Mirror Protocol Project Review: Permisionless Real World Synthetics

Mirror Protocol brings the ability to trade (US) equities 24/7 to everyone; this is done through minting synthetics assets, so-called Mirrored Assets (mAssets).

By
Rich
on
February 1, 2021
Category:
Project Insight

Mirror Protocol

Mirror Protocol brings the ability to trade (US) equities 24/7 to everyone; this is done through minting synthetics assets, so-called Mirrored Assets (mAssets). The Mirror Protocol is powered by smart contracts and runs on the Terra network, mAssets are designed to mimic the price behavior of the real-world assets they represent. This enables traders worldwide to trade their favorite real-world assets (Stocks or ETF) on the blockchain, anytime and anywhere using the Mirror Protocol. This tool is extremely powerful, especially with the recent RobinHood events.


Terraform Labs

The South Korea-based Terraform Labs was founded by Do Kwon and Daniel Shin back in January of 2018. The company created its programmable stable coin $LUNA, backed by some large companies like Coinbase Ventures, Pantera Capital, Polychain Capital, Galaxy Digital, and Arrington XRP Capital, who provided the initial investment capital of $32 Million. Other prominent companies like Okex, Binance Labs, Huobi Capital, Dunamu & Partners, Kakao Ventures, and Kakao Investment also have backed Terra.

Intended as a decentralized global payment system, the Terra Network settles transactions within 6 seconds, requiring a minimal transaction fee. There are over 2 million unique monthly users making payments worth well over $2 Billion each month. Most transactions are generated by the South Korean e-commerce payment application CHAI and MemePay – a Mongolian-based platform. The native $LUNA token also bears yield because 100% of transaction fees are distributed back to $LUNA holders. If you would like to know more about Terra Money, you can read their white paper HERE


Mirror Protocol: mAssets

The fully decentralized and community-driven Mirror Protocol provides secure synthetic assets for its users. The founding Terraform company has no special admin functions in the contracts and has no pre-mine in the Mirror Protocol.

After bridging to the Ethereum Network, Mirror Protocol has also bridged on to the Binance Smart Chain (BSC), bringing tokenized synthetic assets to the BSC community. Mirror Protocol allows users to tokenize real-life assets, physical and abstract assets alike. Physical assets would include: real estate, art, precious metals, commodities, and other illiquid assets. On top of this, users can mint abstract assets like stocks, derivatives, bonds, investment funds, etc. As you can see, almost anything can be tokenized, which brings a plethora of benefits:

  • 24/7 permission-less trading anywhere in the world
  • No need for intermediaries; all transactions will be on the permission less blockchain ledger.
  • The tokenization allows users to trade fractions of an asset.
  • For some assets, the tokenization will allow for better liquidity.
  • The use of smart contracts on the blockchain will significantly cut legal and operational costs.
  • Through the tokenization, assets will be more accessible; the fractional ownership will allow less liquid users to participate.

Synthetic assets minted on the Mirror Protocol, so-called mAssets or mirrored assets, can be created by anyone. Here are the main mechanics of mAssets:

  • Users must lock up 150% of UST's current asset value or 200% if using other mAssets as collateral.
  • If positions go under the minimum collateral ratio, they will be liquidated; this measure regulates and secures the minting process.
  • For redeeming an mAsset, users must burn the same amount of mAssets issued when opening the CDP to get back the provided collateral.
  • Assets are listed and can be traded on various AMM DEXs like PancakeSwap (BSC), TerraSwap (Terra), and Uniswap (Ethereum). Some of the trading fees flow back as an incentive for liquidity providers.
  • A price Oracle that updates every 30 seconds ensures that the mAsset is pegged to the real asset, drifting prizes of mAssets incentivizing traders to arbitrage.

mAssets can simply be held or used for multiple purposes, such as: providing collateral in lending protocols, creating LPs for various decentralized exchanges, creating synthetic stable pools, and many other possibilities. 

For a much more in-depth explanation about the mAssets click HERE

The team has also received an audit from Cyber-security firm, Cyber Unit, and the successful results of the audit can be found HERE. Overall this audit concluded that Mirror protocols smart contracts are secure.


Mirror on The BSC

Since January 22nd, the Mirror Protocol is present on the Binance Smart Chain, kicking off a partnership with the BSC giant, PancakeSwap. This is a win-win as PCS is the first mover to innovate four tokenized stocks to their AMM, allowing users to provide liquidity and earn yield. 

Current deployed BSC Terra/Mirror contracts that are trade-able on PancakeSwap currently only include: mAMZN, mGOOGL, mNFLX, and mTSLA. With more coming, this is the list with corresponding contract addresses so far:


$MIR Token 

The $MIR token is the Mirror Protocol's governance token and is also used to reward liquidity providers. These rewards are generated by the fees users have to pay for closing their position on mAssets, creating a "poll" and trading fees, the collected fees will be used for buying $MIR that will be distributed across the liquidity providers
The maximum supply for $MIR will be 370.575.000 Tokens all to be released over a four-year period. At the current point in time, there are 29.949.947 tokens in circulation; with a market cap of $175.315.103,- it is ranked #121 on Coingecko.

$MIR can be earned in 3 ways:

  • By staking $LUNA, this requires the use of the Station Wallet desktop app, which can be found HERE
  • By providing liquidity to MIR/UST pair. (UniSwap, TerraSwap, PancakeSwap-unrealeased)
  • By providing liquidity to any mAsset/UST pool pairs (non-BNB)
  • Community Pool: The remaining supply will be distributed to the Community Pool after four years

The $MIR token can be traded at several prominent exchanges: Kucoin, Okex, and UniSwap. Currently, users cannot trade a BEP-20 version of the asset, but a bridge is expected to come.


Governance



The $MIR Token serves as the Mirror Protocol's governance token; users that have a stake position in $MIR can participate in the protocols governance system. The amount of voting power is weighted by the amount of $MIR tokens staked, the more $MIR tokens that you stake, the more power it will give you. Any users can create a new "poll" or governance proposal, but to do so, it requires an initial deposit of $MIR tokens. This deposit will be given to $MIR stakers if the request fails.

When a Poll has met all parameters (quorum and threshold) and has been voted "yes" by the community, the "Mirror Governance Contract" will execute the parameters that were set in the poll. The governance contract can invoke any function defined in the other Mirror smart contracts; this does not require updates to the core protocol and will be automatically implemented after a set time.

As stated before, Mirror Protocol is an autonomous and community-governed project. Terra does not have any special admin functions and does not hold a pre-mine.


Conclusion

The ability to buy tokenized stocks or any other real-world asset is just incredible; this allows people to enter markets that they else would or could not. It also means that trading those assets can be done 24/7 and from anywhere in the world—no more official trading hours. This is the power of decentralization! On top of this, the incentives given to their liquidity providers and stakers on their platform are decent and paid in  $MIR. The $MIR token can be obtained easily through various DEXs and CEXs. 

With TerraForm Labs at the basis of this project, healthy fundamentals have been laid out; this strong team juristically increases the odds of an explosive future. As the bull market moves onward, users will not only have access to mAssets on the BSC, Ethereum and Terra as the team plans to continue cross-chain expansion. Overall, Mirror offers an innovative service, allowing users to take advantage of assets in a trustless and permissionless manner creating a strong foundation for growth and an influx of new users.

For more information, or if you wish to stay up to date on the project, check out project and media pages:

Website

Twitter

Medium

Telegram


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Rich

Richard is a multilingual writer, located in the Netherlands, husband and father, cryptocurrency and tech enthousiast enjoys long walks and bicycle rides. Fervent Binance Smart Chain projects promotor.