Mirror DEX Solution

I think this can be solved by eliminating liquidations based on pre/after market oracle reporting. I’m unsure if eliminating minting would be an issue or if this is needless complexity that a proposed insurance fund would cover. (mFB being an example of being able to create an insolvent mint based on an aberrant, although correct, oracle price)

Correct me if I am wrong: If I buy mAsset by swapping on Terraswap and then I put mAsset-UST into Terraswap or Spectrum pool, I pay just Terra network (or Spectrum) fee. So the DN players are not paying any fee on long side to Mirror protocol.

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I checked it. So adding liquidity to LP pools could be either by buying the mAsset as you told or by borrowing the mAsset, this way creating a CDP and applying to the 1.5% closing fee (and ofc adding the UST too). Not sure tho that how are the two part split. Either way, I wouldn’t change the dynamics for the LP providers given it’s working well already, but by reworking the closing fee structure aiming especially at the trader community, we could expand the protocol’s user base.

Edit: Thinking about it now, it would be great to know the composition of the LP pools and checking how much of them getting in-out day by day and somehow target the mAsset buying long LP community with a fee. Tho setting up an entry/exit fee to the LP would also target the mAsset borrowers in the pool, and in this way they’d have to pay 2 fees

I do not understand this. If you are net borrower you are minting and you pay closing fee. If you are DN investor you are borrowing for short farming and buying for long farming. Theoretically you can borrow mAsset and put it into LP, but your position is not delta neutral then because you are 2x short and you hold just 1 mAsset on long side. I do not think much investors would borrow 2x and pay the fee 2x.

The LP providers are willing to pay entry/withdrawal fee only if they can get some added value over classic Teraswap pool. For example the Spectrum protocol applies following fees and people are willing to pay it:

  • ​Deposit Fee: 0.1%
  • Performance Fees. ​Vault Fee: 6% to SPEC stakers. ​Platform Fee: 1% to treasury. ​Controller Fee: 1% to cover gas cost and underlying services.
  • Withdrawal Fee: 0%

Added value in case of Multiplex pool can be:

  • no IL risk in case of singe asset
  • autocompouning?
  • autostaking rewards?
  • higher rewards than in classic Terraswap pool

Edit:
As I am thinking about it, the LP fees are not so important issue.
But we should also think about improving MIR tokenomics as it seems to going down terribly. Falling MIR price errodes funds available for further development and generally it invokes inflation.

:slight_smile: Yes that’s one way to do it, but not the only way as you said it yourself. Not only buying mAsset-DN strategies can be profitable from longing LP-s. If you borrow the mAsset and longing LP as part of a DN strategy, then you anticipate that the market will trend down in the future and still maintaining a DN position (you don’t sell the borrowed mAsset in this case), meanwhile the collateral ratio on your CDP will move higher over time, therefore you can free up additional aUST on the way down and reinvest it further - this way you’re earning more APY than with the other DN strategy. I think more people are shorting this market than you’d imagine, and meanwhile getting the plus APY.

Sure, why would they risk their money in these LP-s? Significantly less IL risk compared to other protocols, not only in single asset pools but in the multiplex pool also (btw if using Spectrum, you effectively using 2 protocols, 2x the protocol risk) . As EuphoricBadger wrote in the original thread, there are multiple ways to implement reward allocation to the pools, without rewards who the heck would even stake their money in LPs? :smiley: Trading fees, UST and mAsset rewards as well as of course the MIR reward distribution can also be implemented, but finding the concrete reward distribution schematic is another topic.

Spectrum protocol is an autocompounder, it’s not in the same league, if Mirror changes, Spectrum needs to adjust to it if it want to offer this unique service for their users. Btw autocompounders are usually have higher protocol fees than the underlying, in this case you effectively pay Mirror’s and of course Spectrum’s fee for the plus service. The users pay the higher fee for the ‘higher quality service’ (more yield, more risk). If Mirror’s fees would be this high, no one would use it, the protocol has to be relatively cheap to get people into it.

I don’t think it’s worth dealing with MIR’s tokenomics. Everything goes down, that’s just how bear markets work, we cannot fix it with different tokenomics. The only meaningful way to care with MIR is to improve the protocol itself. If we manage to do that, than the token will thrive in the future.

I would vote in favor of funding development. Well done EuphoricBadger.

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