Last Updated: 2021/05/03
Mirror has seen tremendous growth over the last few months that can be seen from the 2B+ UST that is currently locked within the protocol as well as continuous increases in liquidity and volume growth. That being said, we want to keep pushing the boundaries of what can be done on Mirror in V2. We have also been looking at all the user feedback (even if we don’t directly reply) and have seen lots of questions about the V2 contents and timeline, so this post will serve as an update to Do’s post here as well as a comprehensive document outlining what you should be aware of for the next batch of releases.
The estimated timeline for V2 is early May.
1. Pre-IPO Assets
As many of you may have heard, Mirror will offer a decentralized method to allow users to mint, trade, and LP mAssets before official exchange listing. This will work in the following manner:
- A company announces its IPO and goes through the process with the SEC in which a red-herring document (SEC Form S-1) with a price estimate is published.
- Mirror users will be able to submit a poll to list a Pre-IPO asset with a fixed minting price and minting period (in addition to the typical mint parameters).
- During the minting period, any user is able to mint the asset at the fixed price. Once the minting period ends, only trading and pool/staking will be available.
- Trading and Pool/Staking will be available until the asset officially IPOs.
- Once the asset IPOs, all actions will be stopped for mPre-IPO, and users will be able to go through with the deprecation/migration process where any person holding an mPre-IPO asset can burn it against any CDP to receive UST at the first trading price in the underlying market.
- This process will go hand-in-hand with the mPost-IPO asset being immediately whitelisted.
2. Governance Participation and Incentivization
We have seen that it has been relatively difficult to pass quorum for polls in many cases despite the relatively high number of MIR staked in governance. We want to revise the governance reward incentive structure so that users who actively vote in polls receive a greater share of the governance MIR rewards. The structure will work as follows:
- Suppose that
TMIR will be distributed to the governance contract in a given block.
- Half will be distributed as currently to all stakers, and half will be directed to those who have voted.
- More specifically, if there are
non-going polls, then each poll will be allocated
T/(2n)MIR. Then if there are
k_nMIR utilized for voting in poll
n, each MIR used to vote in poll
T/(2n*k_n)MIR (in addition to the other half that goes to all stakers).
- We do not want to users to be forced into making an un-educated vote, so we will be adding an
Abstainvote in addition to the
3. Governance Poll Quorum
Another problem with governance is that polls often sway between hitting the 10% quorum and dropping down to 9.99% due to more MIR being staked in governance. To remedy this problem, we will be implementing the same structure currently utilized in Anchor Protocol’s governance.
- The total amount of staked MIR can be snapshotted to the poll within a time window of
Snapshot Periodbefore the poll’s end. This value is used to calculate the poll’s quorum.
- Any one can call the above OR if any user votes during the snapshot period, a snapshot will be automatically taken.
The above should stop the unexpected movement of passing/failing quorum.
4. New Collaterals
As a way of allowing for greater composability within the Mirror and general Terra ecosystem, we will be adding new collateral types for minting.
- MIR, LUNA, ANC, bLUNA, aUST will be allowed as collaterals.
- When utilizing volatile collateral types (ie. all of the above except aUST), there will be an additional collateral premium (ie if you have 100 UST worth of MIR, it would be counted as <100 UST when utilized for minting).
- To retrieve accurate prices for all the collaterals, we will be adding an additional collateral price oracle feeder. For cases of derivates with a 1-to-1 conversion rate (ignoring time discounting) such as bLuna <> Luna and aUST <> UST, we assume equivalency.
This allows for a variety of new use cases of existing ecosystem assets as well as allow for:
- Use aUST to mint assets so that the mAsset essentially accrues interest (interest-bearing assets)
- Variable exposure for minting (ex. minted mAsset can perhaps be dynamically hedged with the underlying collateral)
We will shortly also update the contracts such that multi-collateral minting will be available (mix-and-match collaterals for minting).
5. ‘Mint/Short’ LP Token
During the earlier stages of the protocol, many users were seeing that the mAsset had a larger price premium over the oracle price. While some of this may have been influenced by a confluence of factors such as the sudden launch of the protocol or increases in demand for UST, a large reason for the premium was the demand for the high-yields of mAsset-UST LP staking. The problem was further exacerbated by the fact that buying at a premium was still more capital efficient than minting the asset and then LPing.
To remedy this problem, we will be introducing a new minting and inflationary reward distribution structure. Note that this new minting (let’s call it ‘short minting’) procedure will co-exist with the existing minting procedure (we will need the current procedure to be able to initially set the mAsset-UST Terraswap pool prices).
The aim of this process is to not only lower the premiums, but also adjust the dynamics between
buying -> LP and
mint -> LP. The process is as follows:
- When opening a mint position, the corresponding mAsset as well as an equal amount of non-tradable ‘short’ LP tokens,
sLP, are created.
- The mAssets are automatically sold to Terraswap with a user-set slippage control (if slippage control comes into effect, mint transaction fails) for UST. Thus the user should receive
- When a minter wants to close the position, an equivalent amount of
sLPmust be burned to receive the collateral.
- The liquidation process follows as before with the exception that the corresponding amount of sLP are automatically burned as well.
sLP Token properties
- Any person with accredited short tokens may immediately utilize it to stake in the corresponding
- The division of MIR tokens between
sLPis a function of
premiumis the percent premium between the the Terraswap price and oracle price. That is to say,
premium_tolerance, the fraction of rewards distributed to mAsset-UST LPers and sLP stakers will be set as 8 to 2 per mAsset. When
premium_tolerance, the ratio changes to 6 to 4. These values can be further adjusted in governance. This rule applies to each mAsset separately.
- The short reward ratio (per asset) will now be defined by a piecewise continuous function (capped at a maximum of 40%). The rough percentages are as follows:
In addition, the UST received from short minting will be locked for
lockup_period. After which, the UST can be claimed. If the whole CDP is closed (either intentionally or liquidated) during the lockup period, collateral as well as the locked up UST is immediately given back to the minter. The total UST will be locked up for the pull period if a partial closure happens.
6. Tapering Uniswap MIR Incentives (TBD)
We will be looking into either decreasing and/or migrating the MIR inflationary rewards away from Uniswap. While we have seen success in bringing Ethereum-based DeFi participants into the Terra ecosystem with the 50-50 Terra-Ethereum MIR reward distribution, there is actually very little trading being done on Uniswap. We plan to temporarily move these MIR into the community pool, where the community can deliberate new MIR reward allocation schemes (perhaps by trading volume, liquidity, etc etc). Note this does not mean that ERC-20 support will be withdrawn.
*Further definitive announcements will be made at a later date.
In other news,
- Wormhole, a decentralized bridge, will be replacing Shuttle. Further instructions about the migration to come at a later date.
- We will be revamping the web-app to accommodate for the new changes in V2.
- The Chainlink team has been working on integration with Terra so that users may vote to use Chainlink’s price feeders as well.
- V2 smart contracts will be audited by the Cryptonics team.
Let us know your thoughts and feedbacks below!
- Terra Research & Mirror Product Team -