What is Mirror Protocol (MIR)?
Mirror Protocol is a protocol that can be used for the creation of synthetic assets and was developed by Terraform Labs. This is the same company behind the development of the Terra blockchain
(and the LUNA token).
Synthetic assets, or also called synthetic tokens, are crypto tokens that track and represent the prices of physical or financial products. This means that the value of the token is always equal to the value of the product it tracks.
For example, there are synthetic tokens that are linked to gold. The value of the token is then always equal to the price of gold. A synthetic token can also be linked to a mortgage, artwork, stock, etc.
This is also where the name of the project comes from. Mirror Protocol in fact reflects the price of other products. The value of the token cannot be individually influenced by supply and demand.
A synthetic token could be compared to the crypto or blockchain version of an ETF (Exchange Traded Fund). ETFs are products that are sold within the stock market and have their value tied to an underlying product.
What can you use Mirror Protocol for?
Mirror Protocol can be used by people who want to invest or speculate on the price of physical or financial products, without actually purchasing these products. For example, you could invest in gold by simply buying a synthetic token that is linked to the price of gold. This is a lot easier and cheaper than actually buying a physical gold bar.
Another advantage is that this way you can invest in multiple markets, without having to create different accounts. Normally you would have to create an account at a stockbroker to buy stocks and bonds. Mirror Protocol allows you to speculate on the price of a stock or bond within your crypto wallet.
How does Mirror Protocol work?
Mirror Protocol runs on Terra's blockchain. The Terraform Labs company is not on the board of Mirror Protocol. In fact, MIR token holders can use their tokens for governance. This means that the MIR token represents a voting right, and the holders of these tokens can help decide the future of Mirror Protocol. The project is thus fully decentralized and democratized.
Creating synthetic tokens (mAssets)
Users can create a mAsset from their own wallet. This is the token that reflects the value of another product. Before one can create a mAsset, collateral will need to be specified. The collateral must be 150% of the value of the underlying product at the time of creation. Users can use TerraUSD (Terra's stablecoin) or other mAssets as collateral.
Thus, even though the price of the token follows the price of another product, there must still be actual collateral. Only then can the synthetic token actually reflect the value of other products. This is also the reason that a stablecoin needs collateral to remain stable.
Off-chain data to on-chain data with Band Protocol
Mirror Protocol runs on the blockchain (on-chain), while the prices of financial products are normally maintained on central systems (this is called off-chain data). This off-chain data needs to be converted to on-chain data, which is more difficult than it initially appears. Therefore, the values of the products are retrieved with Band Protocol
. This means using blockchain oracles, which provide updates on the price every 30 seconds.
A blockchain oracle is a piece of software or way to move off-chain data to the blockchain in the correct and valid way, without the blockchain's network having to check this data itself.
Users can create or purchase mAssets themselves within Mirror Protocol's web application. Here you will first need to connect your external Terra-wallet, after which you can immediately start trading and creating mAssets.
Mirror Protocol's MIR token
Mirror Protocol's MIR token is an ERC20 token and runs on Ethereum's blockchain. There is a total maximum inventory of 370,575,000 tokens that will be released over a 4-year period. The MIR token is not a synthetic token, but it can be used for the following functions:
- Governance (voting rights);
- Staking (locking in to receive interest);
- Transaction fees (paying for the use of Mirror Protocol).
Where can you buy Mirror Protocol (MIR)?
You can buy Mirror Protocol's MIR token on Coinmerce's crypto exchange with iDEAL, SEPA, MyBank and Giropay. You do not pay any deposit fees for using these payment methods. Transaction fees vary by cryptocurrency.
In addition to Mirror Protocol, you can also purchase more than 160 other cryptocurrencies. So because of Coinmerce, you actually only need one account to get all your crypto coins. And if something goes wrong? Then you can simply contact our Dutch support team via email or live chat.
Don't you have an account at Coinmerce yet? Then click here to create an account. If you do have an account, you can click here to buy Mirror Protocol (MIR) at Coinmerce.
How and where can you store the MIR token?
Once you have purchased Mirror Protocol at Coinmerce, the MIR tokens are moved directly to your Coinmerce wallet. Here they are safe, as Coinmerce keeps most of its crypto assets in cold storage.
It is also possible to send your MIR tokens from Coinmerce to an external wallet. In that case, make sure that the wallet supports the protocol that MIR uses. Check this also when you want to send MIR to a hardware wallet, from Ledger or Trezor for example.