What is Mooncake?

Mooncake is a permissionless on-chain market for leveraged tokens that splits the USD value of any underlying crypto asset into two separate positions: a Leveraged Position and a Funding Position.

• The Leveraged Position (issued as Leveraged Tokens or LT) gives users amplified exposure to the price movements of the underlying asset (for example, 2x or higher) without the risk of liquidation.

• The Funding Position (issued as mUSD) earns funding fees paid by leveraged users, functioning like a yield-bearing stablecoin.

This dual-vault system works by isolating volatility exposure in the leveraged side while the funding side collects steady fees in USD. For instance, with 2x leveraged SOL at $200, the value splits into $100 Funding Position (stable, earns fees) and $100 Leveraged Position (moves 2x with SOL price changes).It targets traders seeking leveraged exposure without liquidation risk and users looking for stable yield from funding fees. The protocol operates through independent Leverage Vaults and Funding Vaults for each market.