Refugium substrate can either be the usual live sand you use in your display tank, mud, or both!
Substrate such as live sand and mud, such as Miracle Mud, is useful for growing caulerpa as it allows this macro algae to gain a foothold, keeping it anchored.
Mud contains trace elements such as iodine, calcium, iron, strontium and free carbon which are beneficial to coral and macro algae.
Both sand and mud create a habitat for copepods, amphipods and worms, amongst others, in the refugium. They also both contain live bacteria which contributes to a healthy ecosystem. (Presuming of course, you are using ‘live’ sand.)
However, there is much debate over which is best, if any at all!
Live rock and live sand in your display tank provides enough bacteria to take care of your biological filtration without the addition of mud or sand in the refugium, therefore substrate in your refugium will have little effect on the overall bacteria population. Mud does however provide a ‘base’ ensuring that even minimal quantities of trace elements are always available.
Mud does need to be replaced every year or so as the trace elements will have been used over that period of time.
Adding mud to an existing system can be a messy business, and should ideally be added slowly. As you can see in the photo below, adding all the mud at once will leave you with a pretty murky tank for a day or two. The good news is all fish will be fine, and your corals unharmed.