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How to use Mirror Protocol to trade synthetic assets

Mirror Protocol Review & Tutorial: Earn Yield on Synthetic Stocks

Written by LouiseElizabeth

28th April 2021

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The Mirror Protocol is a decentralized platform on the Terra blockchain, created by Terraform Labs. Mirror enables users to mint, trade, and stake synthetic real-world assets including selected equities, ETFs, commodities, and tokens tradable 24/7.

In this Mirror Protocol review, we take a look at Mirror.Finance and explain what mirrored synthetic assets are. Plus how to mint mAssets like COIN, how to trade and stake to earn a high yield. Mirror also provides users with free MIR tokens via weekly airdrops, which you also stake to earn yield.

What is the Mirror Protocol?

Mirror Protocol is a DeFi protocol launched in December 2020 and was created by Terraform Labs, on the Terra network. Allowing anyone, anywhere to trade equities 24/7 through minting synthetics assets, known as Mirrored Assets (mAssets).

These assets mimic (or mirror) the price changes of real-world assets such as stocks like Netflix, Tesla, Twitter or Coinbase, ETFs, and tokens. Therefore, users worldwide can trade their favorite real-world assets on the blockchain, anytime and anywhere using the Mirror Protocol. Not only that but users can have access to mAssets on the Binance Smart Chain, Ethereum and Terra blockchains with further plans to continue cross-chain expansion.

what is the mirror protocol?

Why Use Mirror?

mAssets are stored on the blockchain meaning anyone in the world can get access without geographic restrictions Mirror Protocol could also attract smaller investors, as you can start trading with less than a whole share using fractional shares. Plus the site is decentralized which means you don’t have to go through any KYC or provide any personal information. Simply connect up a supported wallet to get started.

Mirror Finance Tutorial

What is the Terra Protocol?

The Terra Protocol was created in 2018 by a Korean blockchain company called Terraform Labs founded by Daniel Shin and Do Kwon. With the idea to facilitate the mass adoption of crypto by creating digitally native assets that are price stable against the worlds major FIAT currencies.

Terra runs on a delegated Proof of Stake (PoS) blockchain and is powered by Tendermint consensus, which relies on a set of validators to secure the network. Miners need to stake a native cryptocurrency named “Luna” to mine Terra transactions. 

what is the terra network

Transactions on the Terra blockchain take seconds to complete. Plus the cost of transaction fees when interacting with smart contracts is a lot lower than the gas fees on the likes of Ethereum.  Making it an ideal alternative for developers seeking smart-contract-enabled blockchains.

Terra is responsible for the development of several successful crypto projects, including Anchor Protocol offering saving products for Terra stable coins with the aim to deliver a fixed rate of 20% APY on your deposits.

Anchor Protocol Review

What are Mirror Protocol Assets (mAssets)?

The synthetic assets created on the Mirror Protocol are named mAssets because they use the prefix “m” for each synthetic assets. Meaning that Tesla (TSLA) is mTSLA and Apple (AAPL) is mAAPL, etc. mAssets track the price of the underlying asset via a decentralized price oracle which is updated every 6 seconds.

what are Mirror mAssets

They are also listed and can be traded on the likes of Uniswap, Terraswap, and more recently PancakeSwap. After bridging to the Ethereum Network, Mirror Protocol has also bridged on to the Binance Smart Chain (BSC), bringing tokenized synthetic assets to the BSC community. 

The Mirror Protocol supports a wide range of assets including the likes of;

  • Mirrored stocks such as; Apple, Amazon.com, Alibaba, Netflix, Tesla, and Twitter.
  • Mirrored ETFs like; iShares Gold Trust, iShares Silver Trust, United States Oil Fund, LP, and Invesco QQQ Trust.
  • Tokens include; Mirror Governance Token and Mirrored Bitcoin and Ethereum.

Mirror Protocol Features

With the Mirror Protocol there are several features and roles that users can take and that’s as a Trader, Minter, Liquidity Provider or a Staker.

  • Traders essentially buy and sell mAssets against UST through Terraswap.
  • “Minters” enter into collateralised debt positions in order to obtain newly minted tokens of an mAsset.
  • “Liquidity Providers” add equal amounts of mAssets and UST to the corresponding Terraswap pool, which increases liquidity for that market.
  • “Stakers” stakes either LP Tokens or Mirror MIR tokens to earn staking rewards. 

Mirror MIR Tokens

The Mirror MIR token is Mirror Protocol’s governance token and is also used to reward liquidity providers. Mirror can be traded for on popular exchanges such as the likes of KuCoin, OKex and Uniswap.

Alternatively, MIR can be earned by staking LUNA via the TerraStation wallet. You can provide liquidity and earn rewards or you can stake on the Mirror Protocol or these can be rewarded via their airdrop.

Supported Wallets

Similar to other decentralized protocols such as Uniswap or PancakeSwap, users simply need to connect up a supported wallet to get started with the Mirror Protocol. Because the site is decentralized there’s no sign-up or personal data required.

Mirror Finance also have their own Mirror Wallet, that brings you diverse trading options with 24hr trading access across the globe. Plus you can invest and trade mirrored assets that track prices of top global equities.

Mirror Finance Wallet
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Mirror Token Airdrop

At launch, a total of 18.3 million Mirror MIR tokens were airdropped to LUNA stakers and UNI holders as a reward. This was based on a screenshot that was taken on 23/11/2020. Each user with LUNA staked receive MIR on a pro-rata basis and each UNI holder with at least 100 UNI receives 220 MIR.

Also, 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).

These airdrops will appear when you connect your wallet to the protocol and can simply be claimed when prompted.

Mirror Protocol Airdrop MIR

Terra Smart Stake

If you´re unsure when Terra airdrops are available you can check out when the next airdrop is due by heading across to https://terra.smartstake.io/

Terra Smart Stake

How to Stake with Mirror Protocol

Mirror Protocol enables users to stake Mirror tokens or Liquidity Provider (LP) tokens.

When you add liquidity to a pool you’re provided with Liquidity Provider, also known as LP tokens. These tokens represent your share of the pool and can be staked to earn more mirror tokens.

how to stake tokens Mirror Protocol

Mirror Tokens can also be staked via the protocol’s governance tab, where rates are lower. However, there is less risk associated.

Staking with Mirror Protocol, will incur a transaction fee. However, because Mirror is on the Terra Network, the fees are generally low at the time of writing this Mirror Protocol Review.

Creating/Minting Mirrored Assets mAssets

Mirrored Assets (mAssets) can be created by anyone. All mAssets that are bought (or sold) on Mirror were, at one point, minted. Minting is the process of providing collateral to issue a “synthetic” mAsset.

New assets will be minted when collateral is deposited. Users will need to lock up 150% of UST’s current asset value (or 200% if they’re using other mAssets as collateral).

how to mint MIRROR massets

Please tread with caution as if positions go under the minimum collateral ratio, they will be liquidated; this measure regulates and secures the minting process.

For redeeming an mAsset, users must burn the same amount of mAssets issued when opening the collateralised debt position (or CDP) to get back the provided collateral.

Is Mirror Protocol Safe?

The Mirror Protocol development team has worked with the Cyber Unit team and 3rd party consultants to create a safe and trusted protocol. All contract code and balances can be publicly verified and contract audits can be here.

They also promise to reward you should you find an original vulnerability and report this to them via [email protected] You can check out their Bug Bounty guidelines.

LouiseElizabeth
Written by LouiseElizabeth

Louise created the Every Bit Helps YouTube channel back in 2017, after finding the process of buying Bitcoin difficult. Therefore, in an aim to help others, she hopes that her tutorials will make the process of buying, selling and storing crypto a lot easier for newbies in the future.

After spending 20 years working in London in cyber security, she left the corporate life after having her second child in 2018. Louise now travels the world with her two small children trying to make the most out of life.

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