Roadmap following V2

Currencies should be dealt within the Terra protocol and not as mirrored assets tbh, why have mEUR when we can use EUT? This question can be asked for any currency. There’s already a bunch of currencies available, if you want to long EUR/UST, just swap into EUT.

I believe there is also a thread somewhere about creating an efficient forex market on terra, so I as an European can use EUT even if the dApp only deals in UST, and have the protocol handle the swaps.

On 1) If we are going with concentrated liquidity like uni v3, one major upgrade on that would be ability to change price band without having to completely withdraw and deposit back. Behind the scenes, it could be doing the withdrawal and deposit, but just make it seamless for the user experience.

On 3) If we want more user engagement and developer engagement, the documentation needs to be significantly improved both for general users and developers.

If an average Robinhood trader were to look at the following documentation, it is clear as mud. Why do we need to talk about Collateralized Debt Positions etc. Is the app to be used only by investment professionals? Can some simple language be used to explain things? Most of the time we end up doing some transactions to just learn what it is.

Same is the case with code documentation, it is not good. Our team has spent hours and days learning to do basic stuff. William Chen has a few good videos on how to use python sdk. Then he says something about covering how to do a swap using the python sdk will be coverd in next video, but we are still waiting for that video two months after.

As a developer, we are not sure, should I focus on JS, python, graphql, or cosmwasm.

If you follow the telegram channel, 90% of the time the admins are just replying to the same questions over and over. MIR has a strong community, we can at the least, develop a wiki, if someone asks a question, the admins can put that in there and other users can help improve the answers over time.

Seriously, we need much better documentation please especially on the mirror code side.

2 Likes

I’m happy to fund this kind of work via the Mirror community pool

2 Likes

when can we expect increased capital efficiency? we don’t need 0 to infinity range for many stocks or gold. we could narrow ranges significantly. combined with decreased fees to the range of 0.05-0.1% we should have volume 10-20x just due to arbitrage activity. we just need to allocated 10-20% of those fees to purchase MIR that will make protocol very sustainable by itself while giving MIR tokens needed support

To close the short farm, the user needs extra capital to buy the asset first. This should not be required.

Let’s say I used $1000 to start a short farm and now want to close the position. If I don’t have extra capital lying around to first buy the mAsset, it is very hard to take profit on short position.

The close short farm event should take care of liquidating everything including buying the underlying mAsset.

Ease of closing a short farm can generate higher CDP fee as well and beneficial for Mirror holders.

3 Likes

I think premiums have to get lower. This will allow people to day trade and thus increase the volume. Mirror token itself needs a utility, buyback, burn and airdrops. Something attractive to make people hold the mirror token.

Mir token is trading now at 2.7 and it fell so hard last 6 months. Because the aprs are much higher on the massets and the massets are more stable Where as mir is going downhill with much lower apr.

Higher mir price will push aprs and make the ecosystem more attractive.

Also, why dropping a single spar airdrop for mir stakers? It should be on weekly bases since spar will use massets and built on mirror. Most of the focus is on luna but luna is worthless without its protocols that utilize ust

Upvote on this. Creating mAsset-aUST trading pairs seems like a great idea.

On this point, how about introducing Total Return Indices as mAssets? This would allow Mirror to capture cash flow payments as well for specific asset classes. Take for example the S&P500. By mirroring SPY you are losing out on the Dividend Yield. But if you can track the S&P500 total return index, you will get that. And it will open Mirror up for users interested in other asset classes outside of just US Growth Equities.

Another important improvement in my opinion should be to adjust minimal collateral amounts for short positions based on the mAsset risk.

Not all mAssets have the same risk (i.e. volatility). If I’m holding a blue chip stock like IBM for example, it won’t fluctuate as hard as most cryptos. Having one amount used for all mAssets is probably not the right solution. A simple way to do this algorithmically is just to compute historical volatility of an mAsset or its underlining asset and keep adjusting the minimum requirement based on changes in that. So perhaps track the 1y rolling monthly (or daily) vol (which is just a simple variance of the mAsset return/price change over time). Clearly it won’t be perfect since cryptos vol is constantly evolving, but I suspect it would at least be more efficient than the current system.

Thoughts?

As it is today Governance votes on the collateral requirements per mAsset.

1 Like

Yes that’s true, we have voting to set minimum collateral on mAssets and it’s also true that one could suggest a collateral ratio based on historical vol. Doesn’t have to be algorithmic, especially since vol doesn’t change a lot over time.
So I guess this change is not necessary, at least not at this point. There are other higher priority things to work on.

This is an interesting idea and certainly would benefit mAsset Buyers.

I do wonder if this would be an asset that Minters would be less interested in minting because it may be difficult to fully hedge the exposure using traditional assets due to taxes since the dividend income on the real asset would be taxed immediately and the “loss” from paying the dividend on the mAsset can not be used to offset. I suppose this dynamic may be true of any dividend paying asset though.

This idea is mainly an alternative way to allow mAsset Buyers to get dividends on the mAsset, but I’m curious what are the thoughts on how dividends could be implemented in later versions?

Would taking a snapshot on the ex-dividend date and “force liquidating” the amount of the dividend from each CDP and be an option? The dividend could be held by the protocol until claimed by the mAsset holder similar to an airdrop.

You technically don’t have to mint a Gross Total Return Index, you could mint a Net Total Return one instead. For example the S&P500 you have all three indices published (Price, Gross, Net). But I think in general you want to mint the index that is tracked by an ETF. So that you can hedge out exposure in the real markets by using the ETFs.

In terms of how would dividends work in Mirror - I would do something slightly different. I would consider dividends as “automatically reinvested” which means that when a dividend is paid out in the primary market, then the short sellers would automatically mint the equivalent amount of the dividend payout in that mAsset and it would get added automatically to their short position. So for example if i am shorting 1 share worth $100 of mCompany1 with a collateral ratio of 2:1 (so $200 worth of UST in Collateral). And mCompany1 issues a dividend of say $10. Then I would automatically mint $10 of mCompany1 and add it to my short position. Which means after payout I would have shorted 1.1 shares worth $110 of mCompany1 and my collateral ratio would have dropped to 1.8:1 (at still $200). The newly minted amount would show up in the mAsset holder position for that mAsset. So if I am holding 1 share at $100 in mCompany1, I would then after dividend payout hold 1.1 shares at $110 of mCompany1. So really no cash flow is ever exchanged, dividends are assumed to be automatically reinvested. And any person who minted an mAsset with dividends would know WAY before hand that the corporate action would occur and they would have significant amount of time to readjust their collateral. Since companies declare dividend dates and amount quite a bit before the payout date.

I wrote a Medium article that breaks down methods that could be implemented by Mirror AMMs to dynamically adjust the AMM curve to allow swaps to occur at a given oracle price 100% of the time (excluding slippage). This method, however does not result in a balanced liquidity pool: something pointed out to me by Hank-O is the cause of the premiums in the first place. If a better, more natural arbitrage method that supports traders is implemented, both arbitrageurs and LPers could be better off. I’ll explain below:

Imagine a liquidity pool with an initial balance of mAsset and UST where no more liquidity can be added, only swaps may occur. If users purchase the mAsset from the pool, there will be less mAsset vs UST, resulting in a premium as UST/mAsset is now larger.

If we then add the ability to provide liquidity, but not minting, the following will happen: users would purchase mAssets and then LP with their own UST which puts ~2x the UST into the liquidity pool vs someone just purchasing the mAsset. This further increases premium where Premium due to purchase (pPurchase) < Premium due to this form of liquidity provision.

If we add in minting, there will be people who can LP with their minted mAsset to provide both mAsset and UST liquidity which has no effect on the premium, but still supports the functionality of the liquidity pool as there is now more liquidity.

Let’s throw the sLP method in there and now there are those that provide just mAsset to the pool to shrink the premium - an unfortunate side effect is the ability to delta-neutral by simply buying and holding the mAsset which simply drains LP rewards with a net 0 impact on the Pool balance.

This model liquidity pool now has all the methods the current liquidity pools do, yet, as we observe, premiums remain.

Hank-O pointed out in some of our conversations that if you remove the ability to purchase an mAsset and then LP, the premiums of pools would decrease by a significant amount, resulting in a potential surplus of mAsset vs UST, and thus a discount in price vs the Oracle price- this is what we should aim for as people would then purchase the mAsset until an equilibrium is reached. Allowing swaps, and not LP to manage the equilibrium price is something that should be explored. This would mean the removal of short farms and long farms in their current forms whereby they’d be replaced with a combined contract of “Mint-LP” that forces you to mint, and then provide UST as a means to provide both mAsset+UST; doing so would remove internal strategies that have a net zero impact (delta-neutral strategies) on the liquidity pool, improve arbitrage opportunities, and reconsolidate LP rewards.

Interestingly, the ‘Mint-LP’ method can currently be done as Mirror Protocol exists right now; a user is able to capture both long and short farm rewards by sLPing, buying back the mAsset, and then providing liquidity with additional UST on the ‘long farm’ side. Here a user is providing both mAsset and UST, as they put the mAsset they sold, and then purchased, back into the liquidity pool with UST. This is the unharmful version of delta-neutral farming which is what I seek to become the main form of liquidity provision.

Unfortunately, the arbitrage methods would only go so far as people buying up the discounted mAsset would seek to sell once ‘equilibrium’ with the Oracle price has been achieved which would result in a consistent discount unless the Oracle price drops to the AMM’s market price; this is where dynamically adjusted AMM curves come in. Dynamically Adjusted AMM Curves eliminate premiums and discounts entirely for the purchase or sale of mAssets. To continue incentivizing the stabilization of the liquidity pool, Mirror could instead exercise the methods below.

Incentives could be provided for buying or selling an mAsset in the form of ‘locking’ your short or long position for a set amount of time as an optional contract on the purchase, or short of the mAsset (note that these are no longer LP farms as they are traditionally defined). One could be credited with MIR tokens based upon the duration of lock, the side the user is locking, and the relative need for the lock. To prevent delta neutral farming these positions, one would have to only have the option of locking a single side (long or short) for MIR incentives per mAsset. A fee could be levied on those who decide to unlock their position early where the user would earn only a portion of the MIR rewards accrued, with the rest, including protocol fee, going to MIR governance stakers. Note that these would be time-limited contracts that expire. If we really wanted to, we could allow these contracts to be traded like options/bonds, depending upon how they’re implemented. The fact that these contracts are timed would force users into more transactions if they wish to farm yields compared to a set it and leave it mentality for current LP methods. Risk tolerances with this method are also different as impermanent loss would no longer be an issue.

As a note: the fee levied on closing short positions should be removed entirely as it’s a barrier to entry for short-interest. Instead, it should be levied on the exit of a ‘Mint-LP’ and on early ‘unlocking’ of previously locked mAssets or UST (depending upon if you were locking a long or short position).

Here’s a full explanation of Dynamically Adjusted AMM Curves I wrote earlier in case you want to know the dynamics behind exactly how they keep the market price pegged to Oracle Price: Mirror Protocol’s AMM Problem — A Potential Solution | by EuphoricBadger | Oct, 2021 | Medium

3 Likes

Need to also be able to borrow against MIR just like with ETH, Sol and Luna on Anchor.

Still involved for V3?
My additional suggestion is:
use community fund to ensure a minimal liquidity to a set of strategic and voted pools.
Eventually allocate some of the ozone UST from luna burning to ‘feed’ the ust part of the pair.
Accrued mir and fees go to the community (UST are from luna? it goes to luna cause it is fair like that)
Community address can become a kind of treasure (multisig of it would be appreciated: as apollo safe. Can make sense to reuse their code when shared: compensating them accordingly).
community can allocate some funds in astroport, an lp MIR UST and accrue the astro which will be distributed. Governance will decide how to use them

Do you mean borrow against MIR for shorting mAssets? Or borrowing against MIR on Anchor?

I think he means adding MIR as collateral

Hi, the committee has a road map with this ideas, already we have mars protocol live.

Will be interesting to talk about an roadmap for leverage mAssets, any feedback?

1 Like

bravo. im looking forward to seeing this or something like it implmented