Dear Mirror Community,
Just wanted to say great job on v2. It tackled the problem of minting inefficiency really well - balancing out long / short demand, aUST collateral, etc - big win for the Mirror ecosystem.
Going forward, we will have to tackle another big problem - allowing mAsset liquidity to be self-sustainable. Currently mirror liquidity is sustained by incentives in MIR tokens, but we will need to get to a state where fees captured by LPs can attract sufficient liquidity to mAssets. To that end, we will need to solve the following problems. MAssets need to be more heavily traded, and liquidity providers need to capture better value on that volume using less capital. Furthermore, as DeFi and crypto comes under greater regulatory scrutiny, Mirror will need to make effort to make itself more censorship resistant:
- Increase capital efficiency of Mirror LP: Well established real world assets covered by Mirror has low price volatility compared to cryptocurrencies, which means that mAsset liquidity can be concentrated. Mirror will need to live on concentrated liquidity of Uni v3 and Terraswap v2 to improve capital efficiency for LPs and therefore yield on unit capital invested. We will need to explore using a combination of concentrated liq on both DEXs and a rebalancing algorithm on top to ensure liq availability.
Increase mAsset tx vol: mAssets’ major advantage over underlying assets is that they can be freely programmed on. Apps will need to leverage the power of various upcoming protocols to offer the user ever more compelling value props:
- Dividends through Mars: lend mAPPL via Mars and earn high yield
- Leverage through Levana: trade perps on mAPPL
- ETFs through Nebula
- Actively encourage more frontends to be built and hosted: Many more apps that leverage Mirror Protocol should be encouraged to be built out and hosted, preferably by anonymous devs to maximize censorship resistance. We propose creating a pylon.money farm of mirror hosts, each to receive cash flow streams from pylon in exchange for developing and hosting alt Mirror web apps. Happy to gather ideas on how best to align incentives on this.
V3 will be interesting.