Summarising the discussion so far: it seems to me most people agree that veANC is a good idea, and most of the debate is about whether to provide “boosties” on the borrow side or the earn side. Retrograde’s proposal preferred borrow-side incentives whereas Arca/Polychain’s proposal and Pedro’s proposal prioritise earn-side incentives (albeit with different implementations)
Instead of choosing between borrow side and earn side incentives, why not have both and let the governors decide? The simple design would be to have gauges for aUST as well as all collateral assets (bLUNA, bETH), allowing veANC holders to vote on where they think ANC incentives should go. This has a few advantages:
- Preserves aUST composability since yield would be paid in ANC on top of base earn rate
- Preserves simplicity as earn depositors still earn 20% and don’t need to interact with veANC if they don’t want to
- Allows boosted rewards for depositors that have skin in the game, achieving the incentive alignment objectives highlighted by @josh_rosenthal and @Matt_Hepler of Arca
- DAOs like Retrograde would still look to accumulate ANC in order to maximise earn rate for users and minimize borrow costs for borrowers
- Doesn’t dictate whether incentives should go to earn or borrow side but instead allows governors to decide based on the needs of the protocol at the time
Thoughts?