With the introduction of the Borrow v2, and the possibility of having bANC (or any other ANC derivative) as collateral, could this also be an opportunity to include incentives for ANC derivative collaterals to the protocol?
For example, we could add a hypothetical 15% LTV increase for collateral amount in ANC derivatives over other types of collateral, valued in UST, i.e.:
- other collateral = 9000 UST
- total ANC derivatives collateral = 1000 UST
- effective collateral value = (9000+1000*1.15)=10150 UST
With this the protocol would allow higher borrow rates and/or safer liquidation space for those using ANC (or it’s derivatives) as collateral.
A nerfed version of this would be to simply consider the LTV incentive at time of liquidations, not borrowing, and thus provide a liquidation safety net, which may on it’s own be worth enough as a utility. Feature like this would be very intuitive to display in the existing Anchor frontend - the term “anchoring” fits the use case quite well.
If people are incentivized to use ANC as collateral, liquid supply of the token will shrink, causing positive impact on the token’s price. Other protocols could take advantage of this feature and create interesting high yield looping strategies.
There is an obvious risk to having an incentive like this in a sense that if all of the collateral was in ANC derivatives, the incentive could make the protocol illiquid. However, this can be engineered around by providing a variable LTV incentive that depends on the amount of ANC collateral compared to the rest of protocol’s collateral (or total collateral) - the higher the ratio, the lesser the incentive.