We’re going to jump straight in, but if you would like to read about our recent partnership, you can find all the information here:
Welcome @sihyeok , thanks for joining us.
Stanford
Hi — it’s good to be here!
Oliver
welcome to InsurAce group @sihyeok 👏👏👏
Dan
@sihyeok Could you please give us a quick introduction to Mirror and yourself?
Stanford
Sure –
Hi guys, I’m Stanford, PM for The Mirror Protocol, a project led by Terraform Labs.
Mirror is a DeFi protocol powered by smart contracts on the Terra network that enables the creation of synthetic assets called Mirrored Assets (mAssets).
mAssets mimic the price behavior of real-world assets and give traders anywhere in the world open access to price exposure without the burdens of owning or transacting real assets.
In addition to mAssets, the Mirror Token (MIR) is minted by the protocol and distributed as a reward to reinforce behavior that secures the ecosystem. With it, Mirror ensures liquid mAsset markets by rewarding MIR to users who stake LP Tokens obtained through providing liquidity.
Dan
That’s great! Sign me up. Great time to diversify my portfolio a bit!
Stanford:
Haha — for sure, you can check it out at terra.mirror.finance
Dan
@oliver4insur Oliver can you explain what coverage InsurAce.io is offering to Mirror users (like myself in the near future!)
Oliver
yep, great, know mirror for quite some time, and Paul from Pantera had a nice article on Mirror as well.
this is like a mirror of the real world assets, but doesn’t have those hastles.
yes. sure. We’re really proud to partner with Mirror, and support Mirror and the whole Terra ecosystem.
Mirror protocols is the leading protocol of synthetic assets, and InsurAce.io has listed the ethereum and terra versions, for coverage of smart contract risk. If user assets are lost due to smart contract issues, they can request for compensation from us to cover their loss. In this way, you’ll be more comfortable to deposit money into Mirror and sleep tight at night with peace of mind.
Mirror is building a great concept to digitalize the ownership and values of real-world assets, and we’re glad to be part of this great journey and provide safeguarding.
Dan
That’s a pretty great deal, own some synthetic versions of real world assets completely protected, with no pesky third party fees. Fabulous.
Stanford Can you please help us to understand synthetics a bit more and the major difference between Mirror protocol and other players such as Synthetix and UMA?
Just so I know I’m investing in the right place 😉
Stanford
Sure — The basic goal of mAssets synthetics is to mimic the price trends of real-world exchange-traded underlying assets and give investors access to not only home markets but also foreign markets as well.
This allows holders to experience the price exposure of the underlying assets in a decentralized manner without needing to go through your typical KYC and AML processes.
In addition, these assets can be traded 24/7, which allows for much greater freedom in what you can do with the assets.
Unlike UMA and Synthetics, mAssets are collateralized by Terra USD stablecoin, so the minimum collateral ratios to mint mAssets are several multiples lower, at around 150%. This increases not only the capital efficiency of users but the whole protocol itself.
Dan
That’s awesome! 24/7 trading, no KYC, and I get more assets for my hard earned crypto investments. What’s not to like!
@sihyeok So, what sort of returns could investors hope to achieve after we include InsurAce.io insurance of 5.99% is included? How does that compare to real world returns and traditional fees?
For our community, obviously not just for me to know for my investments 😁
Stanford
Haha
Sure so…
Users are able to both take long and short positions on Mirror, and with the additional help of InsurAce, users can invest with the sound of mind that their capital is protected from any potential smart contract problems.
Currently, providing liquidity on Mirror can be as high as 60–70%, so investors who want full assurance of protection in case of a black swan event are able to buy coverage at a rate that is much smaller than the yields that are being offered on Mirror.
Again, even after accounting for the costs of coverage, this is much higher than what you would ever see in TradFi
Dan
I mean, 54% protected, sounds pretty tasty.
@oliver4insur what do you think?
Oliver
Just to add a few comments as an user of mirror and previous synthetix, i think mirror has a much higher capital efficency: 150% on UST, whereas on SNX, you’ll need to deposit $SNX as collateral, over 750% colleteralization, which could higher and more risky given $SNX’s high volatility.
Stanford
Yeah, good point — we allow users to collateralize on stablecoin as well as mAssets, which allows users to choose their tolerance for volatility when minting.
Dan
This is really good to know. Super important for any investor into synthetic assets
Oliver
There was actually a hack to synthetix back to mid of 2019, causing over $37MM of asset lost.
so you see, security issue exists for synthetic asset area as well, and shouldn’t be ignored. Many tier-1 protocols got hacked, but ofc they’re very resillient, but it still hurts, espeically for users.
we can see some of the yields on mirror is quite high, especially those securities related assets, both long and/short side.
With this insurance coverage, the APYs are more secure, and you don’t have to worry about the security risks which happened to other protocols.
Oliver
the current 5.99% of cost is a start, with our TVL growing and more covered sold, this cost will be adjusted to be lower to benefit more. @vagrantcrypto
Dan
That’s great, lower costs in the future is always a good thing!
Which leads me nicely onto my next question for you both…
Not financial advice, but a hypothetical, if you were an investor looking at this sector, how would you maximise your returns, whilst minimising your costs with insured synthetic investments?
Stanford
As Oliver mentioned, a decent amount of large attacks on different projects are due to smart contract failures. With Mirror and InsurAce’s partnership, users will be able to take long or short positions depending on their market view and have the peace of mind of insurance protection in the unlikely chance of a smart contract failure.
Perhaps the simplest option is to provide liquidity for mAssets whilst buying coverage.
That way you safely earn a decently high APR without the need to actively manage your assets
Oliver
Yes.
I used to work for a traditional regulated derivatives exchange, trading commodities, index, etc. and I know how onerous it is to trade. But now with this synthetic assets Mirror created, it’s really revolutionary.
and on top of these assets, there could be numerous more possibilities, such as build asset management, derivatives trading / clearing, etc., which is so disruptive.
we’re happy to be part of this landscape, and work as a risk management role to this grand picture.
Dan
I’m sold! I’m going to be apeing in pretty hard after this Q&A! Definitely doing a little more research first though, as any sensible investor should.
Luckily, I can start here, since we’re talking to the team…
Stanford, any exciting milestones that Mirror Protocol is going to have coming up, what’s next for you guys?
And, how can our community members join the Mirror community?
Stanford
Yeah, Mirror recently launched its v2 and we are in the process of launching v3 which will include mechanisms to reduce slippage (concentrated liquidity) when making trades and allow liquidity providers to automatically balance their liquidity positions.
So definitely be on the look out for additional features to be announced soon
We have various active community channels, including TG (https://t.me/mirror_protocol ) and discord. For more technical-focused discussions, please join the discussion at forum.mirror.finance.
Dan
Nice one! So I can expect lower insurance premiums and lower slippage in the future. This just gets better and better.
That’s all of the questions I had planned for you. I’m going to add a couple of quick questions that we received on twitter for you now.
What are the benefits of investing in synthetic assets (mAssets) over buying the same asset through TradFi? And what are the benefits over other types of crypto assets?
I feel like we answered the first half of this already. So maybe just address the second point
Stanford
As mentioned earlier, users are able to gain synthetic price exposure of the underlying assets in a decentralized manner, where there are no worries of censorship.
In addition, those who prefer dealing with crypto can utilize their crypto assets to gain exposure to equity markets without the need to liquidate into fiat and then reinvest in a brokerage account.
This saves on a lot of the time and fee consumed in the process of moving assets
Dan
Nice! who needs pesky brokers any more.
Oliver
this actually bridges crypto players to the real world assets and vice versa, not just OG tokens anymore, any asset can be traded here in a crypto native way as lons as they can be minted.
Dan
Absolutely
One last one for you @sihyeok
How does mirror operate within the Terra ecosystem? Are there plans for multi-chain?
Stanford
Yeah, Mirror protocol is on top of the Terra blockchain, but users are able to move their assets to various different ecosystems including Ethereum, BSC, Harmoney, etc through Terra’s bridge, which can be found at bridge.terra.money
This is currently live, and users are immediately able to move their various Terra/Mirror assets to different ecosystems
Dan
Awesome! Love a bit of interoperability!
Stanford
Yep, with IBC coming in the next update of Terra’s mainnet, there will be even more optionality
Oliver
Shuttle is cool.
Dan
This is all so awesome. I cant wait to dive deeper into the research. But unfortunately we’re out of time for this Q&A session today.
@sihyeok it has been a delight having you here. I’m sold on Mirror, and I’m very glad we’re working together.
Thank you so much!
Oliver
thank you for joining us today @sihyeok, really been a pleasure to work with Mirror, and Look forward to the upcoming V3.
Stanford:
Thank you and the InsurAce community so much for having me. If anyone has additional questions, please feel free to find me in the Mirror/Terra community channels!
Will be actively lurking in here as well 👀
Glad to be part of this partnership with InsurAce, the first insurance partner for Mirror
Dan
That’s great! Very excited for the future of all of this. Especially for my future gains.
Thanks again.
