on the crypto
The creators of the Terra stablecoin platform announced last Thursday the launch of the Mirror protocol, a way to mint crypto assets that mimic the share value of publicly traded companies such as Apple shares or Tesla.
Participating in the US stock market is easier thanks to Terra
“We were motivated to create a way for retail investors around the world to more easily participate in the US equity market,” Do Kwon, CEO of Terraform Labs, the company behind Terra, said in a press release.
The new protocol will also bring a new liquidity mining opportunity to Terra's Tendermint-based blockchain. Known as mAssets, the new tokens will track the price of US shares in the real stock market, using an Oracle system that can check prices every six minutes.
Synthetic assets
The Synthetix exchange has pioneered the creation of synthetic cryptocurrency assets. However, Mirror offers lower collateralization rates than Synthetix's, making it more capital efficient.
Better capital efficiency goes hand in hand with another benefit Mirror offers: decentralized options versus US equities. A platform that does not require authorizations for US stock options should be attractive to the growing cryptocurrency retail market. While there are no direct benefits to the Terra team from the new protocol, its design should spur additional demand for its stablecoins.
A governance token to manage the Mirror Protocol
To govern the Mirror Protocol, Terra also announced the launch of a governance token called MIR. MIR will be distributed at a constant rate over a four-year period to users who contribute cash to automated market makers (AMMs) who trade mAsset or MIR itself on Terra's Terraswap or Ethereum's Uniswap.
Mirror has specific interfaces to provide liquidity to pools on Ethereum or the Earth chain. Only pools that match resources with TerraUSD will be eligible for MIR. MIR will have a fixed supply of 360 million.
Of these, 9,15 million will be distributed to UNI holders in an initial airdrop, an equivalent amount will go to LUNA holders (the token that allows Terra stablecoins to keep their peg). There will also be a reward for it staking for LUNA owners, as well as a fund for the development of MIR governance.
Yield farming with MIR
Over the next four years, interested users can grow MIR by contributing to the liquidity pools for MIR and mAssets on Uniswap and Terraswap. Since Mirror runs on the Terra blockchain, users will need to bridge Ethereum to earn rewards.
“We are initially using a centralized bridge of our own creation (called the Shuttle), but we should migrate to a more decentralized bridge called Wormhole early next year,” Kwon said. MIR holders will earn a commission when users withdraw mAssets to reclaim the underlying. Institutional investors wishing to cultivate MIR can do so through FalconX.
