Cryptocurrencies are transforming the traditional financial industry faster than anyone can imagine.
Bitcoin has shown that the transfer of digital assets via the Internet no longer requires intermediaries.
Ethereum then made it possible to settle a wide variety of financial contracts digitally, automatically and trustless.
The following tutorial will show you how to use Mirror.Finance:
- without being registered on an exchange
- without trusting anyone
- with minimal fees
- at any time (7 days / week)
with shares and other assets.
Overview
Mirror.Finance is a decentralized app (Dapp) that serves as an interface for a blockchain application. The underlying blockchain is called Terra with its native “Luna token”.
Mirror.Finance uses the “smart contract” feature of Terra and the stablecoin UST. Through the interface, one can create, buy, sell, and stake synthetic representations of various stocks, indices, ETFs, and in the future, even other assets. In this article I would like to focus on the functions and operation of Mirror.Finance — a detailed explanation of synthetic assets will follow in a later article.
Connection with the blockchain and the interface
First, we need a program that holds the private keys and can interact with the blockchain. Since we are using the Terra blockchain, we install the Terra-Station browser extension for the Chrome or Brave browser:
Link: https://chrome.google.com/webstore/detail/terra-station/aiifbnbfobpmeekipheeijimdpnlpgpp
We will now start with the creation of a new wallet, its public address and the corresponding private key.
To do this, click on “New Wallet” after opening the Terra extension.
Here we choose any name, a strong password and write down the “seed phrase” on a paper or in a book and keep it in a non-digital and safe place.
Attention. Please do not save or photograph it on your computer, this is the private key and anyone who knows it could access your digital assets!
The next step is to check again if the seed phrase got wrote down correctly.
With a click on “Create a wallet” we are also ready to get our public address, which you are also welcome to save on your computer, since it is only needed for receiving, but not for sending funds.
Now you have successfully completed the first step and created your own wallet.
Next, you need to connect the wallet you just created to the Terra interface. To do this, go to https://terra.mirror.finance/ and click Connect.
After that, confirm the interaction.
If everything worked out smoothly, you can now see your own wallet in the Terra interface instead of the Connect button. You have now successfully connected your own wallet.
Deposit money
The next step is to transfer money to your wallet. As already mentioned, the stablecoin UST is required for this.
What is UST: https://medium.com/terra-money/announcing-terrausd-ust-the-interchain-stablecoin-53eab0f8f0ac
The best way to do that at the moment is through Kucoin, a well-known cryptocurrency exchange. You can buy UST with other coins like USDT.
If you don’t have any other cryptocurrencies yet, you can also buy USDT directly with a credit card here and then exchange it for UST:
Now you have to change USDT to UST by pressing Sell in the USDT/UST pair:
Now you have to transfer the just purchased UST from the “Trading Account” to your “Main Account”.
Finally, you need to send your UST to the wallet you just created. (Wallet Address -> your public address)
Back on terra.mirror.finance you will see your credit after a short time.
Trading stocks with Mirror.Finance
That wasn’t exactly easy, but now we come to the interesting part — trading assets with Mirror.Finance.
In the Terra interface you can already see the “Trade” button, which leads you directly to the buy and trade interface. Here you can directly select from a list the asset of your choice with the desired amount in UST. You can also see the first advantage: The crypto representation of the share, in this case Apple, can also be bought in smaller parts, e.g. for 10 UST and even less.
By clicking on “Buy” and then accepting the warning, we can confirm the transaction in Terra Station by entering the previously chosen password (not the passphrase !).
Voilà, within a few seconds …
… the transaction is confirmed.
Another advantage of trading synthetic crypto assets is now also apparent — the transaction fees are only a few cents. The price is determined by a so-called oracle, which reads the latest price from traditional exchanges and feeds it into the blockchain.
This also leads us to the third advantage. This trade was made on a Sunday — this means that it is possible for me to trade the respective asset at the closing price on exchange free days. (Sunday -> Friday- Close)
With a click on “My Page” we see an overview of our assets:
If we want to sell, this is done again in the Trade window in the same way:
Liquidity Staking (Passive Income)
In this part I want to explain you how you have the possibility to generate a passive income with Mirror.Finance.
This works by providing liquidity to the market. This is to guarantee the execution of trades.
For providing liquidity, Mirror.Finance rewards us with the so-called MIR token, which is used as a governance token (voting).
We now go to the “Pool” menu and further to “Provide”.
To provide liquidity (“provide”) we have to add the asset and UST in the same value and confirm by clicking on “provide”:
After a few seconds you will receive a confirmation. You can now see how much liquidity has been provided in MAAPL and UST Pool, and that we have received a “Pool Share Token” for it, which represents our share in the trading pool. This is also called “LP”, which stands for “Liquidity Pool”.
Now we go to the “Stake” menu and search for our Apple Pool. A small note “Stakeable” shows us immediately that we have the necessary LP tokens here:
If we click here, we are able to choose and “Stake” our maximum number of LP tokens:
Back under “My Page” we can take a look at our successful “Stake” in the overview and observe how the rewards in “MIR” slowly grows. Of course, this can take a few hours until this value changes. As soon as there is a reward, you can press the 3 dots next to it and claim your “MIR” with “Claim”.
These can then be sold again directly, also staked or voted for new assets or other “Proposals” in the “Governance” menu.
Congratulations — if you’ve made it this far, you’ve successfully
-created your own Terra Wallet and connected it to the Terra Finance Interface
-purchased UST and transferred it to your own wallet
-traded your first synthetic assets
-generated your first MIR tokens through staking
If you have any further questions feel free to ask them in the comments, if there is enough interest I can write another advanced article with more technical background.
The whole thing will also be shown in my stream, so subscribe to my Youtube channel to discover this and many other exciting topics.
~SiRo~
(edited by cryptocrew)
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