The Synthetic Asset Protocol Utilizes to Track Real-World Assets.
Mirror Protocol (MIR) Fact Sheet
- Mirror Protocol is essentially a decentralized finance (DeFi) protocol that provides users with an opportunity through which they can mint mirrored assets (mAssets) that can track an underlying asset's price in real-world markets, which in turn provides traders with access to price exposures of any real-world asset.
- Mirror Protocol can also ensure that there is sufficient collateral within the protocol to cover the mAssets, and it can even manage markets for mAssets.
- The native cryptocurrency and governance token behind Mirror Protocol is the MIR cryptocurrency.
- MIR, as a cryptocurrency, is used for the protocol's governance, major parameters, farming, liquidity provision rewards, and even collateral.
- Mirror Protocol is based on the Terra network, and it is powered through the usage of smart contracts and was built by Terraform Labs (TFL).
MIR Historical Data Price Chart in the U.S. Dollars (USD)
Mirror Protocol (MIR) Historical Data Price Chart in the U.S. Dollars (USD). Source: TradingView
What is Mirror Protocol (MIR)?
Furthermore, Mirro Protocol also provides tools as well as features that allow users to create their own synthetic assets that are tokenized versions of any assets in the real world, such as the commodities or stocks that can be found.
Furthermore, any of these synthetic assets which have gotten created through the Mirror Protocol get dubbed Mirrored Assets or mAssets.
These essentially reflect the price of the real-world financial assets that they represent, and this is why the project has been named in such a way.
However, what everyone needs to know right away is the fact that Mirror Protocol is hosted on top of the Terra blockchain. This is what essentially gave the project cross-chain and multi-chain operation access, where it became available on the BNB Smart Chain (BSC) as well as the Ethereum (ETH) network, where the Mirror protocol could function.
All of this was also made available through the utilization of smart contracts.
The main priority that this project has in store for users is to essentially enable them the ability to trade U.S. equities 24 hours every single day of the week, which is a procedure that can be completed from any point in the world, which significantly lowers the barrier of entry and accommodates for easy access to the financial markets for just about anyone.
Users can essentially manage and even trade tokenized assets through the creation of synthetic assets without owning the stock or commodity that they represent.
MIR is the native cryptocurrency behind the protocol that plays an integral role within the governance procedure and can be staked as a means of getting voting rights, where users can essentially earn a share of the fees from the collateralized debt positions.
How is Mirror Protocol (MIR) Used?
Mirror protocol is based on the now rebranded Terra Network.
Before we go over the functionality surrounding Mirror Protocol, we first need to look at the current state of Terra.
The Terra (LUNA) network essentially crashed, and Do Kwon, who is the founder of Terra (LUNA), launched a new revival strategy known as the “Terra Ecosystem Revival Plan 2”, a week after the price of LUNA carried on to decline.
The new chain is called Terra Classic and has Luna Classic (LUNC) tokens. Once TerraUSD (UST) lost its dollar peg, people rushed to redeem their UST for cash, which increased the supply and dropped its price. It resulted in the crash of UST, and this cryptocurrency is no longer active.
Keep all of this in mind as you learn further about what Mirror Protocol is and how it initially worked.
With that out of the way, the Mirror Protocol is powered by smart contracts. This is essentially how the network enables users on a global scale and with different backgrounds to essentially trade commodities, stocks, or any other financial asset. Mirror Protocol allows users to create synthetic assets which are a direct reflection of the real-time and real-life value of any of the assets that they represent.
The Terra network is a blockchain-based, decentralized protocol, and it provides each developer the ability to create Decentralized Finance (DeFi) software, decentralized applications, and even protocols. Terra runs on a Delegated Proof of Stake (DPoS) consensus mechanism based on Tendermint, which created a solid environment for the Mirror Protocol.
Specifically, MIrror Protocol made a combination of DPoS with the Cosmos SDK as a means of providing tools for synthetic assets, which are known as mAssets.
What happens here is that any user is provided with the opportunity to create synthetic assets that mirror the value of real-life assets through creating a position within the protocol. All the user needs to do later on is deposit collateral, while the system can regulate the collateral supply and ensure that there are always funds that can cover the value of the mAssets.
Terraswap was a decentralized exchange built on top of the Terra blockchain that utilized the automated market maker (AMM) model inspired by Uniswap (UNI). However, it has migrated to Terra Classic and is now known as Terraswap Classic.
With Terraswap, people can trade, provide liquidity with different assets within the ecosystem, and essentially utilize it as a central hub through which they can trade their assets that are generated from different protocols within the Terra ecosystem.
With this in mind, the market for the aforementioned mAssets is facilitated on the Terraswap platform, and all synthetic assets were, at the time before its crash, essentially listed against UST, which was at the time Terra's dollar-pegged stablecoin.
Mirror Protocol was also used for adding liquidity to the network, swapping, as well as any other operations.
The system also includes the Mirror Token (MIR), which gets utilized as a means of rewarding any network participants that secure the actual network.
Use-Cases of Mirror Protocol (MIR)
Synthetic assets that were created on Mirror Protocol were known as mAssets. In order for a user to mint or create a mAsset, they would need to first deposit collateral to the protocol, which would account for more than 150% of the current value of the real-world asset.
At the time, the protocol accepted TerraUSD (UST), which was a stablecoin issued through Terra, alongside mAssets as collateral.
At the point in time when the value of the real-world assets increased to exceed the value of the collateral initially deposited, the collateral would be liquidated as a means of ensuring that the system would remain solvent.
If any user wanted to redeem their collateral, they would first need to burn the mAssets issued to them, and they would also trade mAssets through the process of interacting with liquidity pool on top of automated market makers (AMMs) such as Uniswap and Terraswap.
mAssets can be traded 24/7. However, they can only be mined during real-world market hours due to the fact that the stocks and the bonds serve as their underlying index value.
Usability & Primary Features of Mirror Protocol (MIR)
Mirror Protocol made an announcement surrounding a partnership with UniLend, which is a decentralized money market protocol, in January of 2021.
Mirror Protocol here managed to connect its key mAssets to UniLend’s lending protocol, and as a direct result of this, the mAssets now act as collateral for borrowing. In order for them to generate profit, they can also be placed within UniLend’s platform by liquidity providers (LPs).
Furthermore, this was the first time synthetic stocks were utilized as collateral within the DeFi money market protocol.
Then we saw the launch of the V2 Mainnet on June 25, 2021. Here, Mirror Protocol essentially announced version 2 of its network, and this new version included additional features that enhanced the current processes in V1 and ensured that all classes of users were rewarded for any of their contributions within the protocol.
Furthermore, active voters were eligible for enhanced voting awards in addition to the existing governance staking rewards in V2. An abstain vote option got added for users that wanted to engage actively in the governance.
Mirror Protocol V2 also introduced a new non-tradable cryptocurrency called short LP (sLP) which is generated whenever a short position is created. These sLP tokens are also stakeable, and they create a reward that changes dynamically depending on the current price premium between Terraswap and Oracle.
Mirror Protocol gets price data on the assets that its tokens represent through the utilization of decentralized oracles, all of which update throughout the span of 30 seconds. Mirror Protocol's mAssets are soft-pegged to the price of their real-world counterparts, where this peg is maintained by mining liquidations, governance, and arbitrage.
A liquidation takes place at the point in time when the price of a real asset rises, where the collateral deposited to create the mAsset does not exceed the minimum collateralization ratio of 150%. Here, the protocol sells the collateral to buy the mAssets until the ratio reaches its maximum again.
The MIR cryptocurrency features two main functionalities. First, MIR acts as a governance token and enables holders to vote on any changes to the protocol. Second, the MIR cryptocurrency gets distributed as a reward to those users that provide mAsset liquidity to automated market makers (AMMs).
In order for a user to participate in the governance process, they need to stake their MIR and vote on any issues surrounding the network. If they provide mAsset liquidity to an AMM, they can also stake their liquidity provider (LP) tokens on Mirror Protocol to earn rewards denominated in MIR.
Mirror Protocol is based on the Terra network, and it is directly powered by smart contracts. This is how the network can enable users from anywhere in the world to essentially trade commodities, stocks, and even other types of financial assets.
Tokenomics & Supply Distribution
When we go over the official tokenomics posted in its documentation, there were a total of 54.9 million tokens at the genesis of Mirror Protocol.
When we look at the distribution of these tokens, they were distributed as follows:
- 16.66% (9.15M) tokens were airdropped to UNI holders
- 16.66% (9.15M) tokens were airdropped to LUNA stakers.
- 6.66% (36.6M) tokens were allocated to the community pool.
The total supply of MIR tokens increases within the span of 4 years due to inflation until the total supply reaches 370.575 million.
- The airdrop will feature 4.9% (18.3M) of the total token supply.
- 4.9% (18.3M) were distributed to LUNA stakers throughout the first year
- 45.1% (167.27M) tokens will be distributed to all mAsset and mAsset (mETH) staking pools by the end of the fourth year.
- 0.4% (38.6M) tokens will be evenly distributed to MIR-UST and MIR-UST (mETH) staking pools by the end of the fourth year.
- 34.6% (128.1M) of the total MIR supply will be distributed to Community Pool by the end of the fourth year.
After the end of the 4-year plan, no more MIR tokens will be minted through inflation.
Team & History
Mirror Protocol was created by Terraform Labs (TFL), which is the same team that created the Terra blockchain and is dedicated to building out the entire Terra tooling as well as the application ecosystem.
With that in mind, Terraform Labs launched Mirror Protocol in December 2020 as a means of creating price-stable liquid derivative assets on the Terra Network.
When we go over its native cryptocurrency, MIR was first issued on Uniswap and Terraswap on November 11 to December 4, 2020.
Activities & Community
When we go over the Official Mirror Protocol Twitter page, we can see that there are over 124,200 followers.
Then, when we take a look at the Official Mirror Protocol Telegram group, we can see that there are over 12,470 members.
Development Activity and GitHub Repositories
When we go over the Official Mirror Protocol GitHub page, we can see that there are a total of 14 repositories.
Out of them, four are pinned, including:
- Mirrorcli - the command-line interface for Mirror Protocol on Terra.
- Docs - the official documentation for the Mirror site.
- Mirror-contracts - the source code for the core smart contracts implementing Mirror Protocol on the Terra blockchain.
When we go over data from Cryptorank, we can see that the MIR cryptocurrency is trading at a value of $0.253.
Furthermore, there are 248,345,490 total token transfers daily, with a transfer count of 8,841. There are 966 unique senders and 733 unique receivers, with a median received amount of 2,317.
When we go over data from Etherscan, we can see that there is an average MIR price of $0.25, 24,308 holders, and 385,824 transfers.
Additionally, there is a fully diluted market cap of $29,464,877.70.
Activities and Partners
- Mirror and UniLend Partner - This was a strategic partnership intended to bring the first Synthetic Stocks to a Decentralized Lending Protocol
- Mirror V2 Mainnet Launch - an upgrade that brought Collateral Ratio Multiplier, UST Lock-up Period, Snapshot Period, Voter Weight, and Premium Update Interval changes.
- Mirror Community Update — June 2021 here, the team announced milestones, with the launch of the Mirror Testnet, Mirror V2, and where they reached a Mirror governance milestone of 100 polls posted.
- Mirror Community Update — July 2021 - here, the team announced the listing of the MIR token on Kraken Exchange, Bitfinex, and WazirX. Additionally, Polkadot, Square, AMD, and ARKK got listed on Mirror. mHOOD got whitelisted on the Mirror Protocol, and there are ongoing discussions on the Mirror Forum.
References & Reports
- Mirror and UniLend Partner To Bring First Synthetic Stocks to a Decentralized Lending Protocol
- Mirror V2 Mainnet Launch
- Mirror Documentation - Official Tokenomics
- Official Mirror Protocol Twitter page
- Official Mirror Protocol Telegram group
- Official Mirror Protocol GitHub page
- Mirror Community Update — June 2021
- Mirror Community Update — July 2021
- Notice Regarding the Terra Classic (LUNC) Network Upgrade
- Delegated Proof of Stake Explained
- Terra Ecosystem Revival Plan 2
- Do Kwon - Forbes
- Cryptocurrency luna crashes to $0 as UST falls further from dollar peg - CNBC
- What Is Ethereum and How Does It Work? - Investopedia
- An Introduction to BNB Smart Chain (BSC)
- What Are Smart Contracts on the Blockchain and How They Work - Investopedia
- What Are Crypto Synths? Synthetic Assets Explained - Shrimpy Academy
- Decentralized Finance (DeFi) Definition - Investopedia