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Trading US stocks on Uniswap? A Brief Analysis of Mirror Protocol's Operating Mechanism and Token Economy

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Mirror Protocol connects cryptocurrencies with traditional markets by minting synthetic asset mAssets to anchor US stock prices.

Original title: "Mirror Protocol: Trading US stocks on Uniswap "

Original source: Shenchao

"We Motivated to provide global retail investors with an easier way to participate in the U.S. stock market.”

December 3, 2020, Korean stablecoin project Do Kwon, CEO of Terraform Labs behind Terra (Luna), tweeted.

U.S. stocks are a very attractive asset class globally, with Apple, Tesla But for most of the world, access to the $36.3 trillion market is limited.

Trading US stocks on Uniswap? Brief analysis of Mirror Protocol operating mechanism and token economy

On December 4th, the Mirror Protocol was officially launched.

According to the official introduction, Mirror Protocol solves this problem by casting synthetic assets (mAssets) and anchoring the price of US stocks. Prices of exchange-traded funds and other traditional financial assets, thereby linking cryptocurrencies to traditional markets.

Today, Apple, Tesla, Twitter, Microsoft and other stock tokens have been minted and can be traded on Uniswap and Terraswap.

Note that the US stock tokens minted and traded here do not represent real ownership of the stock in reality, but only anchor the price of the asset, similar to Due to the issuance of DAI, that is to say, there will be no dividends.

To mint US stock tokens, users can mortgage their Terra stablecoins (UST) and over-collateralize at a ratio of 150%. For mAsset mortgages, the overcollateralization ratio needs to be greater than 200%. Compared with Synthetix’s 700% overcollateralization ratio, Mirror’s asset efficiency is higher, mainly due to the relatively low volatility of traditional financial assets and a larger margin of safety.

In order to keep the token price consistent with the US stock price, mAssets will use the oracle (bandprotocol) to track and update the price every six seconds, which is mainly used to determine The mortgage ratio of CDP will not directly affect the transaction price of mAsset on Terraswap.

Then the question is, how does the protocol work during non-US stock trading hours?

According to the rules, at this time, the oracle machine will be invalid, so mAsset will not be able to be minted, but it can still be traded on Terraswap.

The emergence of mAsset will greatly reduce the threshold for ordinary people to participate in the US stock market. There is no need to hold the entire stock, there is no review, and the transaction is not restricted.

Currently, Mirror Protocol has passed the Cyberunit contract audit.

Governance token MIR and liquidity mining

In order to better launch the Mirror Protocol, Terra issued the governance token MIR, and simultaneously started liquidity mining on the Ethereum chain and the Terra chain.

According to the white paper, the total issuance of MIR is 370,575,000, which will be distributed within four years. At the beginning of creation, Mirror Protocol will issue 54.9 million tokens, and the distribution The proportions are as follows:

Trading US stocks on Uniswap? Brief analysis of Mirror Protocol operating mechanism and token economy

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UNI airdrop: 16.66% (9.15 million) tokens will be airdropped to UNI holders (users with more than 100 UNI in their wallets before the snapshot on November 23 , receive 220MIR).

LUNA Stakeholder Airdrop: Will be airdropped to LUNA stakeholders 16.66% (9.15 million) tokens. Community Pool: 66.66% (36.6 million) of tokens will be allocated to the community pool.

In the next four years, MIR will be allocated at a fixed rate to liquidity mining on Terraswap or Uniswap Mine investors and community members, Mirror Protocol has repeatedly emphasized in the document that this is a community-led project.

Trading US stocks on Uniswap? A brief analysis of Mirror Protocol's operating mechanism and token economy

During the four-year period, the inflation rate of MIR tokens will decrease year by year, until the end of the fourth year, no new tokens will be issued,< /span>The final distribution ratio is as follows:

Airdrop [4.9%]: distributed to UNI holders and LUNA Stakeholders.

LUNA Staking Reward [4.9%]: Distributed to LUNA stakers for the first year of the protocol.

mAsset LP Mortgage [45.1%]: Distributed to all mAsset staking pools over 4 years.

MIR LP collateral [10.4%]: allocated to the MIR-UST collateral pool over a 4-year period.

Community Pool [34.6%]: Allocated to the Community Reserve Pool over a 4-year period.

In addition to participating in governance, MIR holders will get fee income.

Now, investors can exchange USDT for Terra stablecoin (UST), then provide liquidity on Terraswap or Uniswap respectively, mortgage LP, and obtain MIR.

In general, since the price fluctuation of US stock assets is relatively small, the risk of providing liquidity for US stock tokens is relatively small.

Trading US stocks on Uniswap? Brief analysis of Mirror Protocol operating mechanism and token economy

Mining on Uniswap

Trading US stocks on Uniswap? A brief analysis of Mirror Protocol's operating mechanism and token economy

Mining on Terraswap

In the field of cryptocurrency, many organizations have tried to introduce US stock assets into cryptocurrency before, but most of them were centralized exchanges with little success. Now DeFi has taken over the banner and the ending How, remains to be tested, but such an attempt is worth encouraging.