All you need to know about Mirror Protocol

Updated on 22 August, 2022 2:23 PM
1 min read

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    Mirror Protocol was formed in 2020 by the same team that created Terraform Labs and is based in South Korea. Even though it was formed by a centralised organisation, the Mirror protocol is completely decentralised, and holders of the MIR tokens are the ones who have the power to function and they use their votes to change transaction fees or to propose new changes in the platform.


    Why do traders use Mirror Protocol?

    In recent times, the demand for synthetic assets has grown among Decentralised Finance (DeFi) dealers. The said traders claim that these synthetic assets will help smooth out the traditional market system giving access to stocks and other assets to traders from all around the world more easily. This is where Mirror protocol comes in by providing synthetic versions of these stocks.

    How does Mirror Protocol work?

    Each digital asset on Mirror corresponds to a physical asset. It is a blockchain-based protocol that is decentralised and allows users to trade synthetic assets which are cryptocurrency tokens that mimic the value of physical assets like equities. The synthetic assets may represent real-world stocks as well as commodities such as rice and metals. Without the need to hold the things they represent in the real world, synthetic tokens give investors access to the price of those assets. Investors can always track the price of their tokens whenever there is any price fluctuation even without owning them. Thus investors get an incentive to invest and hold these assets which they won’t have done earlier for miscellaneous reasons.

    The Mirror Protocol, which is hosted on the Terra blockchain, can be used for a variety of cross-chain and multi-chain operations, linking ecosystems like Cosmos, Ethereum, and Polkadot. These synthetic assets provided by Mirror are known as Mirror Assets (mAssets) and are also available on Binance Smart Chain (BSC) and Ethereum.

    The network's liquidity is additionally increased through Mirror Protocol, including through token exchange. Users who protect the network are given Mirror Tokens (MIR), which can be used for trading, governance, and a variety of other purposes.

    Key utility of the Mirror Protocol

    One of the major goals of the Mirror protocol was to provide a trading platform to global users that can be accessed by anyone and at any time of the day, week, or month. It was created to break down the major financial barriers to traders that give time and geographic limitations to trading platforms.

    The mirror token or MIR serves as a governance token by allowing its owners to vote on protocol updates. Another aspect of Mirror is that users can control and trade a tokenized form of an asset through synthetic alternatives in place of owning the actual asset.

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