Can we somewhat duplicate Mechanism like Celsius and Orion Money to give the ANC Token more value?
Like having % of account in ANC will give you higher return in Earn? Those that don’t carry ANC get like 15% yield? Those that do get 20%? Should help a lot with sustainability of yield reserve and incentivize to actually hold ANC and accumulate.
I know people here are going to mention, governance as the value…but the let’s be real majority of people don’t care. So ANC actually has zero value to most people.
I think if you look at the paper on Mars protocol it will be used as collateral (anc token) as well as some of the other newer protocols. If these protocols do take off the anc token will rise in value.
If ANC is the only option as collateral for these newer protocols. Then yeah very bullish
Actually, nobody will want to use ANC as collateral because the value keeps dropping. I am assuming Mars Protocol would liquidate you if the value of your collateral drops to a certain threshold.
Best solution is to actually build ORION tokens mechanism into ANC token
That seems like a crappy way to drive value to the token.
Really value will accrue if/when staking rewards increase. In my opinion, that won’t happen until people actually want to use the borrow function of Anchor without it’s insane borrowing incentives.
The borrowing incentive inflation combined with 200 million tokens being released to investors starting 1 year from genesis are very strong headwinds to Anchor’s price.
Organic borrowing demand is the key driver of sustainable Anchor value!
Well if a high amount people aren’t borrowing with high yield incentive (shown by borrowing yield still high), how are they going to borrow when incentives are lower. Especially when the risk is so high with liquidation.
Yes, those are big headwinds to ANC’s price 1st year.
The big lesson is that we need less risky methods to support the entire Anchor platform.
It seems most things in Anchor just rely on the Borrow side, aka people taking massive risk. That isn’t a good model. Anchor needs to be supported by revenue that doesn’t require people to take massive risk. A combination of moderate and and high risk will sustain anchor
To add more arguments for the percentage tier for Holding anchor.
- Incentive to hold ANC because you get a higher yield %
- Those that don’t hold the designated amount of ANC in their portfolios get 15% Earn
- ANC price will rise because everyone wants to get higher yield.
- The 2nd tier to all this, is choosing whether your yield gets paid out in UST or ANC.
- Highest yield you can get is when you choose to get rewards in ANC and have a certain percentage of your Earn in ANC.
- Those holding ANC will now get exposed to to high yields and capital appreciation.
- Protects yield reserve more.
The guys at Orion.money aren’t going to like this…
I think most investors are very used to the idea of better rewards for those with more skin in the game. Higher rewards for those that time lock ANC (3 months?) and certain thresholds for higher rewards. Yes, this can reward whales, but smaller depositors can lock for longer to get more earnings which levels it up. When institutions come in, you want their commitment. The lock does not have to be absolute … if they want out before “maturity” perhaps they should get penalized with less interest. The net reward should be lower than someone who never time locks. The penalty from early redemption can go to support reserves and interest payments for depositors.
Are you suggesting that Anchor generate revenue outside of borrowing? Or different borrow mechanics?
Outside of borrowing, good to not have all your eggs in one basket mentality. It builds resilience. Which anchor needs. As we all are scrambling for funds with limited revenue source. This is how most successful businesses run. Multiple products and services.
Now the harder question, what alternative revenue stream.
TLDR; I dump ANC every time I earn it. I wouldn’t if my Anchor Earn yield was dependent on it.
I agree with both the subject of this post as well as the proposed solution.
As crypto winter approaches, sellers will look to put their stables to work. The best tokenomic models for this situation will incentivize users with higher yields on stablecoins for hodling, not borrowing.
If offering 200%+ for borrowing isn’t doing the trick, then it’s time for change. I propose cutting the ANC borrower incentive in half (which would still equate to 100%+ for borrowing) and using the other half to further incentivize Anchor Earn.
Someone more mathematical than me can crunch the numbers, but something like Nexo’s Loyalty Tiers which rewards lenders with higher yield the more native token they hodl has proven to be an excellent model.
Why would you want to further incentivize Earn if Borrow isn’t generating enough demand?
The issue here is how to fix Borrow. Earn is fine. If the demand for Borrow isn’t figured out, ANC is going to $.25 (or lower) imo. Investors will start dumping this when their 200 million ANC start vesting in a few months.
From March-May utilization was 70%+. Liquidations rocked the system, but the bands will converge closer over time.
If you don’t want early investors to dump their ANC, give them a reason to hodl it by 1) driving demand for ANC which will increase price 2) further incentivize their Earn savings only if they hodl their ANC
You do realize that ANC Borrow would likely fall to well under $50 million if you pulled 50% of the incentives and the ANC Earn rate would then likely fall to 5% or so. How would that impact the price of ANC?
Currently borrowing is only available to LUNA hodlers. Borrow demand will not be an issue once other assets are bondable. Borrowers are paying 3-7% to borrow right now. You don’t think they’ll be interested in earning 100% to borrow?
I’d consider making the reward relational to the borrow rate (currently ~15%). At equilibrium, this would mean free borrowing which is attractive already, anything above that is
The ANC borrower issuance is to aggressive. Consider offering the initial issuance to all accounts who have borrowed up to this point to keep your word and reward early borrowers, and new issuance schedule from then forward.
How do other financial institutions generate income? Gotta get out of the mentality of just relying on Borrowing because it obviously ain’t working.
They pay deposit fees that are sustainable to their business. The problem is, right now 19.5% is far from sustainable
I do agree on the fact that ANC need additional utility / value accrual schemes.
Not that sure on whether introducing tiers in deposit yields would be a good option though. Anchor’s value proposition is to provide yield - this key feature should be kept as simple as possible imo
Also might be worth considering for methods to remove the circulating ANC supply. I think Luna tokenomics are quite well structured here, where supply decreases as network adoption increases. Would there be a way to have ANC tokens burnt as the amount of deposits increase?
Wasn’t the plan when the yield reserve was build up to a sufficient level to increase the % of the excess yield that goes to buying back ANC? If this is still the case, the value accrual problem would be solved by working on the system deficit and creating a plan for the yield reserve. The bigger problem with ANC value is that there’s too little guidance for ANC investors to understand what to expect in terms of future return.
For example, what is the optimal amount in the yield reserve before ANC rewards are boosted? What can we expect the rewards to be boosted to? What is the plan and expectation on when we can expect the boost to happen? Of course, these are basic concepts in Investor Relations for any business with a large investor base.
Burn mechanisms reward ANC holders not participating in governance. Is that the intention?
I think you just highlighted another issue, ANC only has value during the good times (yield reserve sufficient), maybe ANC token should have value during “good” and “bad” times.
I think this is the main issue with Anchor in general. It works well, when we are in “good” times and building mechanisms only based on optimistic scenarios. There needs to be a shift in mentality to “Designing for worse case scenarios” instead of designing for optimistic scenarios.
I know nobody likes to think of worse case scenarios, but look where it got us…Scrambling for a solution when it actually did happen.