Understanding Mirror Protocol


  1. The primary reason is to enter staking pools (either long or short). There is not always adequate liquidity to take a sizable position for yield farming, so large positions may require minting the asset first, and then adding it to the liquidity pool for yield farming rewards.
  2. The second reason is to take a short position (Borrow and sell the stock, then buy back later, hopefully at a lower price, to repay the borrow). Some assets on Mirror Protocol may be more cost effective to short than they are using Traditional Finance (TradFi) brokers.
  3. The third reason is price arbitrage. Mirrored assets trade on the Terraswap Dex, which uses an x*y=k model like Uniswap, but minting mAssets (and collateral requirements) are governed by price Oracles that are provided by Band Protocol. (Later these will also be provided by Link, but the Link integration on Terra blockchain is still a work in progress.) mAssets frequently trade at price premiums to the oracle price, so traders may mint mAssets to capture the price premium, while hedging their position using Traditional Finance (TradFi) brokers.

Delta Neutral Strategies

Things to Consider…


Governance Strategies

  1. Half of the fees are paid to all stakeholders, and compounded automatically.
  2. The other half is split into separate pools for each of the active governance polls, and pay out to active voters in proportion to the stake that is voted.
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Joseph Savage

Joseph Savage

Savage Corner: Where finance and crypto meet. Subscribe to never miss a post! https://www.savagecorner.io

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