Wanted to check how do you feel about the proposal to adjust MIR rewards coefficients to rewards a bigger portion of MIR rewards to short side comparing to long side.

Currently the premiums on many pairs are in the range of 6-7%. At the same time MIR incentive almost the same for both short (~35%) and long slide (~28%) that encourage market neutral and discourage more short minting.

The idea is to double-triple short MIR incentive while decrease long MIR incentive for respective pairs.

Let me know how do you feel about this proposal. If there is enough interest I can spend more time calculating specific changes in coefficients and provide a formal proposal for voting.

Would love to hear if anyone is against or for the proposal!


I think premium exist because people do not create new short positions, but instead hold their short positions for a long period of time without taking any action.

Even if we increase reward ratio for Short positions larger than the long positions, if people just create one short position and hold them for a long time, it would really help the reduction of premiums.


i think you are right. I guess my hope is that by increasing rewards we will attract more capital to open more short positions. when APR goes form 30% to 100% I think more and more capital will be involved in arbitrage. with current rewards opportunities elsewhere are higher…

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I like the idea. Shorting is riskier and it should be encouraged to improve the liquidity and trading activities.


I agree. But i think this should be done dynamically with addressing premiums as the main priority. So high premium assets should have less rewards for longs (0%) and more rewards for shorts. This can br implemented dynamically. For example rewards can have a 0% weighting if premiums are above 5%, .1 weighting if 2-3% and 0.5 weighting if 0-2% premiumz


agree 100%. will try to draft something on that front. not sure who will implement though as team seems to be quiet these days

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I could change the numbers in code and make a pull request or somthing. But I have no idea how you would deploy that and how to make a proposal to migrate to that new version(if that’s even possible.
What should the new max short ratio be? Right now it’s 40% at 7% or more premium. If it should be doubled that could be set to 80% short at 7%+ premium.


Vote NO on delisting MIR and ANC as collateral options for short positions.

I think voting yes to delist is taking away reasons and/or incentives for opening short positions.


Vote NO on any delisting of supported mAssets or options.
Vote NO on re-weighting of specific mAssets.


I agree with vicw above, this is killing Mirror IMO. There hasn’t been an mAsset added since August, and we have whitelisted assets from January that still haven’t been added. If Band is to blame for this, then we need to look for new oracle providers


Band is to blame and that is a fact. There is little that can be done to fix this issue at the moment.

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Hell no, there should never be incentives for short positions.

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Yes. I think so. You need to buy sufficient amount of borrowed mAsset first.

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Like Offensetaker, I’m having difficulty understanding why we should be adding incentives to short positions when we’re trying to stem the free money leaks from the whole protocol. Please consider the context of delta-neutral positioning.

One way to create a delta-neutral farming position in Mirror is to mint an mAsset (a mint is an inherent short) and then provide the mAsset paired with UST to its long farm LP. This is good for the protocol because it ACTUALLY provides liquidity. It is reasonable for the protocol to pay for people to do this.

Another way create a delta-neutral position is to short-farm an mAsset and then buy it right back again to cover the short indefinitely. This is bad for the protocol because it doesn’t even provide liquidity to the market, even though on paper it creates an sLP. It is not reasonable for the protocol to pay for people to do this.

By increasing incentives for the short farm, the thing that is bad for the protocol would be advantaged, which is exactly what we do not want. I oppose.


Cyptofan: Why do you want to discourage market neutral?
Why do you want to encourage short minting?

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Kalirren: I think every trade is good for the protocol, because it helps to reduce premium prices.

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On big problem with Mirror protocol is the ridiculously high premium of the some mAssets. I believe it is partly caused by the unbalanced incentive. Long positions are benefited by the intrinsically built-in pair swap fees PLUS long-farm rewards. There is no swap fees for the short position, which is further penalized by 1.5% protocol fee. So without properly elevated incentives for short position, people will be reluctantly to open short positions and premium will always remain high for the most of mAssets. High premium will deter people from active trading, resulting in declined fees and TVL for the protocol.

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If you look at the mirror list, some assets have high premiums and some have low premiums. The ones that have high premiums are the ones that have high short yields. The ones that have low premiums are the ones that have high long yields and low short yields.
Let’s ask a question: how might high short-farm yields be related to artificial buying pressure that keeps premiums high? Answer: by constructing a delta-neutral position on the short farm, of course…

I agree that the short position is important because without shorting there is no way to bring prices down. But there always is a way to short an mAsset, and that is by minting it! Shorting by minting is different from short-farming. I think the first is desirable and the second is not. Here’s an illustrative example:

Person A with UST decides they’re going to put it into Anchor/Mirror. They use a delta-neutral strategy to enter this market: they convert 2/3ds their money into aUST, use the aUST to mint 1/3 their money worth of mAsset at %200 collateral ratio, and provide the mAsset along with the last 1/3 of their UST to the long farm LP.

Person A’s total yield is 2/3 * 20% + 2/3 * LFAPR.

Person B with UST decides they’re going to use a different delta-neutral strategy to enter this market. but instead of minting the mAsset, they short-farm it with 2/3rds their money, They then buy this mAsset right back to cover their short, and get 1/3rd their money back in 2 weeks as UST; using that 1/3 UST and 1/3 mAsset, they provide to the LP to earn LFAPR.

Person B’s total yield is 2/3 * 20% + 2/3 * LFAPR + 2/3 * SFAPR.

The difference between Person B’s yield and Person A’s yield is 2/3 * SFAPR, paid to them by Mirror protocol itself, which is taking a dead loss on the difference. What is the difference in what A and B did? Person A minted and Person B short-farmed the same initial aUST. The mAsset that person A created has been provided to the liquidity pool through the long-farm contract. The mAsset that person B created has been bought right back, then provided to the liquidity pool through the long-farm contract. And if you look more carefully, you see that in the event of liquidation, Person B and Person A end up with the same assets after liquidation: 2/3 total money in long-farm LP token. In the end, Mirror is taking the same collateral for the same net transaction but stupidly is paying a greater rate for what person B is doing, even those what person B is doing is worse for the protocol.

So currently, the sLP does nothing for the protocol, and yet we pay people the SFAPR to make and hold them. Mirror is basically paying people to borrow their aUST to do nothing with it. This is an -exploit-, which needs to be patched.

Now I understand that the point of the sLP existing is for people to be exposed to swap fees while not necessarily holding a long position. That would be a valid use case for an sLP-like object. I think sLP implementation needs to be changed so that the UST from shorting is not returned, but is used to bind the mAsset into the sLP.

tl, dr: Minting needs to be incentivized over short-farming; but the protocol currently has this backwards and so it bleeds value.

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For this part, I think you are confusing the cause and effect. The reason for the higher short yield is because the premium is too high so that the protocol would incentive the user to mint a short position to minimize the premium. Because selling the mAssets into the mAsset-UST pool would cause the price of mAsset to go down, hence minimize the gap between the Terraswap price and the oracle price.

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I think you’re trying to explain something to me that I am having trouble understanding from the Mirror documentation. Why should the yields be higher for a short-farm when the price premium is high? Shouldn’t they be lower for the short-farm in this scenario, because people would be minting mAssets anyway to respond to the price differential between oracle and swap exchange, and would need less incentive to do so?

I am trying to think this through but am getting lost. If a person mints a mAsset and sells it, downward pressure will certainly be put on the mAsset’s market price. If a person mints a mAsset, binds it into an LP (at what price? Terraswap’s?) and provides the LP, what does Terraswap do? If someone provides collateral to a mint contract and creates mAsset and sLP, I have no idea what happens to market pressure; I don’t understand the idea of an sLP well enough yet.

It still seems to me as if the cash flows of the “mint” function and the “Short-farm” function have been interchanged in the current implementation of Mirror. I would think that the mint function should return the use of overcollateralized value whereas the short-farm function should lock it up in return for short-farming yields. The current system where the short-farm both returns short value and affords yield seems to me like we’re allowing users to take free money.