# Trader Flywheel

Data from popular perp exchanges shows that 90%+ traders end up losing money trading perps, we want traders to earn what belongs to them: the protocol fees\
Since our unique design requires no LP, unlike most of the other perp dex, LeverUp doesn't need to incentive LP to accumulate an decent amount of TVL in order to get trader to open position

<figure><img src="/files/yy0khWmt1FpXSpucZjQe" alt="" width="563"><figcaption></figcaption></figure>

<figure><img src="/files/c1SWNDK5kH3sza9kOn2R" alt="" width="563"><figcaption></figcaption></figure>

### VMMV (Virtual Market Making Vault)&#x20;

LeverUp introduces a unique Virtual Liquidity Pool, called the VMMV (Virtual Market Making Vault).

This mechanism acts as the automated market-making counterparty, with each asset supporting its own open interest limits and leverage parameters.

As a result, perpetual trading is no longer constrained by TVL size or asset availability.

### The Flywheel: All About Traders

With the VMMV design, participant roles are simplified and made more transparent: there are only traders, no LPs.

This makes trading more direct and pure, protocol fees are no longer split with LPs but are instead 100% redistributed back to traders, reinforcing the trader-centric flywheel.

<figure><img src="/files/QCCRAmWPqA20Xkir8mZA" alt="" width="563"><figcaption></figcaption></figure>

But before diving into how protocol fees works, you should know how LV and LVUSD work in general

#### Overview of LV

<figure><img src="/files/chLlHzAciETXW9HOWZEl" alt="" width="563"><figcaption></figcaption></figure>

#### Protocol Fees back to traders

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### LV Emission

Traders earn points via trading

LV emit to traders on every epoch

Traders can sell LV, or stake LV to earn compound interest

[$LV Point System](/docs/liquidity-layer/usdlv-point-system.md)
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### Protocol Fees Incentive

On each epoch

**100% of the protocol fees** (open, close, holding) are redistributed to traders as incentives in 2 ways

1. Protocol Fee (USDC) to staked xLV users directly based on proportion&#x20;
2. Protocol Fee (USDC) will buy $LV,  convert into $xLV as the reward to $yLV users based on proportion

Protocol fee incentives are weighted by the ratio between staked xLV and xLV in the yLV vault
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### Trader Investment Fund

In the mid-to-long term, based on the traditional PnL statistics of perps platforms, traders’ overall PnL is negative, a reality we must acknowledge.&#x20;

Beyond the USDC used as collateral, the excess portion will flow into the Trader Investment Fund, which actively invests and channels all returns back to traders
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