Terraform Labs today announced the launch of its Mirror Protocol, the first synthetic assets protocol that tracks the price of U.S. stocks, futures, exchange-traded funds, and other traditional assets, bridging crypto with global financial markets.
U.S. equities are an attractive asset class globally, but access to the $36.3 trillion-dollar market is limited. Mirror solves this by enabling the minting of synthetic assets—so-called “Mirrored Assets” (mAssets)—that mirror real-world assets' price behavior. Reflecting the exchange prices on-chain Mirror gives traders price exposure to real-world assets that may not otherwise be accessible to them.
The Terra vision
Seoul, South Korea-based Terraform Labs, launched in January of 2018, was co-founded by Do Kwon (who also appeared on the 2019 Forbes 30 under 30 ) is the company behind the programmable stablecoin, Terra. Investors include Coinbase Ventures, Arrington XRP Capital, Pantera Capital, Polychain Capital, and Galaxy Digital.
"I met the founders, Do and Daniel (Shin) in Korea in mid-2018 and was impressed with their eCommerce experience and vision for what Terra could become," Michael Arrington of Arrington XRP Capital told Decrypt. The founders wanted to create a stablecoin designed to be used in eCommerce transactions. “Their vision of using seigniorage as a way to encourage its use in eCommerce, creating a virtuous cycle of usage and growth, seemed like a no-brainer,” he added, noting that “they have executed beyond our expectations since then. We have never sold any of our original investment, and we have slowly acquired a multiple of that initial investment over time."
A way to invest in U.S. stocks worldwide
Co-founder and CEO Kwon said that his team was “motivated to create a way for retail investors worldwide to more easily participate in the US equities market. Mirror enables the minting of synthetics that trace equities and other traditional financial assets demanded by everyday retail investors, further integrating cryptocurrencies into the global economy."
Investors worldwide have spent years trying to find ways to integrate cryptocurrency with traditional financial markets. Kwon said that the target market for the product is users outside of the U.S.: “One of the main value propositions of Mirror is to grant 24/7 exposure to and fractional ownership of synthetic assets, such as US equities, to people who don't currently have an easy way to access these types of assets."
Mirror will launch with a farmable governance token—MIR—that earns fees from asset trades. mAssets are listed and traded on Uniswap and Terraswap decentralized exchanges. By adding the Mirror governance token—MIR—to liquidity pools, MIR holders can earn 0.25% from trading fees. To burn mAssets, the issuer must burn the equal amount of mAssets issued, which prompts the previously locked Terra stablecoin collateral return.
According to Terraform Labs, users need to contribute to liquidity provision for mAsset and/or MIR pairs on Uniswap and Terraswap to be eligible to receive airdropped MIR. Users can go to terra.mirror.finance to provide Terra-side liquidity, and eth.mirror.finance to provide Uniswap-side liquidity.