously accrues funding fees over time. # Leveraged Tokens (LT) #### What are leveraged tokens? Leveraged tokens represent a packaged form of leveraged exposure to an underlying asset — their prices are designed to amplify the movement of that asset by a fixed multiple. Mooncake reimagines this concept for the Solana ecosystem. It’s a native leveraged token protocol that automates leverage through on-chain rebalancing, offering simple and composable leveraged exposure to Solana’s major and meme tokens — all without facing liquidation or managing debt positions. Instead of juggling perps, lending markets, and collateral ratios, users can simply hold leveraged tokens in their wallets. These tokens behave like any other SPL asset, trade freely, and continuously maintain their target leverage through Mooncake’s on-chain mechanisms. *** #### Why it matters Traditional finance has long used structured products to provide leveraged exposure — like the multi-billion-dollar 3x Nasdaq ETF that tracks triple the index’s daily performance. In crypto, centralized exchanges once offered similar tokens, and some DeFi platforms have their own versions. Mooncake takes the next step: it brings the entire process fully on-chain, removing intermediaries and making leverage transparent, efficient, and permissionless. *** #### How Mooncake’s leveraged tokens work While the idea is simple, the implementation defines how smooth and sustainable the experience is. Mooncake’s model is built around a few essential design principles: * Supported assets & leverage: Mooncake covers both leading Solana tokens and high-beta meme assets, typically offering fixed 3x-10x exposure. * Leverage generation: Instead of borrowing or using derivatives, Mooncake achieves leverage via internal balancing between “leveraged” and “funding” pools, keeping the system self-contained and stable. * On-chain rebalancing: As prices move, the protocol automatically rebalances positions once deviation thresholds are hit — no manual intervention, no liquidations, and no hidden debt. * Minting & redeeming: Users can mint or redeem tokens directly through the Mooncake pools anytime. # Concept of Leveraged Token ## Concept of Leveraged Position The Leveraged Position represents the USD price exposure of the underlying token. In other words, the entire value change of the underlying token is fully reflected in the value of the Leveraged Position.
#### Example Continuing from the earlier example: Suppose 1 SOL = $200, split into Funding Position ($100) + Leveraged Position ($100). If the SOL price instantly increases from $200 to $220 (+10%), * The Leveraged Position value increases from $100 to $120 (+20%). * This shows the 2x leverage effect in action.
The value of the Leveraged Position in USD terms is: $$ Leveraged\ Position\ Value = Underlying\ Token\ Value\ –\ Funding\ Position\ Value $$ ## Mooncake's Leveraged Token All leveraged positions from leverage users are pooled together inside a single Leveraged Vault, and the receipt of this vault is the Leveraged Token (LT). Whenever the price of the underlying token moves enough to hit the rebalance threshold, all leveraged positions inside the vault are replaced with a new set of positions of the same value.
This ensures that the effective leverage ratio of the LT remains constant.
For example, in a 3× LT market, if the price of the underlying token increases and causes the effective leverage of the LT to fall below 3×, then during the rebalance the Leverage Vault needs to obtain additional risk exposure from the LP in order to restore the target leverage. # Effective Leverage Effective Leverage measures how much exposure to the underlying token’s price movements a Leveraged Position represents at the current time. At Initialization / Rebalance: $$ \text{Target Leverage} = \text{Effective Leverage} = \frac{\text{Underlying Token Value}}{\text{Leveraged Vault Value}} $$ Afterwards (dynamic): $$ \text{Effective Leverage} = \frac{\text{Underlying Token Value}}{\text{Leveraged Position Value}} $$ This ratio adjusts over time as the price of the underlying token changes, showing how leverage drifts away from the initial setting until the next rebalance. # Performance of Leveraged Tokens **Essentially, you can think of a leveraged token as a procyclical / momentum-rebalancing strategy vault.** When the underlying token continues to rise, the leveraged token’s exposure increases through automatic rebalancing. When the underlying declines, exposure is reduced to maintain the effective leverage close to the target leverage, while ensuring the token can never be liquidated. Under this mechanism, leveraged tokens exhibit two primary effects: #### 1. Compounding Effect In a trending market, leveraged tokens benefit from the compounding effect — their returns can **exceed the target multiple of the underlying asset’s cumulative performance**. Example: For a 5x SOL leveraged token, when SOL rises 1% per day for 5 consecutive days: $$ SOL\_{gain} = (1 + 1%)^5 - 1 = 5.1%;\\ 5XSOL\_{gain} = (1 + 5%)^5 - 1 = 27.6% $$ Here, the 5xSOL token’s total gain (**27.6**%) even exceeds 5 times SOL’s total gain (5 × 5.1% = 25.5%). Likewise, during a continuous downtrend, the compounding effect works in the opposite way — the leveraged token’s losses are less severe than the simple multiple of the underlying’s decline Example: If SOL drops 1% per day for 5 days: $$ SOL\_{loss} = (1 - 1%)^5 - 1 = -4.9%\5XSOL\_{loss} = (1 - 5%)^5 - 1 = -22.6% $$ Compared to a simple 5× multiple (5 × -4.9% = -24.5%), the actual loss of **-22.6**% is smaller. 👉 In trending markets, leveraged tokens tend to **outperform** their theoretical multiple returns due to the **positive compounding effect**. #### 2. Volatility Drag However, in sideways or choppy markets, the situation reverses. Leveraged tokens suffer from volatility drag — the performance decay caused by frequent rebalancing during price fluctuations. Put simply, it’s the cost of repeatedly “buying high and selling low” in a volatile market. Example: For a 5xSOL leveraged token, if SOL’s daily returns are +1%, -1%, +1%, -1%, +1%, then: $$ SOL\_{gain} = (1 + 1%)^3 \times (1 - 1%)^2 - 1 = 0.98% $$ A simple 5× multiple would suggest a **4.9%** gain, but the actual 5xSOL performance is: $$ 5xSOL\_{gain} = (1 + 5%)^3 \times (1 - 5%)^2 - 1 = 4.48% $$ So, in a volatile market, leveraged tokens **underperform** due to this compounding loss — and the higher the volatility, the greater the drag. #### Key Takeaway Leveraged tokens are powerful **short-term** trading tools that magnify gains and removing liquidation risk. However, they are not designed for long-term holding, as the volatility drag gradually erodes value in non-trending markets. Traders should use them strategically — in strong trends, they can **outperform**; in chop, they **decay**. # Leveraged Tokens vs. Perpetuals Leveraged tokens and perpetual futures both offer ways to gain amplified exposure — but they operate on very different principles. Mooncake’s leveraged tokens are **on-chain structured assets** that automatically rebalance to maintain their target leverage, keeping positions healthy and liquidation-free. Perpetual futures, on the other hand, rely on **external margin management**: as the price moves, leverage drifts, and liquidation risk becomes real. \ So how do these two instruments actually perform in practice? Let’s explore four types of market environments and see how Mooncake’s rebalancing model stacks up against traditional perps. #### Takeaways * **Trending markets**: Mooncake’s rebalancing compounds momentum, often outperforming static leverage. * **Pullbacks**: Automatic deleveraging avoids liquidation, giving positions a second life. * **Sideways markets**: Frequent rebalancing introduces volatility drag. * **Extended drawdowns**: Mooncake preserves capital longer, but losses still accumulate. *** #### 1. Trending Markets When markets trend — either up or down — leveraged tokens shine. Because Mooncake’s tokens automatically adjust exposure through **momentum-based rebalancing**, they amplify gains during strong trends while preserving target leverage.
Take Solana’s 2023–2024 rally, for example, where SOL surged from $20 to $200. A 3x leveraged perp would’ve required active margin management to maintain exposure. Mooncake’s SOL3x, however, continuously re-upped its exposure through on-chain rebalancing, letting holders ride the trend without worrying about margin calls. In a sustained rally, each rebalance increases notional exposure, compounding returns. By the end of the move, Mooncake’s leveraged token typically shows **higher realized gains** than a static 3x perp that drifted lower in leverage over time. 👉 In short: **when it’s pumping, Mooncake compounds the move.** *** #### 2. Sharp Pullbacks and Liquidation Events When markets turn against a position, the difference becomes even clearer. Perps are binary — once margin runs thin, you’re out. Mooncake’s tokens, however, **automatically deleverage** through on-chain rebalancing, cutting exposure before it hits critical thresholds. For instance, during the market correction on Oct. 11th, 2025 , a 5x long perp would have faced liquidation after a single deep candle. Mooncake’s leveraged token, by contrast, executed multiple down-rebalances, reducing notional exposure and staying alive through the dip. The result? **Lower drawdown, zero liquidation, and a position that’s still intact when the market recovers.** 👉 In short: **Mooncake bleeds slower and survives longer.** *** #### 3. Sideways and Choppy Markets Not every market trends. When prices chop within a tight range, Mooncake’s automatic rebalancing becomes a double-edged sword. Each small move triggers an adjustment — “buying high and selling low” — leading to **volatility decay**. This is the natural trade-off for being liquidation-free: Mooncake dynamically adjusts exposure instead of blowing up, but in return, flat markets slowly eat away at its margin. Perps don’t rebalance, so if they avoid liquidation, they can slightly outperform in these conditions. But the keyword is *if*. 👉 In short: **when it chops, rebalancing grinds.** *** #### 4. Continuous Adverse Trends In long, one-directional drawdowns, Mooncake’s rebalancing mitigates pain but can’t fully escape gravity. When the market keeps moving against your position, each rebalance trims exposure — preserving capital but gradually eroding margin. Take SOL shorts during its early-2025 uptrend: a perp position would’ve been wiped out by January, while Mooncake’s **INVERSE Token(not yet)** still retained roughly 30% of its margin. But if the rally continued, even that would fade. 👉 In short: **Mooncake soft-lands losses — it doesn’t make them disappear.** # mUSD (Funding Token) #### Concept of mUSD(Funding Token) Funding Token (FT), branded as **mUSD**, is a USD-denominated, yield-bearing asset that earns the funding fees paid by leveraged traders within the Mooncake protocol. In Mooncake’s leverage structure: * LT (Leveraged Token) = borrowing to take leveraged long exposure * FT (Funding Token) = lending to LT users and earning their funding payments Therefore: FT functions as a market-driven lender that captures the funding paid by LT holders. Its yield is non-subsidized, non-inflationary, and non-Ponzi, fully sourced from organic trading activity. *** #### Mechanism of mUSD When users mint LT (e.g., 3× SOL, 5× memecoin), they effectively: * use the underlying token as collateral * borrow purchasing power from the LT/FT market * pay funding to maintain their leveraged position FT holders supply this purchasing power, so: * LT pays funding * FT receives funding
Detailed mechanism: 1. Users deposit the underlying token → the protocol splits the value into LT and FT based on the market’s target leverage. 2. When the LT side is net long (as is typically the case): * LT requires additional leveraged exposure * FT provides the required purchasing power 3. On each rebalancing cycle, the system calculates the funding fee based on leverage imbalance and allocates it to FT holders. 4. The value of FT increases over time as funding accumulates. Thus: FT behaves like a USD-like asset whose yield automatically adjusts according to leverage demand. *** #### Yield Source of mUSD mUSDs' yield comes entirely from: **Leverage Demand** Higher leverage demand → higher utilisation ratio → higher funding → higher FT APY. **A fully sustainable, non-subsidized model** No emissions. No project subsidies. No “new users paying old users.” FT’s yield is real cash flow driven purely by market supply and demand—similar to perpetual swap funding rates on exchanges. # Concept of Funding Token #### The Concept of Funding Position The Funding Position represents the portion of the underlying token’s value that remains after separating out the price risk. Each Funding Position is initialized with a value of 1 USD, and it continuously accrues funding fees over time. $$ Current\ Funding\ Position\ Value =Intial\ Funding\ Position\ Value\times e^{funding APY\times T} $$ #### The Concept of mUSD mUSD, also known as the Funding Token, is the receipt token of the Funding Vault, and its price is denominated in USD. Each market has its own independent Funding Vault, which holds Funding Positions for that market. When a Funding Vault is fully composed of Funding Positions, the price of mUSD behaves similarly to a yield-bearing stablecoin — it continuously accrues funding fees over time. # Funding Curve Each Funding Position receives funding fees determined by a dynamic funding rate. The funding rate follows a funding curve, which is a function of the Utilization Ratio.
* The Funding Curve is defined as a piecewise function with two segments. * As the Utilization Ratio changes, the funding rate adjusts accordingly, ensuring a balanced relationship between Leveraged Position holders and Funding Position holders. \ The Funding Rate is determined by a piecewise function of the Utilization Ratio (ur): $$ \begin{align\*} \&If\ ur < 80%,\ Funding\ APY = a + b × ur \ & If\ 80% ≤ ur < 100%,\ Funding\ APY = a + b × 80% + c × (ur – 80%)\\& a\ is\ the\ bottom\ funding \ rate,\ b\ is\ the\ first\ funding\ growth\ rate,\ c\ is\ the\ second\ funding\ growth\ rate.\end{align\*} $$
Utilization Ratio: The Utilization Ratio is a key metric that measures whether Leveraged Positions and Funding Positions in the market are balanced. $$ \begin{align\*} \&funding\ ratio = funding\ position\ in\ funding\ vault / total\ funding\ position\\ \&leveraged\ ratio = leveraged\ position\ in\ leveraged\ vault / total\ leveraged\ position\end{align\*} $$ When minting funding vault tokens is allowed: $$ Utilization\ Ratio= 0.5 + 0.5 \* (leveraged\ ratio - funding\ ratio) $$ When minting funding vault tokens is not allowed: $$ Utilization\ Ratio= leveraged\ ratio $$ The Utilization Ratio is a key indicator that measures the balance between Leveraged Positions and Funding Positions in the market. It directly determines the value of the Funding APY. # The risks of mUSD #### Risk: Although the probability is extremely low, mUSD does carry theoretical principal risk.\ This scenario may occur only under extreme conditions—specifically when the underlying token experiences a sharp, continuous price decline, and the LP pool has become fully composed of leveraged positions.\ In practice, this situation implies that a large number of users are selling their leveraged exposure that is embedded in the underlying token, while relying on mUSD’s zero-slippage minting mechanism to exit. #### How are they measured? A useful metric for assessing the risk of mUSD is the Coverage Ratio, which is the ratio of the total value of Funding Positions to the total value of the Funding Vault for a given market. The higher the Coverage Ratio, the lower the likelihood that the Funding Vault will hold Leveraged Positions, and therefore the lower the risk to mUSD. # Liquidity Provider #### LP Token Mooncake adopts a single-token liquidity pool model. When liquidity providers (LPs) deposit the underlying token into the pool, it is split into a Funding Position and a Leveraged Position, which together form the trading pair. \ \ LP tokens earn returns from two sources: 1. **Trading Fees:** When mUSD or Leveraged Tokens (LT) are minted or redeemed, a swap occurs between Leveraged Positions and Funding Positions, generating trading fees for LPs. 2. **Funding Fees:** Because the Liquidity Pool holds Funding Positions, LP tokens benefit from the price appreciation of these Funding Positions as they accrue funding fees

Mooncake uses the oracle price of the underlying token and the funding rate to calculate the USD value of both Funding Positions and Leveraged Positions.
The exchange rate is defined as: $$ Exchange\ Rate = \frac{\text{Funding\ Position\ Dollar\ Value}}{\text{Leveraged\ Position\ Dollar\ Value}} $$ This exchange rate determines the swap ratio between Funding Positions and Leveraged Positions inside the AMM. #### **The risks of LP Tokens?** Because the proportions of Funding Positions and Leveraged Positions inside the Liquidity Pool may drift away from the target leverage composition, the performance of LP tokens can deviate from that of the underlying token. For example, when demand for Leveraged Tokens is high, the Liquidity Pool will hold a smaller proportion of Leveraged Positions. In an upward-trending market, this may cause LP tokens to underperform the underlying token. # Minting / Redemption of... # Leveraged Token As a holder of Leveraged Positions, all positions are stored in the Leveraged Vault, and users receive Leveraged Tokens minted to their addresses. #### Minting / Buying Process 1. A trader deposits Underlying Tokens. 2. The tokens are split into a Funding Position and a Leveraged Position. 3. The Funding Position enters the AMM and is swapped into additional Leveraged Positions based on the current exchange rate. 4. The trader’s holdings are now entirely in Leveraged Positions. 5. These Leveraged Positions are deposited into the Leveraged Vault, and the trader receives corresponding Vault Tokens (Leveraged Tokens). #### Redemption / Selling Process When a trader redeems or sells Leveraged Tokens, the process works as follows: 1. The trader’s Leveraged Tokens represent a share of the Leveraged Positions stored in the vault. 2. A portion of these Leveraged Positions is swapped into Funding Positions via the AMM. 3. The resulting Funding Positions are combined with the remaining Leveraged Positions to reconstruct the Underlying Token. 4. At this point, the Leveraged Token is fully converted back into the Underlying Token, which is returned to the trader.
# Funding Token As a holder of Funding Positions, all positions are stored in the Funding Vault, and users receive Funding Tokens minted to their addresses. #### Minting Process 1. A trader deposits Underlying Tokens. 2. The tokens are split into a Funding Position and a Leveraged Position. 3. The Leveraged Position enters the AMM and is swapped into additional Funding Positions based on the current exchange rate. 4. The trader’s holdings are now entirely in Funding Positions. 5. These Funding Positions are deposited into the Funding Vault, and the trader receives corresponding Vault Tokens (Funding Tokens). #### Redemption / Selling Process When a trader redeems or sells Funding Tokens, the process works as follows: 1. The trader’s Funding Tokens represent a share of the Funding Positions stored in the vault. 2. A portion of these Funding Positions is swapped into Leveraged Positions via the AMM. 3. The resulting Leveraged Positions are combined with the remaining Funding Positions to reconstruct the Underlying Token. 4. At this point, the Funding Token is fully converted back into the Underlying Token, which is returned to the trader.
# Rebalance Mechanism Rebalance is the core mechanism of Mooncake. After each rebalance, both Funding Positions and Leveraged Positions are **reset** into new positions. This ensures that the **Effective Leverage** of Leveraged Positions return to the **Target Leverage**. ## Rebalance Process 1. **Conversion to Underlying Value** * All Leveraged Positions and Funding Positions in the Leveraged Vault, Funding Vault, and LP Vault are converted into the equivalent value of the underlying token. * Conversion uses either: * Oracle Price (for **Scheduled Rebalances**), or * Price Cap/Floor (for **Price-Driven Rebalances**).
2. **Re-splitting** The total underlying tokens are then re-split into new Funding Positions and Leveraged Positions, according to the target leverage.
3. **Vault Adjustment** Funding Vault and Leveraged Vault are swapped against the LP Vault as needed, so that each vault ends up holding only its designated type of position. If mismatched positions remain, the system will keep retrying swaps until cleared.
### Rebalance Triggers **Scheduled Rebalance** To ensure the effective leverage does not drift too far from the initial target, Mooncake performs periodic rebalances for each market.
**Price-Driven Rebalance** When leverage deviation is caused by price movements, Mooncake applies a cap/floor mechanism. If the TWAP oracle price moves outside the cap or floor range, a rebalance is triggered at the cap/floor price. # Risk #### Leveraged Token Mooncake’s leveraged token is a trading instrument designed to maintain a target leverage ratio. It is suitable for short-term trending markets and not intended for long-term holding. Please exercise caution when choosing to hold leveraged tokens for extended periods. 1. Volatility Drag Risk: In a choppy market, continuous rebalancing may cause the leveraged token’s price to decline even if the underlying asset’s price remains unchanged. Over prolonged periods of volatility, the *volatility drag* effect can make the leveraged token’s value appear to approach zero. 2. Price Risk: Although there is no liquidation mechanism, the leveraged token’s price fluctuates more significantly than the underlying asset due to its leveraged exposure. 3. Insufficient Effective Leveraged Position in Vaults: In rising markets with limited LP liquidity, the leveraged vault may face a shortage of leveraged positions after rebalancing. This can cause the effective leverage to remain below the target leverage level. 4. Liquidity Risk: If the LP pool size is too small, the leveraged positions may not be fully convertible into the underlying token, potentially leading to redemption failures. 5. Oracle Risk: The leveraged token price relies on oracle feeds. Incorrect or manipulated oracle prices may result in unexpected losses. 6. Smart Contract Risk: As Mooncake is an on-chain protocol, it inevitably faces various smart contract risks. In the event of an exploit, the loss could be permanent and irrecoverable. #### Funding Token 1. Yield Risk: The APY of Funding Tokens is derived from leveraged positions and tied to the *Funding Curve*. When utilization is low, the yield of Funding Tokens decreases accordingly. 2. Principal Loss Risk: Although Funding Tokens continuously earn funding fees from leveraged positions, they are not principal-protected. If the LP pool lacks sufficient liquidity and the underlying asset’s price falls, the funding token vault’s leveraged exposure may increase beyond 0%, resulting in potential losses tied to the underlying token’s price movements. 3. Liquidity Risk: If the LP pool size is too small, the funding positions may not be fully convertible into the underlying token, potentially leading to redemption failures. 4. Oracle Risk: Inaccurate or manipulated oracle prices could allow leveraged tokens to profit unfairly, which in turn may cause principal loss in Funding Token positions. 5. Smart Contract Risk: As Mooncake operates fully on-chain, it is subject to smart contract vulnerabilities. A protocol exploit may cause irreversible fund loss. #### LP Token 1. Impermanent Loss: As an LP, you effectively hold a mix of leveraged and funding positions. When traders buy these tokens and the market moves in their favor, LPs face the risk of impermanent loss. 2. Liquidity Risk: During withdrawal, if the remaining leveraged or funding positions in the pool are insufficient to convert all redeemed positions into the underlying token, LPs may encounter liquidity risk. Although LPs can use the force withdraw feature to request redemption, which will convert all positions into the underlying token at the next rebalance event. 3. Smart Contract Risk: If the liquidity pool or staking contracts are exploited, attacked, or maliciously manipulated, LPs may incur partial or total fund loss. # Fees #### Fee Structure * LT Swap Fee: A transaction fee charged on each Leveraged Token (LT) trade, based on the trade amount. * FT Swap Fee: A transaction fee charged on each Funding Token (FT) trade, based on the trade amount. * LP Mint/Redeem Fee: 0% / 0.5%. * Market Management Fee: 2% annualized rate, applied to the overall market to cover system operations and maintenance. * Rebalance Fee: A proportional fee charged per rebalance event, applied to all participants involved. * LP Imbalance Fee: When LT buy/sell activities cause significant deviation between the leveraged and funding positions within the LP pool, an LP Imbalance Fee of up to 2% will be charged to mitigate excessive pool imbalance and protect overall stability. Imbalance Fee is calculated based on the following mechanism: Indicator: the proportion of leveraged position in the LP pool pool\_lev\_ratio = pool\_leverage / (pool\_leverage + pool\_funding) * Before the trade: pre\_pool\_lev\_ratio * After the trade: post\_pool\_lev\_ratio The value of this ratio ranges from \[0, 1].
Parameters: * max\_imbalance: The maximum fee level, represented by *M* in the formula, set at 2%. * p: Determines the steepness of the curve, set to 5. * b: The baseline proportion of leverage positions in the underlying, calculated as unit\_leverage\_amount / (unit\_leverage\_amount + unit\_funding\_amount) Imbalance Fee Calculation: pre\_imbalance = f(pre\_pool\_lev\_ratio) \ post\_imbalance = f(post\_pool\_lev\_ratio) \ Imbalance Fee = max(post\_imbalance - pre\_imbalance, 0) # Audit Report Oct 2025, by Offside Labs: # Privacy Policies Effective Date: 22/10/2025 ### 1. Introduction Welcome to Mooncake. We value your privacy and are committed to protecting your personal information. This Privacy Policy explains how Mooncake (“we”, “our”, or “us”) collects, uses, and safeguards your information when you interact with our website, decentralized application (“App”), and associated services (collectively, the “Services”). By using Mooncake, you agree to the practices described in this Privacy Policy. ### 2. Information We Collect Mooncake is a decentralized protocol. We strive to minimize the collection of personal information. However, certain limited information may be collected when you interact with our Services: * Public Blockchain Data: When you connect your wallet to Mooncake, we collect and display your public blockchain address and on-chain activity (such as trading, liquidity providing, points earned). * Device Information: We may collect basic technical data, including device type, browser type, operating system, and IP address, to optimize service functionality. * Usage Data: We may collect anonymized usage analytics, such as page views, interaction events, and performance metrics, to improve our Services. We do not collect: * Your name, email address, or other directly identifying personal information unless you voluntarily provide it (e.g., via feedback forms or partnership inquiries). * Your private keys, seed phrases, or wallet passwords. ### 3. How We Use Your Information We use the information we collect to: * Provide, operate, and improve the Mooncake platform. * Monitor platform performance and detect security incidents. * Analyze trends and usage patterns to enhance user experience. * Comply with legal obligations and enforce our Terms of Service. We do not sell your personal information to third parties. ### 4. Cookies and Tracking Technologies We use limited cookies and similar technologies to: * Remember user settings and preferences. * Improve website performance and security. * Conduct basic analytics through privacy-preserving services (e.g., Plausible Analytics, self-hosted solutions). You can control cookie preferences through your browser settings. ### 5. Third-Party Services Our Services may integrate with third-party tools (e.g., wallet providers, analytics services, RPC nodes). These services have their own privacy policies, and your interactions with them are governed by those terms. We encourage you to review any third-party privacy policies before engaging with those services. ### 6. Data Retention We retain non-personally identifiable information only as long as necessary to fulfil the purposes outlined in this Privacy Policy. Blockchain data, by its nature, may be immutable and publicly accessible indefinitely. ### 7. Your Rights and Choices Depending on your location, you may have rights under applicable privacy laws, including: * The right to access and correct your information. * The right to request deletion of your personal data (to the extent possible). * The right to restrict or object to data processing. * The right to withdraw consent where we rely on your consent. To exercise your rights, please contact us at . ### 8. Security We implement reasonable technical and organizational measures to protect your information. However, no system is perfectly secure. Please use Mooncake responsibly and safeguard your wallet credentials and devices. ### 9. International Users Mooncake operates globally. By using our Services, you acknowledge that your information may be transferred to and processed in countries outside of your jurisdiction, including countries that may not provide equivalent data protection. ### 10. Changes to This Privacy Policy We may update this Privacy Policy from time to time. Changes will be effective immediately upon posting on our website. We encourage you to review this Privacy Policy periodically. ### 11. Contact Us If you have any questions, concerns, or requests regarding this Privacy Policy, please contact us at:
rate labs limited Website: app.mooncake.fi # Term of Use Last Updated: 22/10/2025\ Effective for: Mooncake(a market for tokenized leverage) 1\. Acceptance & Modifications 1.1 By accessing or using Mooncake Protocol ("Protocol"), you acknowledge that: * You have read, understood, and agreed to these Terms; * Token trading involves high price risk and potential total loss of funds; * You are solely responsible for complying with local laws (including crypto/financial regulations). 1.2 We may amend these Terms at any time. Your continued use constitutes acceptance. 2\. Eligibility & Access 2.1 You must: * Be at least 18 years old; * Not be a resident of *the United States, China, Canada, North Korea, Iran, Cuba, Syria, and any other region where our services are restricted by local laws.*; * Not be on any sanctions list (OFAC, UN, etc.). 2.2 Prohibited Access: * Use VPNs to circumvent geo-blocks; * Share API keys or account credentials. 3\. Trading Risks 3.1 You expressly acknowledge: * Leverage magnifies both gains and losses; * Automated liquidations may occur without prior notice; * Oracle price feeds and market volatility may trigger unintended liquidations; * You are solely responsible for monitoring positions and collateral ratios. 3.2 No Risk Mitigation Claims: * We do not guarantee stop-loss orders or liquidation protection; * Historical performance is not indicative of future results. 3.3 Leveraged Token Trading & FT/LP Risks You acknowledge and understand that this includes, but is not limited to * *LT Holders are exposed to:* * *Price Risk* * *Volatility Drag Risk* * *Insufficient leveraged position in Leveragd Token Vault* * *Liquidity Risk* * *Oracle Risk* * *Smart Contract Risk* * *PT holders* are exposed to: * Yield Risk * Principal Loss Risk * Liquidity Risk * Oracle Risk * Smart Contract Risk * *LP positions* may suffer: * Impermanent loss * Oracle Risk * Smart Contract Risk 3.4 Underlying Token Disclaimer * *Underlying Tokens are sourced from external protocols* (e.g., \[List Solana, Pump.fun, Bonk.fun, Meteora, etc]). Mooncake does not: * Audit or guarantee the solvency of these providers; * Insure against losses caused by their smart contract failures, governance attacks, or bankruptcy. * *You bear all risks* of Marker Manipulation of the underlying tokens. 3.5 SMART CONTRACT RISKS 3.5.1 Inherent Protocol Risks You expressly acknowledge that Mooncake’s smart contracts: * Are experimental and may contain undiscovered bugs or vulnerabilities; * Could be exploited by malicious actors, resulting in loss of funds; * May require emergency pauses or upgrades due to critical risks, potentially freezing withdrawals or trading. 3.5.2 No Code Guarantees * Audits do not eliminate risk: Even if Mooncake's contracts are audited by third parties, audits cannot guarantee absolute security. * Open-source liability waiver: While Mooncake's code may be open-source, you assume all risks of using it (including forked or modified versions). 3.5.3 User Responsibility * You must: * Verify all transaction details (e.g., token addresses, slippage tolerance) before signing; * Monitor for protocol announcements regarding security incidents; * deposit funds you cannot afford to lose. 4\. Intellectual Property 4.1 All trademarks and logos remain our exclusive property. 4.2 User-Generated Content: * You grant us a royalty-free license to use your public contributions (e.g., forum posts); * Do not submit sensitive data (private keys, personal info). 5\. Liability & Indemnification 5.1 No Warranty: * The Protocol is provided "AS IS" with no warranties of merchantability, fitness for purpose, or security. * The Protocol provides *no warranties* regarding: * Accuracy of projected APYs; * Accuracy of projected Prices; * Tax treatment of yield earnings. 5.2 Limitation of Liability: * We are not liable for: * Losses due to smart contract bugs, hacks, exploits, or design flaws; * Oracle failures or price manipulation; * Losses due to margin trading or liquidation. * *Losses due to third-party yield provider insolvency*; * *LT/FT/LP token devaluation caused by external market conditions*; * *Regulatory actions against yield sources* (e.g., bans on staking derivatives). * User funds trapped in contracts due to technical failures (e.g., blockchain reorgs, gas wars). 5.3 Indemnification:\ You agree to indemnify us against any claims arising from: * Your use of trading features; * Your violation of laws (e.g., unlicensed trading); * Your misuse of the Protocol. 6\. Governing Law & Dispute Resolution 6.1 These Terms shall be governed by Singapore. 6.2 Arbitration: * Disputes shall be resolved via binding arbitration in Singapore under the Arbitration Rules of the Singapore International Arbitration Centre (SIAC); * Class action waiver applies. 7\. Additional Risk Disclosures 7.1 Key Risks: * *Smart Contract Reliance*: Yields depend on external protocols’ uninterrupted operation. * *Governance Risks*: Third-party providers may change yield terms via governance votes. * *Tax Implications*: Yield earnings may be taxable as income (consult a professional). * Impermanent loss in LP positions; * Protocol insolvency risk due to extreme market conditions; * Manipulating the spot market price to profit from changes in the leveraged position’s price. 7.2 No Tax Advice: * You are responsible for reporting margin trading gains/losses to tax authorities. 8\. Contact For legal notices: