Currently, the premium to the mAsset is ridiculously high. Such situation would essentially kill any motivation for trading. Just look at the petty 85 transactions in the last 24 hours.
Please get rid of the ridiculous premium and let the user trade the mAsset at the oracle price. This way, the user would be able to take advantage of daily price fluctuation better, and soon the trading volume would pick up, and then the protocol could charge a reasonable transaction fees on huge number of transactions.
Without proper change, the Mirror protocol would not be sustainable and will die sooner than you can image.
How can you “let the user trade at the oracle price”? Obviously that’s the goal but you seem to be implying that Mirror “adds” a premium to mAssets. The premium exists due to supply and demand. You can’t just fix the mAsset price to the oracle price, you need parties on both sides of the bet which creates the premium problem
People owning mAssets and getting MIR tokens as rewards is the fundamental problem why MIR is broken and why there are persistent premiums. The whole point of MIR rewards is to incentivize people to provide mAsset liquidity (i.e. to mint mAssets) which drives mAsset prices down toward par.
That people can buy mAssets (taking liquidity) and then LP those mAssets to claim the ~20% in MIR rewards makes absolutely no sense.
I’ll plop this here in case you guys haven’t already seen it: overviews how the AMM curves can be changed to dynamically adjust swaps to be made in terms of the Oracle price. It has its own issues such as offering the same price no matter the mAsset:UST ratio, but it’s a solution. There would need to be other changes made to make it viable, but I think it could be a step in the right direction in the absence of volume and liquidity.
I feel like there needs to be an active approach to pool balancing via pseudo-arbitrage where a user’s goal is to earn reward, but unknowingly benefits the system; the whole LP and sLP method as they are right now are far too passive and promotes “set it and leave it” approaches such as DN which we have already discussed in great detail. This was my thinking behind paragraphs 10 & 11 on my post, but I’m not sure if my approach would be the best way to implement incentives. Perhaps this method, paired with dAMMs, and an unequal LP provision solution based on Oracle price could solve the overly-passive approach currently being taken.
I’ve also been doing some research on dynamic curves to augment the slippage via the arb needed to rebalance the pools in times of high volatility low liquidity that happens from the traditional XY =k. It seems like using a dynamic oracle in lieu of arbitrage could possibly be the solution here too. Ideally we can model this out and back test it. Here’s some research on the topic:
"dynamic curves for decentralized autonomous cryptocurrency exchanges " [2101.02778] Dynamic Curves for Decentralized Autonomous Cryptocurrency Exchanges