After the Mitosis Booster event and Mitosis TGE in the Binance wallet, Binance exchange launched $MITO a trading competition and the Binance Square Mitosis leaderboard event, indicating that the trading enthusiasm for MITO will continue, so I'm providing some potential arbitrage information for Mitosis.
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MITO arbitrage opportunity: MITO/tMITO
@Mitosis Official When the airdrop was issued to protocol users, there were two schemes:
1.MITO
Instantly receive the full airdrop share
2.tMITO
Receive 2.5 times the MITO tokens, but in the form of tMITO, which will expire in six months. At maturity, it can be redeemed 1:1 for MITO tokens.
Note: tMITO holders can also allocate rewards from the reward pool (details are relatively complex, and the yield is unclear, not elaborated in this article)
From a traditional finance perspective, we can understand it as: holding tMITO = holding a convertible bond that matures in six months, with an original exchange ratio of 2.5:1, thus creating arbitrage opportunities for this derivative tMITO.
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How much arbitrage space is there for tMITO on-chain?
In theory, during the initial token issuance period, since the maturity date is still far away, the initial exchange ratio of tMITO:MITO will present as "greater than or equal to 2.5:1", which in the short term depends on the current selling pressure of tMITO.
Note: When tokens are airdropped, the ratio of tMITO:MITO is close to 3:1, and it has currently dropped to 2.73:1
Ideally, the early ratio of tMITO:MITO should be 2.5:1, currently at 2.73:1, indicating that the market has more tMITO than MITO, and tMITO holders are willing to exchange tMITO for MITO at a discount to trade.
From this perspective, the potential arbitrage space = the originally maturing 2.5x exchange ratio in six months + a discount of 0.23, which further increases the potential arbitrage profit.
In simple terms, if you believe that the price of MITO will still have room to increase or at least stabilize in the next six months, buying tMITO can yield potential arbitrage profits, depending on how you perceive the 2.5x exchange rate and the price volatility of MITO.
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Why is the exchange rate higher than 2.5?
Some people may wonder why tMITO is sold at a discount; the reason is that many users who received the airdrop chose the 2.5x airdrop option. Although the official has not disclosed the specific acquisition ratio, we can observe from the staking data of the Mitosis dApp's verification nodes:
The staking volume of MITO is only 1/90 of tMITO, indicating that the number of tMITO is significantly greater than that of MITO. If a large number of tMITO choose to take profits early (trading for MITO), it will cause tMITO to appear at a discount.
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If I choose to hold tMITO, what can I do with it now?
Staked in Mitosis verification nodes to earn gMITO
Providing on-chain liquidity (DEXs LP)
Collateralize tMITO to lend out cryptocurrencies (Lending Protocol)
More functionalities can be found by visiting the Mitosis ecosystem. Click on Ecosystem in the Mitosis dApp to see what projects are available on the Mitosis mainnet.
Note: gMITO is the governance token of Mitosis, which can be exchanged back to MITO at a 1:1 ratio
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Summary
I believe tMITO can be understood as: an MITO derivative strategy launched by the official, guaranteed by the official for exchange and redemption, suitable for users who want to earn returns from MITO tokens through more aggressive strategies.
Of course, Binance itself has also launched several MITO-related yield strategies, such as a wealth management product offering about 13.43% APR, a MITO/USDT arbitrage strategy providing about 0.09% funding fee APR, or trading categories like MITO spot trading, contract trading (including spot grid and contract grid).
tMITO can be seen as an on-chain arbitrage opportunity. Even if there is potential arbitrage space, it does not guarantee profit; please make appropriate investment decisions based on your own risk preferences!
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※ The above content does not constitute investment advice. Users should operate based on their own risk tolerance, DYOR, and participate cautiously in the investment market.
※ The attached image is derived from Mitosis, Nautilus