Dear Mirror Community,
Currently Mirror only supports price tracking of an mAsset, but not its cashflows.
If the goal of the Mirror protocol is to match investors (going long an mAsset by holding it over a mid to long period of time) vs speculators/liquidity providers (going short an mAsset or short term trading) then there is a significant gap for most type of investors.
Let me explain… most investable assets have associated cashflows. In the case of Stocks or ETFs clearly we are talking about Dividends, in the case of fixed income asset classes (such as Bonds) then obviously it’s coupon payments.
Clearly in its current state Mirror is suitable for Assets that have no cash flow, such as growth stocks.
And I do understand that we live in an historical timeframe where dividend yields on most stocks are quite low (dancing around 1%). But that does matter quite a bit, especially if we want this platform to succeed in the long term, not just for speculative reasons.
So I was wondering if there is a plan to incorporate corporate actions (such as dividends) in mirrored assets.
How would we do that? The easiest way to do it is of course to find a price oracle that can pass also corporate action data for stocks or ETFs (just to start). This would include things like Dividend Announcement Date, Pay Date, etc.
Currently stocks trade in a way that when a dividend is announced the price changes to account for it until it is paid off. So part of that is already baked in the price of the mirrored assets (for that short amount of time between announcement and payoff). But the issue here is to actually receive the cashflow when the dividend is paid if you are holding a mirrored asset.
Clearly someone has to pay that. In my opinion who is going short an mAsset should pay that out. When the dividend is announced, it generally is stated also the amount of $ per share to be paid out and when. So if a user is going short an mAsset, they should be held responsible for that exact amount and it should be reflected in their collateral ratio (Everything else being equal, it should go down, since now the total collateral is used against the position marketvalue + the announced dividend amount). If the person wants to close their CDP, they still can, but they would need to put up the exact amount of shares in that position + the dividend amount in UST.
This is not too different than borrowing a stock from someone at a brokerage house. You are going to receive all the cashflow of the borrowed stock and if you sell it (essentially shorting the stock), then you would be responsible for paying the cash flow to the person who bought it from you.
Does this make sense? Do you guys agree and if so how would you design for this?