What is the Mirror Protocol

What is the Mirror Protocol

Mirror Protocol is a DeFi protocol of an ecosystem that works with smart contracts on Terra that allows users to release synthetic assets: mirrored stocks of big companies, like Tesla or Apple, as well as mirrored cryptoassets, such as BTC and ETH. These assets are called mirrored assets or mAssets.

Mirrored assets (mAssets) mirror stock market prices with perfect accuracy. Oracles (Oracle Feeders) are responsible for this, who install specialized software onto their servers.

Unlike traditional tokens, which represent a real asset, mAssets are purely synthetic assets and only reflect the prices and movements of the respective asset.

Mirror is a project that is developed and managed by the community: the markets are supported only by its users thanks to the promise of receiving rewards in the MIR token, and the protocol evolves through democratic control (polls and votes from the most active users of the protocol).

In the Mirror protocol users serve one or several of these roles:

  • Trader
  • Minter
  • Liquidity provider
  • Staker

And besides those, there are also backup agents who are crucial for the infrastructure of Mirror — Oracles (Oracle Feeders).

Trader

Traders buy and sell assets (mAssets) for UST through Terraswap and make a profit from exchange rate differences.

Minter

A minter is a user who is part of the CDP, receiving freshly minted tokens of a mirrored asset (mAsset). The tokens may be supplied by UST or another mirrored asset token, it’s important to keep supporting the supply coefficient so it’s higher than the minimum (set by the community by voting).

Minters can edit their current CDP supply coefficient by burning mAssets or depositing some extra. The deposited tokens and UST can be withdrawn while the supply coefficient is higher than the minimum.

Liquidity provider

Liquidity providers add an equal share of an mAsset and UST to the respective Terraswap pool, increasing liquidity and stability of the mirrored asset. The liquidity provision process is rewarded with LP tokens, which correspond to the user’s share and allow the user to receive fees that users pay for trades in the pool. LP tokens are burned in exchange for return for the money invested into the pool prior (mAsset and UST).

Staker

A staker is a user who sends LP tokens (with a Staking contract) or MIR tokens (with a Control contract) to stake with a goal of a profit in the MIR token.

LP coin stakers receive a reward in the MIR tokens released according to the four year plan of MIR distribution.

MIR stakers receive rewards in the form of fees that are paid when withdrawing CDP supplies. If a user is a MIR staker, they can take part in the control process (creation of polls and voting for them), the importance of their vote is measured by the stake size. Control is a process in which new mAssets are whitelisted and the protocol’s parameters may change.

LP tokens can be unbonded from the stake at any time, while MIR tokens can only be called back if they’re not used in the voting process in an active poll.

Oracle

Oracle (Oracle Feeder) is an assigned Terra account, which is responsible for delivering accurate information on prices for a specific mAsset and is the only role that has the right to update a registered price for a mirrored asset. Because of the decisive role in the operational stability of assets, the oracle is picked by the community and will be swiftly replaced should they stop delivering on their promises.

Tokens

Only 4 tokens are part of the Mirror protocol:

  • UST — TerraUSD — the native coin of Terra
  • mAssets — Mirrored Assets — synthetic mirrored assets
  • LP tokens — tokens that allow users to receive rewards in the form of fees (which can be sent to stake)
  • MIR — Mirror Token — the token of Mirror protocol, given out as rewards for beneficial activity, required for the control process

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