Abracadabray.Money UST Strategy Megathread

Hello everyone,

After pulling my loans from Anchor due to concerns of the health of the protocol and still holding onto the acumulated rewards, I wanted to gather an idea of where the community is at regarding the UST pool on Abracadabra and the amount of depository inflow from the strategy.

For those who do not know, you can find reference to the degenbox strategy using Anchor here:

For additional information about the leveraged strategy, find it here:

For information about how this can be done even further, find it here:
Note that for this one you will have to use some creative thinking to understand how to do it with Abracadabra.

Some disclaimers:

  • This is not the only protocol doing things like this with Anchor, many are doing so and finding ways to utilize anchor deposits.
  • This is not a discussion about wether it is good or bad to be utilizing such strategies, it is a discussion about the impact of such strategies to the health of Anchor Protocol and possible solutions going forward.
  • This discussion needs to be had with the community at large and key members of Anchor protocol, either those holding large percentages of Anchor/collateral supply or developers/stakeholders of the protocol. It has been going unaddressed in multiple forum posts over the last couple months and is damaging the branding and image of Anchor, a key component to the protocol’s success going forward.
  • We will leave discussions/conspiracy on why TFL has not addressed the issue yet aside

I think the impacts of these strategy’s on anchor’s ecosystem is toxic. It promotes short term growth in favor of long term stability for the protocol. This strategy has had an obvious negative impact on borrower’s rates even though it should be positive. With more dollar supply borrowing should get cheaper yet it’s getting more expensive. Anchor is struggling to keep up negative interest rates which the rest of the de-fi lending community is more than able to do. We shouldnt have a competitor that uses us offer better rates for borrowers than we are able too yet that is exactly what is happening on Abracadabra.money

The yield reserve, essentially our warchest as a protocol is draining at an alarming rate with no clear ideas of how to restore balance. This is following many months of positive yield growth. Collateral growth has stagnated in the last month and we can’t just rely on increasing collateral value to increase borrowing demand.

The lending market is competetive as most saver’s or bond holders know. It’s great that Anchor is now able to compete with the big leagues in lending however its clear it has gotten sick while trying to get there. Nearly all of the recent forum proposals have been linked in some way or another to this leveraged UST strategy. It is not looking good on either Anchor’s books or branding.

There has been plenty of great ideas / proposals on the forum over the past couple of months to address the issue that have gotten nowhere lets try to lay them out and highlight the best ones here.

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Why haven’t we put great ideas/ proposals into a vote already so we can determine if it’s a good solution to do or not? Seems to me we’re waiting for nothing? If we can start putting it on a vote already, we can further refine and ideate the proper solution. We’re talking too long and having multiple discussions without taking actions.

My first post in the Anchor forum. Just wanted to share that this morning I’ve pulled out of Anchor borrow, exactly for the reasons stated in this thread.

Sitting on the sidelines waiting to see what happens, this doesn’t feel right.

The anchor team is working to increase borrowing demand to match the growing deposits by taking Anchor cross-chain. Cross-chain Anchor

Appreciate you putting this post up but it seems a bit contradictory. If you don’t think these strategies are bad, then nothing you list out here is surprising or needing addressed. You’re basically leaving those folks out of the conversation. That’s all I have to add here.

The earn deposits has outpaced the collateral side of Anchor (which fluctuates based on the price of bAssets). The hypergrowth of earn deposits is primarily the result of MIM degen box and as many people stated above is unsustainable.

Perhaps a way to keep the system in check is to put a max ratio of earn deposits / collateral value. This is a model just proposed as a potential solution: [Proposal] Institute a deposit limit when there is a max of 80% earn deposit to collateral ratio