> For the complete documentation index, see [llms.txt](https://docs.midas.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.midas.app/liquidity-and-composability/midas-staked-liquidity-msl.md).

# Midas Staked Liquidity (MSL)

{% hint style="info" %}
To view how much instant liquidity each mToken has, please click [here](https://midas.app/liquidity#liquidity-profile).
{% endhint %}

To process instant daily redemptions and bridge the gap with traditional settlement times, portfolio managers have historically relied on an "internal liquidity sleeve" which holds a percentage of the portfolio in unproductive, idle cash. While this provides a basic liquidity buffer, it introduces a significant "cash drag" that dilutes the overall yield of the portfolio, penalising long-term investors by leaving capital uninvested.

#### MSL: Atomic Settlement Without Cash Drag

[Midas Staked Liquidity (MSL) operates as a dedicated liquidity infrastructure to facilitate an atomic settlement experience](#user-content-fn-1)[^1]. When a user requests an instant redemption, the portfolio manager automatically pulls USDC from the MSL pool to pay the user, net of a fixed instant redemption fee, while burning the redeemed Midas tokens.

This transfer of funds creates a liability towards MSL that is securely registered on-chain. Once the portfolio manager liquidates the underlying traditional assets, the portfolio repays its debt to MSL via a smart contract. This architecture ensures total auditability and transparency for all interacting parties without relying on complex secondary market trading.

**MSL Redemption Flow**

<figure><img src="/files/oerpkHUQFxx94mQJ08d8" alt=""><figcaption></figcaption></figure>

#### MSL token: A Risk-Isolated Yield Opportunity for LPs

The MSL compartment functions as a pure liquidity provider and assumes no underlying investment risk regarding the portfolio's assets. [The loan provided via MSL has seniority over any other investor in the mToken](#user-content-fn-2)[^2]. Instead of bearing market exposure, MSL simply facilitates the immediate transfer of value during the brief settlement window, earning a predictable yield generated entirely from the fixed instant redemption fees.

As the demand for composable onchain investment products scales, the need for risk-isolated, high-velocity liquidity provision grows alongside it. Institutions or capital allocators interested in providing pure liquidity to capture these transactional fees without taking on market exposure are encouraged to contact our team to discuss participating in the MSL ecosystem.

[^1]: Subject to availability and capped at 10% of TVL

[^2]: The structural design of mSL provides deep principal protection against market volatility. Because the short-term loan extended by mSL is strictly senior to the equity of mToken holders, and the maximum liquidity facility is capped at 10% of the portfolio's Total Value Locked (TVL), mSL liquidity providers would only incur losses in the extreme event that the underlying portfolio's total asset value declines by more than 90% before the short-term loan is repaid.


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