Hi, I’m an experienced trader seeing signs that mAssets may not maintain their peg .
Hear me out friends:
If Mxxx trades 50% higher than xxx (the collateral ratio boundary):
- Awesome, we mint Mxxx and sell for UST in pool to make a profit.
- But we are already seeing this doesn’t work well with spreads below 50%. MSpy is almost 5% higher than fair market value. There is no mechanism to do arbitrages below the collateral ratio limits.
MORE IMPORTANTLY (and my BIGGEST concern I want to discuss with the creators + community)
If trading price of Mxxx is below actual xxx:
- If you buy in pool using UST you get Mxxx much cheaper than actual xxx
- But where can you sell/burn the Mxxx as a trader?
- Burning is only available to the minters, correct? So I can’t do anything with the Mxxx purchase.
- In a liquidity crisis, what would stop the synthetic stock becoming worthless?
If the pools have large amounts of people trying to withdraw liquidity for stablecoins, what is stopping minters from waiting for MAssets to trade close to $0 in the pool before buying their Massets back from the pool and burning their positions for maximum profit??
If Mirror wants to survive through hard times (not just crypto booms), how can we as a community think ahead and ensure mirrored asset prices don’t crash in a liquidity crisis?
I have a suggestion:
- Enable the other way around as well: minting UST using mAssets as collateral.
- This would ensure that Mirror stocks can’t decrease more than 50% of oracle price. It would give people like me more trust to invest, and it would also add more liquidity to the platform.
What are your thoughts friends??