About

Mirror Protocol is a DeFi protocol built on the Terra blockchain (coded in Cosmwasm, a smart contract language) to create synthetic assets called Mirrored Assets, or mAssets. mAssets mimic the price behavior of traditional and digital financial assets to trade with no intermediaries to gain price exposure without purchasing the underlying assets. mAssets are designed to be composable and portable across the Terra, Ethereum, and Binance Smart Chain networks. Users can mint mAssets in exchange for Terra stablecoins and mAssets deposited into Collateralized Debt Positions, or CDPs. The protocol maintains CDPs to stabilize mAsset value under community management.

History

Mirror was developed by Terraform Labs (TFL), the group behind the Terra blockchain dedicated to building out the Terra tooling and application ecosystem. Terraform Labs launched Mirror Protocol in December 2020 to create price-stable liquid derivative assets on the Terra network.

TFL designed Mirror to be decentralized and community-run at launch, burning the admin keys and not granted special access privileges to specific users. The protocol is facilitated by five key stakeholders: Minters, Liquidity Providers, Stakers, Traders, and Oracle Feeders.

Synthetic assets provide exposure to an asset without holding the underlying resource. The project enables global access to financial markets, low transaction costs among mAssets, and fast order execution relative to other traditional and digital exchanges.

The protocol was designed to solve problems common to blockchain-based derivatives exchanges. The new synthetic asset class required substantial over-collateralization if backed by volatile digital assets. The Terraform team aimed to efficiently capitalize mAssets with at least half UST, the Terra-based stablecoin pegged to the US Dollar. With half of all collateral denominated in UST, the Mirror protocol could mint new mAssets with 150% of their value locked in CDPs. With three to four times less capital required by other derivative protocols, Terraform aimed to drive value and volume to the Mirror protocol.

Mirror's native token, MIR, was issued first to Terra liquidity providers on Uniswap and Terraswap from Nov. 11-Dec.4, 2020. Mirror's genesis event started a four-year issuance of MIR tokens exclusively to Terra and Mirror users. By May 2021, Mirror grew to be the fifteenth largest DeFi protocol by TVL, with $118 billion of collateral locked in the protocol.