Mirror Protocol allows the creation of fungible assets, “synthetics”, that track the price of real world assets. Mirror synthetics are intended to be used as key building blocks in smart contracts, and to bring the world’s assets to the blockchain.
To mint a Mirror asset (mAsset), an issuer must lock up > 150% of the current asset value in Terra stablecoins OR mAssets as collateral. If the value of the asset rises above the collateralization threshold, the collateral is liquidated to guarantee solvency of the system.
To target the price of the mAsset, the system reads in underlying asset prices via a decentralized price oracle - prices are updated every 30 seconds. When the price of the mAsset drifts significantly from the primary market, traders are incentivized to purchase / sell the asset to mint / burn to claim the collateral.
To burn a mAsset, the issuer must burn the equal amount of mAssets issued when opening the CDP - the collateral is then returned to the issuer.
The DeFi boom has given us a number of applications built on top of the Ethereum network and an unappetizing variety of food tokens of questionable intent. While we appreciate the abundance of gastronomical options, what we truly crave is substance — something built on real world value. To that end, we introduce Mirror — a DeFi protocol that enables Mirrored Assets (mAssets): synthetic assets that give traders price exposure to real-world assets by reflecting their price activity on-chain.
We take the best that DeFi has to offer and pair it with real-world asset exposure on an interface accessible on both the Terra and Ethereum blockchains. Moreover, mAssets offer many tangible advantages over traditional assets: you can hold them in fractional amounts and trade them unrestrained by geographic location or US stock market hours. You can benefit from exposure to the asset without the burden of owning the asset.
Fair access to popular assets is limited to a few. Synthetic assets provide exposure to an asset without holding the underlying resource. This has a range of advantages, including expanding global accessibility to foreign markets, reducing the friction when switching between different assets (e.g. from Apple shares to synthetic gold), and enabling speedy order execution.
Anyone can issue and trade assets fully collateralized in Terra stablecoins and mAssets, tracking the price of everything from traditional equities to cryptocurrencies.
Detailed mechanism documentation can be found at https://docs.mirror.finance.
The Mirror token (MIR) is Mirror Protocol’s fairly distributed governance token. The MIR token has two main features:
At genesis, a total of 18.3 million MIR will be airdropped to LUNA stakers and UNI holders as a reward to those who not only actively uphold the stability of the Terra and DeFi ecosystems at present, but also believe in their success and rising significance. Based on screenshots taken on 11/23/2020 03:36AM UTC, each user with LUNA staked will receive MIR on a pro-rata basis and each UNI holder with at least 100 UNI will receive 220 MIR.
Additionally, in order to align the growth of the Mirror Protocol with the network security of the base layer, Terra, over the course of the first year 18.3 million MIR tokens will be distributed to LUNA stakers on a weekly basis (every 100,000 blocks). For a more detailed distribution breakdown, see the the MIR distribution schedule .
With no Mirror token pre-mine, users can farm Mirror tokens by providing liquidity on Uniswap on Ethereum and equivalent pairs on Terraswap on Terra, similarly to how yield farming programs work on Uniswap. Liquidity providers are rewarded generously over the course of four years, with rewards decaying by 50% until the end of year four.
While the Mirror protocol is developed by Terraform Labs (TFL), TFL abdicates control to the decentralized DeFi community from the onset. TFL has no intention of keeping or selling any MIR tokens for profit so that governance privileges and potential rewards are entirely in the community’s hands. There are no admin keys with privileged access. All changes, such as new features to be added to Mirror Protocol, must be enacted via community governance. Passing a governance proposal requires a majority approval of Mirror token holders, and takes 1 week(s) to take effect.
More specifically, MIR holders receive the following governance rights:
Mirror can create new mAssets that track the price of any asset via onchain governance. To get the ball rolling here, we’ve selected the initial pool of assets based on the following criteria: popularity, provision of both long and short positions, and broad coverage (blue chip, commodities, ETFs, etc).
At genesis, the following assets will be covered:
mAAPL — Mirrored Apple Inc.
mAMZN — Mirrored Amazon.com, Inc.
mBABA — Mirrored Alibaba Group Holding Limited
mGOOGL — Mirrored Alphabet Inc.
mMSFT — Mirrored Microsoft Corporation
mNFLX — Mirrored Netflix, Inc.
mTSLA — Mirrored Tesla, Inc.
mTWTR — Mirrored Twitter Inc.
mIAU — Mirrored iShares Gold Trust
mQQQ — Mirrored Invesco QQQ Trust
mSLV — Mirrored iShares Silver Trust
mUSO — Mirrored United States Oil Fund, LP
mVIXY — Mirrored ProShares VIX Short-Term Futures ETF
MIR — Mirror Governance Token
Designed with interchain operability in mind, Mirror can be accessed on Mirror Web App and mETH, with a few key differences between the two. For a frictionless user experience, all tokens on Mirror and mETH are easily transferrable between each other through the interchain Shuttle bridge, which enables cross-chain transfers between Terra and Ethereum. This means that any asset bought or minted on Mirror can be sent to Ethereum and be traded on Uniswap, and vice versa.
We consider the security of the Mirror protocol extremely important. Our development team has worked with the Cyber Unit team and third-party consultants to create a safe and trustworthy protocol. See the Mirror Smart Contract audit here. All contract code and balances can be publicly verified.
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