The Terra Ecosystem -- Wielding Synthetic Assets, Payments, and Savings With Stablecoins - Do Kwan

our our next uh project or our next uh presenter is uh native to the cosmos space this this project um we're gonna be talking about tara so i i never knew anything about tara until i was doing some research as part of a project i was uh contributing to called micro tick over the summer when i learned what uh this platform was doing it blew my effing mind um you'll hear a lot more about it but tara is a is a blockchain uh tender based blockchain part of the cosmos ecosystem that's seen some pretty uh mind-boggling adoption in south korea um and there's uh there's much more uh interesting things even growing out of it right now so uh dough good to see you okay uh so maybe it'll be productive if i spend some time um talking about mirror protocol and uh why it's interesting so i'm just gonna share a screen okay so uh at terra we uh run a set of algorithmic stable coins uh that are picked to real-world currencies like the u.s dollar uh you know the singapore dollar the korean law and so on and so forth and we recently launched a synthetics protocol called mirror that wraps around 14 different tokens that track the price of u.s equities so if you uh you know look at the types of things that you can buy with ust which is our dollar peg stable coin it's things like m apple uh that's uh the tracks the price of of an apple stock and google tracking the price of google and tracking the price of tesla and so on and so forth so what's kind of really interesting is that uh these synthetics uh are sort of minted on the para blockchain but they can be migrated over to places like uni swap for instance so um for example if you go to uh eth.mirror.finance we've built a front end that wraps unison so uh for example for the m tesla token you can press this and then it it it takes you to uniswap's own native interface where you can uh purchase the and tesla token right so it trades against terra usd but you know technically it can trade against anything else yeah so um and then you can also trade this on pancake swap which uh i haven't had the pleasure of using yet but yeah my laptop is like four years old so okay yeah there's too many of these but uh basically the idea is that uh we've sort of constructed a scheme whereby uh you're able to create synthetics that uh you know replicate a trading experience of what you would find on an equities exchange like commodity exchange uh and then we've taken this interchange to be supported on ethereum and then finance smart chain uh tera and then coming to some other chains like uh solana uh fairly soon so uh basically some of the things that are uh interesting to use on top of these equities versus holding the underlying assets is uh for number one you know uh the ability to earn a very high apr on top of these things so uh for example like the apr that you can get on holding like twitter stock for instance is let's say uh 300 percent right like 290 from amazon like 290 percent from an apple and uh if you compound these daily so let's say that you earn uh apr in the form of the native governance token which is called mir and then you sell half of it and then you keep the other half uh and then you put it put it into the mir token uh pool itself you can earn you know a really high apy so i would say some are hovering around the realm of two thousand percent so uh basically the value proposition becomes really interesting whereby not only can you hold uh synthetic price exposure to some of the most attractive assets in the world in the form of u.

s equities but you can also earn a very high uh apy on them so it's kind of you know like the marketing slogan could be uh get paid to hold apple stock which is you know in my opinion very attractive so uh from a yield farming perspective uh the ability to earn uh yield on holding real world assets is much more attractive than uh i i i would say the rest of the universe of yield farming opportunities and uh the reason for that is for example if you're providing liquidity on uh d5 native token let's say it's called the french fry token uh then there's there's sort of no price floor uh so like the price of the the price volatility of the token is much much higher right like it shouldn't be surprising to you at all if the price of the french fry coin goes to zero or if it spikes like tedx for no reason so basically uh the yield is high but it's only high to uh compensate for the very high risk of impermanent loss but uh for microsoft stock or for like netflix stock or apple stock volatility is there but it's definitely not at a scale of what you would expect from uh some of the smaller coins in d5 so that that's something that's uh worth considering okay so uh we're building some exciting things on top of uh mirror so for example there's a bunch of things that are coming up on top of the mirror protocol so for example there's a project uh being built up called spar finance so basically the idea here is that it's a decentralized fund management protocol whereby fund managers can construct sort of shall we say signaling wallets that invest into you know public markets and mirror so investing into uh synthetic stock markets and then uh you know uh community members can sort of uh attach their wallets to uh the spar fund wallet and then basically have these fund managers um you know allocate uh their portfolio into different projects in a totally non-custodial manner and in exchange a certain percentage of the fee uh management fee or you know some carry that you make on the uh that the fund manager makes on behalf of you can be paid out to the fund manager in in the form of so let's say thank you uh there's different things that's being built out like an etf product uh a dynamic etf product whereby a smart contract determines the rebalancing uh of the assets in the pool there's also you know like a bunch of new assets that are looking to get listed um yeah so really interesting things that are being built up on top of these things okay yeah so that that's pretty much uh coverage of great protocol it's a a pretty interesting application of what you could do with synthetics um and uh we're looking to get these uh built out in more chains we're looking to expand uh the asset coverage that we have by uh having mirror protocol cover uh the wide gamut of different types of equities commodities and etfs so basically you're going to start to see a mirrored version of nasdaq on these things and then the new products that are going to be built here is going to sort of expand the functionality of these varied assets such that you can do more with these assets when you could ever do with the underlying equivalents okay yeah so uh that's just about it uh on what i what i wanted to cover uh if i had known this was a presentation i would have said more but well we could just use some like spontaneous q a i suppose um let's see if anybody has any questions in the comments here uh is somebody saying can you explain how you'll fix the premium price on mirrored assets yeah is is the are the questions are oh okay cool yeah so uh right now uh most of the mirrored assets are trading at a premium to what their underlying prices are and then uh the premium gets much worse uh when markets are closed versus you know when markets are open and that's because there's no arbitrage loop to close things out so the reason why mirrored assets traded a premium is because um number one uh mirrored assets have a significantly higher cash flow from dividends so um and what i mean by this is from yield farming so it makes sense that they from a discounted cash flow perspective that they'd be worth more than the underlying asset right um and then number two uh the underlying stable coin that gets used as collateral to create these m assets which is terra usd is currently uh trading at a premium and uh so that that premium gets uh reflected in the mirrored assets themselves because they are a derivative of atera usd so a couple of things uh number one uh we're going to be solving the tara usd premium issue starting from next tuesday because at pera we sort of recently passed the governance proposal to make the minting parameters for terry usd much more significant to a magnitude of about 20 x so once tera usd premium subsides then in that case it's going to make it much easier to sort of humiliate the premium issue and then ask this as well so that's one thing uh number two um the we're sort of tweaking the uh incentive mechanism a little bit on mirror such that it becomes uh more incentivized for people that are looking to arbitrage price differences between uh underlying and the am asset even when the markets are closed so once that mechanism is out a tentative timeline early march uh i think uh the situation should be much better cool um speaking of the token somebody's wondering uh james fox is wondering what is the inflation of the mere token currently let's see uh so for year one it should be around 100 percent okay yeah and then uh after that it should diminish to let's say 20 ten percent uh until it reaches a fully uh diluted supply of 370 million tokens okay uh and then another question what about the uh the leverage for the liquidity yeah so uh we've recently made a proposal on cream finance to get uh mirrored assets added to uh to their lending markets and what this is gonna enable is that uh we'll be able to get this into alpha so in that case yeah you could do never shield for me or not moral great japanese chapter um i have a question i i would suspect is on the uh the minds of some some viewers right now is um in terms of of how this uh relates to ethereum um you know currently the the vast majority of d5 liquidity is over in the eats space how does mir and maybe this relates to terra's plans as well but how do you guys plan on bridging over to sort of uh network with that wonderful giant big-ass liquidity pool over in ethereum land yeah so one of the interesting things that we noticed is okay so we created a bridge called shuttle to bring over terra usd and um you know these mirrored assets over to ethereum and then terra usd is starting to become pretty well integrated into lots of places in the d5 stack on ethereum so um for example it's on an incentivized onsen pool and sushi swap it's on unislap it's on curve trading against usdc and tether um and it's on places that harvest finance and you know lots of different places and then a similar situation from various assets and what's kind of interesting is that if you have incentivized pools on both ethereum and terra we're we're starting to see a lot of transactions crossover into a chain that is more affordable because if you're going to be trading these assets regularly anyway right uh people are willing to sort of take the jump into uh try to trade in a system where it has lower cost basis i mean for some of the guys um you know like it doesn't fit their security model or for you know stickiness and various different reasons they would stick around but uh in other cases yeah crossover has um definitely uh yeah we were we were definitely able to see that so in terms of the total number of transactions on a daily basis we're seeing about uh 16 000 transactions on terra uh and then maybe just a couple thousand on the ethereum side for mirror so yeah comparison what what was that figure say maybe three months ago or i guess the protocol is pretty pretty new so it's hard to have historical data yeah it's only two months old so we don't we don't really have anywhere up and to the right right right okay yeah um meno pep is wondering should i stake my mirror um put it into a uh lp for the best returns yeah um great question [Music] so if you believe that the price of mirror is going to stay relatively stable so for example you feel like you know towards the end of the year it's going to be worth more than a third of what it is today or worth less than 3x of where it is today then uh you should you should um yeah you should put it into and help people so mirror against ust but if you feel like it's going to be highly volatile then you should put it into the um the governance taking which also offers up to almost 100 apr cool uh geisha is wondering can you explain why tara doesn't want the on-chain luna stablecoin swap used besides as a way to control control stablecoin price yeah um so that's a good question so for sort of like a backgrounder um how cara stable coins maintain their stability uh is that they uh so so at any given time you can trade in stable coins against the system for whatever their nominal value is in in in the luna token so in in essence the protocol acts as a price maker uh for the stable coins using the uh the luna staking token as the medium so for example you can always trade in one pair usd against the system to get a dollar's worth of luna in return so which means that when the stable point is trading at 90 cents you can buy from the open market get a dollar's worth of luna and then sort of keep doing this arbitrage until um the uh the price stabilizes so it's it's not so much that we don't want this swap mechanism used for anything besides stabilization it's just that like uh a lot of the times in which swap mechanisms are being used uh there are lots of cases in which it can be exploited at the cost of uh somebody who's holding luna so for example um you know in a situation where the prices of the coins are stable but a lot of people are let's say uh you know swapping the stable coins for luna instead of buying it from the open market then in that case it's um it's a way to dilute luna supply because you know luna gets printed as more terra swapped it right without sort of having to pay the sip is cost and therefore the price increase that you would get if you were trading the open market so um you know obviously that's something that isn't value constructed for the ecosystem cool that's a great nuanced answer thank you um esquire13 can you explain anger and thoughts about when it'll be released yeah so um so so anchor is a pretty interesting product where we attempt to uh get pretty close to a what is a fixed income instrument uh so so uh the way the way that we've designed it is it's very similar to uh let's say you know a federal funds rate for instance so for example people that are holding the anchor governance token can set a target interest rate or what on what they want to anchor to use and then basically how the system works is that as so basically in the background there's a money market where uh staking positions across different ecosystems are are being leveraged to earn yield uh to power uh interest rates on deposits so uh when the stake reward revenue is in excess of this target rate then we're fine so in that case we just give out the fixed income and then we keep the rest as some sort of buffer to pay for future interest dividends once we run out and when the uh when the interest rate falls below the target rate in that case we dip into the reserves that we built up during times in which we were making excess and if the demand falls even below that i.e we spent everything in the reserve then that case incentivization schemes in the anchor governance token is used to bring borrowed demands back up so in essence psyc what the system tries to do is that it tries to use a set of monetary levers some of which rely on the monetary policies of various staking systems to try to get to a target interest rate that the community deems feasible to be paid out in stable point um so i i think this is pretty exciting because we've never really had a scalable fixed income instrument in crypto and if you have such an instrument it becomes very useful to plug into lots of different uh d5 primitives so which is why we try to target anchor as you know sort of like a gold standard or reference interest rate in crypto similar to what you would find in a federal funds rate uh that that sort of animates the us dollar uh the launch schedule is uh we're going to be launching with um so b2b partners so we're wrapping this up into an sdk and then sort of exporting it such that it can be hooked up into lots of wallets and fintech services so it should be in a matter of weeks so definitely in february and then we generally for everything we ship we tried to airdrop uh anchor governance tokens to people that stake luna so um pretty on that too cool yeah it sounds like you guys have really thought through the economic incentives the tokenomics edge cases um you mentioned security dough um can you speak a little bit to the challenge of building a a separate validator set for a new zone um you know did you did you sort of uh leverage your existing validator said and uh do outreach to what you had with with tara um you know i know from uh you know working on building a validator set with microtic it's it's it's tricky you want to make sure that it's really distributed and um it's one of those trade-offs you know you can't just rely rely on the wonderful shared security of of eth um did you find that to be uh a fairly straightforward thing leveraging your your your cred with with tara yeah so um so both mirror and the anchor are built on pop-up para so we have a sort of a web assembly uh virtual machine um you know called cosmosim which was built by uh a good a good folk set yeah so so basically it's basically a set of smart contracts but when we were first launching pera it was i think it was a little bit easier to bootstrap the validator set because we were the first zone besides iris net uh to launch out of the cosmos ecosystem so i think a lot of cosmos validators were sort of you know more enthusiastic about joining a zone just just to understand what the experience would be like but now that there are lots and lots of uh you know different zones that are popping up i think it's more challenging to bootstrap a set yeah it makes sense um let's see here we have time for a few more questions um let's figure architectural difference uh swiss david's wondering how would you explain the differences between ethereum and terra this touches on some kind of high level uh you know like we're just talking about shared security but um one big difference is it's not super uh freaking expensive right now on ontario but um yeah it's kind of kind of high level stuff but what would you say are the are the big differences there yeah so um so just just in terms of philosophy like ethereum needs to be a uh sort of like a decentralized computer that is sufficiently general to be able to service you know most types of use cases that you want to build so uh the the idea is that uh you know ethereum is sort of like a decentralized aws um and then eat the reserve currency that gets the reserve and the gas currency that gets used throughout this ecosystem uh so for terra you know the goal it's it's more of a it has a very strong fintech vibe so the idea is that we would want to take uh you know um you know the good parts of what animates blockchain technology and then think about how we can use uh these technologies to solve problems that everyday users come across in finance so for example if we have constructed a set of stable coins the problems that we think about is how can we make uh these stable coins easier to spend so for example how can we make uh use uh you know the decentralized nature of these stable coins to uh you know improve pain points and legacy payments technology in a way that other players cannot or how can we make uh the trading experience or the ability to buy asset exposure in different places across the world much much easier by using decentralized synthetics and how can we come up with an uncorrelated savings rate by uh you know tapping into a vast reserve of yields in decentralized finance and and on ethereum and then bring it to lots of people in the world that are not making a real interest under savings uh and uh therefore sort of demolishing their household savings as a result so i would say that it's a difference between sort of a sufficiently general machine and then uh sort of like uh uh sort of like uh a fintech ecosystem that is powered by default very cool um james fox has a great question uh do you guys have plans to expand uh this support i think terror related uh expand payment outside of south korea yeah so great question so um i i think the ability to pay in different types of crypto is going to be commoditized over the next couple years so uh with visa offering crypto payments uh you know paypal demo those will all right now they only allow the ability to purchase a bitcoin but they're going to expand into uh different types of payments use cases i think in the latter half of this year i think where terra is a little bit different is that um on most of the different payment services they um sort of try to focus on exposing the crypto to the consumer and the merchants to fiat so so for all of these different services it allows the user to pop up in crypto and then always the settlement piece with the merchant is in terms of uh fiat we're actually the opposite so if you look at para payment services the uh you know the the consumer side of the engine is is always abstracted so they generally like to pop up in either their bank account integration with or with fiat directly and then the settlement to the merchant comes in the form of crypto um so uh you know i think this has some massive benefits like uh like for example the ability to settle faster or for cheaper and i think this is sort of like a use case that resonates through most places in uh in asia um but you know like in 2020 had things gone normally we should have expanded to more places but licensed acquisition and the ability to talk to regulators becomes difficult during a pandemic so i think as the situation ameliorates a little bit i think we'll be able to be a little bit more expensive uh aggressive on expansions right a few users are wondering if you're drinking wine i don't know about you though but we're about to start drinking beer here at eat denver headquarters yeah it's uh 8 a.m but uh the answer is probably no guys um great yeah i guess it's time to wrap up um it sounds like some users might have more questions in the comments though if you want to jump in those uh and as far as just learning more the latest and greatest i know you're pretty active on twitter um mirror protocol uh is it your protocol or is it mirror.protocol for the website or yeah so uh if you if you go to uh mirror above finance or anchor protocol.com or uh you know tear down money there's a set of community links i'm pretty active in all of those uh there's also my twitter which is uh you know d0h0 k1 so if you send me a dm what happened to chad um yeah thanks for having me today yeah thanks for stopping by good to see you and have a good one yeah bye-bye okay um yeah if you guys want to see an example of like a a project in a platform that's iterating really fast i think that's a good one and uh tara was interesting enough now that they've added mirror it's really getting far out and then uh you know i saw one of the comments having to do with you know mirroring uh us equities this is an interesting uh question from a lot of standpoints regulatory uh from an oracle standpoint so keep an eye on what they're doing with with that too because they're one of the projects that's really pushing pushing the boundaries and i think inevitably we'll probably see some uh you know and i think though alluded to this but some of the uh those native assets pegged over to eth on the erc20 side and then while they're on unit swap and holy crap anybody can get them on ethereum and it gets very interesting from there