Mirror and UniLend Partner To Bring First Synthetic Stocks to a Decentralized Lending Protocol
Mirror is pleased to announce our partnership with UniLend, a decentralized money market protocol, to bring major mAssets to UniLend’s lending protocol. The mAssets will serve as collateral for borrowing and can be deposited by liquidity providers (LPs) on UniLend’s platform to generate yield.
The integration will be the first case of synthetic equities used for collateral in a DeFi money market protocol.
Mirrored Assets as Collateral on UniLend
“We’re thrilled to extend the functionality of mAssets as collateral in a lending protocol like UniLend,” says Do Kwon, Co-Founder & CEO of Terra.
“The deployment of mAssets can play a significant role in improving capital efficiency for lending platforms. They also provide a unique avenue for borrowers to retain exposure to mAssets (e.g., stocks) without sacrificing significant liquidity, and lenders can earn attractive yields on their deposits based on borrowing demand for synthetics like stocks, ETFs, and eventually, other assets.”
UniLend is a decentralized money market with its own DEX built into the platform, enabling a more robust liquidation mechanism that does not rely on third-party DEXs. The platform includes a suite of features including spot trading, borrowing/lending, community-based governance, and critically — UniLend allows for the permissionless listing of ERC-20 assets, without any entity retaining control over the process.
A Net Positive for DeFi
The injection of mAssets into a decentralized lending protocol like UniLend is promising for several reasons. Primarily, mAssets are significantly less volatile than crypto assets, especially illiquid altcoins. As a result, the over-collateralization ratio (OC) ratio for borrowers can be lowered compared to hyper-volatile altcoins, where a higher OC ratio is needed to defend against liquidation. Major tech equity mAssets like mAAPL and mGOOGL are less volatile, are supported by real-world cash flows, and are significantly more liquid than altcoins, meaning OC ratios don’t have to be as high to defend against liquidation.
Improved capital efficiency is one of the direct consequences — a net positive for DeFi. The deployment of mAssets from Mirror on Terra to UniLend on Ethereum is also a manifestation of superfluid collateral, a primary objective of DeFi at large.
Depositing mAssets on UniLend
UniLend is built on Ethereum, so users on Terra who wish to deposit mAssets into UniLend can utilize Mirror’s Shuttle bridge to Ethereum before sending the mAssets to UniLend. Other users on Ethereum can simply purchase mAssets on Uniswap and send them to UniLend.
Users can borrow crypto assets against their mAssets on UniLend, meaning that they can retain exposure to the underlying stock while taking out a loan in a stablecoin, BTC, or some other crypto asset. Should a user wish to attain additional mAsset exposure via margin, they can deposit a specific mAsset into UniLend and borrow against it to mint a stablecoin, which can subsequently be used to purchase more of the same mAsset.
For example, if Alice wants to increase her exposure to mAAPL, she could purchase mAAPL on the Uniswap mAAPL/UST trading pair, send it to UniLend and borrow against it. In return, she would generate UST, which she could use to purchase more mAAPL on UniLend’s DEX, the same Uniswap mAAPL/UST pool, or even use the Shuttle bridge to purchase more mAAPL on TerraSwap and keep her additional mAAPL on the Terra blockchain. Talk about composability!
Conversely, UniLend LPs can deposit mAssets into UniLend and accrue appealing yields based on borrowing demand in the lending protocol. Considering that the Mirror + UniLend partnership is the first to bring synthetic stocks to a decentralized lending protocol, demand for mAssets on UniLend, in part, will be related to the demand for permissionless access to major US tech equities — a vast market. Many people worldwide do not have access to US stocks, particularly people in financially disenfranchised regions, let alone do they have exposure to generating a yield on US equities or using them for collateral to borrow crypto assets.
UniLend is about to release the V2 of their testnet, which will incorporate the FAANG (Facebook, Amazon, Apple, Netflix, Google) mAssets in the run-up to the UniLend mainnet launch. In the meantime, we will be working with UniLend to seed liquidity for the mAssets, UST, and other trading pairs available on their platform.
“As the Internet of Money begins to take shape, we press forward to help cultivate an unshackled system,” says Chandresh Aharwar, UniLend Co-founder & CEO. “The anticipation of the future of money is exuberantly growing and we believe that mAssets will be on the forefront of creating new opportunities that the legacy financial system could not offer. We’re excited to see our partnership with Mirror Finance flourish.”
UniLend is a permission-less DeFi protocol that combines spot trading services and lending/borrowing functionality within the same platform. We are opening this functionality to new and innovative DeFi technologies.
UniLend’s mission is to create new opportunities within the DeFi space by welcoming the rest of the ERC20 token ecosystem and beyond to the DeFi world, hence their motto “unlocking the true potential of decentralized finance.”
Mirror is a DeFi protocol powered by smart contracts on the Terra network that enables the creation of synthetic assets called Mirrored Assets (mAssets). mAssets mimic the price behavior of real-world assets and give traders anywhere in the world open access to price exposure without the burdens of owning or transacting real assets. Mirror is a community-governed project that seeks to unlock the wealth creation of major asset classes to users around the world via a permissionless access model.