Anchor Earn vs Borrow. growing chasm

Maybe you should check Prism Protocol. I think that’s what you are looking for.

Anchor won’t ever be able to use it’s own yield to fund the yield, would make no sense as that’s just a pretend game, the yield needs to come from somewhere outside Anchor… But other protocols will offer products like that, self-repaying loans from $aUST, a sort of cash advance system… check Kinectic Money.

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Why hasn’t the anchor borrow distribution APR gone up as the earn to borrow gap has grown? The distribution APR shot up to over 200% back in May when there was a larger borrow to earn gap then. Now that the gap is bigger then it ever has been the borrow distribution apr is at its lowest amount ever?

Makes no sense to me. The distribution APR is there to promote borrowing demand when needed. We need it now more than ever.

Yes very good point.
I thought the distribution APR was supposed to get adjusted automatically to promote borrowing when the yield reserve is depleting and tapered when yield reserve has grown.

Is there a target for yield reserve holdings?

Apologies if this has been mentioned already and I’ve missed it, but what about a tiered Earn % based on how much collateral an individual has provided?

i.e. something like: if you haven’t put up any collateral on Borrow, you get 15% base on Earn. If you’ve put up $x in collateral, you get 20% on Earn up to $y, and 15% thereafter.

Or 1% bonus in Earn for every $x of collateral in Borrow up to 20%.

Problem with that is you’re asking people to give up staking yields to get earn yields, it’s hard to make it enticing for the end user and useful for the protocol at the same time, would also end up making Earn a complex product when it should be the easiest available.

Can someone please comment on:

  1. Why the Net Borrow APY is negative while the yield reserve is falling (faster and faster every day)?

  2. Is there a minimum yield reserve target at which point the ANC distribution APY will increase to incentivize borrowing?

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So interesting thread.

Let’s not forget:

  • things started plummeting on the day of the failed oracle feed and the unlawful liquidations of bcollateral. You would expect the yield reserve to be stabilising by now but it is not. Check Mirror Tracker.

  • TFL have donated 70 MUST into the yield reserve to support anchor at the beginning. At the moment anchor is still the prime dapp on Terra but in coming months many more dapps are coming. Will TFL support Anchor again if needed be? I understand Do did not want to help out to compensate any of the liquidated bcollateral holders.

  • So I have to agree with most of you above: Anchor team needs to step in and twist the protocol core settings. My guess is that they have a plan in place and they will start scaling down the earn yield% once the yield reserve crosses xM€.

I would really like to hear from the Anchor team on this topic.

This thread is not evolving into any proposal for a vote up to now.

  1. Why the Net Borrow APY is negative while the yield reserve is falling (faster and faster every day)?
  2. Is there a minimum yield reserve target at which point the ANC distribution APY will increase to incentivize borrowing?

also interested to know the mechanics behind this

It’s all in the gov docs. Simply put the borrow rate moves based on the utilization ratio.

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TFL will not step in because ANC is a decentralized protocol that the ideas and direction for solving this will come out of the community here with the Anchor’s team support. It can longer depend on TFL as we need to increase the strength of the community and the governance community.

Something that is in the works: adjusting the base earn rate based on market conditions and cash flow. Research is being done on a basic framework that the community can guide and agree on.

Also borrowing from the communities ideas of building a time-locked boost on this base rate is being explored.

More official write-ups summarizing things from the forum that can be further discussed are coming

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Sure, I’m just having a hard time to get the equation right. According the docs:

borrowRate = utilizationRatio * interestMultiplier + baseRate

If i want to calculate the current borrowRate, where do I get the interestMultiplier from? I can only find a hardcoded 0.42 in the docs, but I assume this one is also floating based on a function?

borrowRate = (2,067,024,812 / 5,258,196,431) * ??? + 2%

Thanks. I am surprised TFL would back out of supporting Anchor at this moment. Anchor is by far TFL’s biggest golden goose for UST demand and the gateway into the entire Terra ecosystem.

With over $11 Billion worth of TVL, is the community ready to tackle such issues without guidance? If Anchor was a PLC, it would be the 140th largest bank in the world by asset value. Surely such wide impacting decisions cannot be made by a small group of anons in a public forum?

I am looking forward to your proposals, but I fear we are going to spin our wheels reaching any sort of consensus and the clock is ticking on the yield reserve.


We have worked on an earn yield curve model that would stop the hemorrhaging. We suggest updating this model with the most appropriate inputs from Anchor side and putting it up to vote.

In my mind, this can be put to vote within a few days to prevent the need for capital injection by TFL.


One issue mentioned and being discussed in the post above is the issue with the redemption of aUST in a yield curve - that complexity could be hard to overcome… wherein aUST on one yield trajectory from date x is NOT fungible with aUST from another yield trajectory starting at time y.

Open to ideas on this or if a simpler tiered time lock would suffice given our model shows similar end states for earn with both models.

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Hey all, just joined because I believe there is another point to all of this that a lot of people dont seem to be seeing.

The Abracadabra UST leverage farm is a very convenient way for Terralabs to liquidate hundreds of millions of UST without hurting the peg a lot and they have a direct incentive to keep that one going for as long as possible.
How are they doing it?
Happy that you asked.

  1. Back in September Terralabs announced “Project Dawn” to help cover operating costs by releasing 3 million Luna a month from the genesis wallet, which I believe they have maxed out so far. Why they need 300m a month to cover operating costs, beats me.
  2. To cash out that humongous amount of money every few minutes bots are selling/burning Luna into UST (for example terra1zz2nf34fjkjygkg0kplkrr29ycxarmct6kafvj)
  3. Once enough UST is collected, TFL bridges the money over to ETH mainnet to the wallet 0xa046a8660e66d178ee07ec97c585eeb6aa18c26c
  4. Every time Daniele opens up the Abracadabra leverage farm by another 100m, what happens is that those users are selling those newly minted MIM for more UST which imbalances the MIM-UST curve pool.
  5. When the UST-MIM curve pool is sufficiently imbalanced another bot will sell as much as UST as possible into the curve pool until a perfect 50/50 ratio is reached again. In case above they are now sitting on 100m MIM in the wallet
  6. Then slowly the MIM is being sold into the MIM-3pool at a favourable peg and the USDT/DAI/USDC Stablecoins are being send to different exchanges to cash out (probably)

Over the last weeks Daniele opened up the leverage by another 500M bringing it to the currently 1.3bn it is sitting at and TFL was very fast to bridge over as much UST as possible and they have been trying to slowly sell all the MIM ever since as evidenced by the tx log from the wallet above.

Therefore TFL indirectly uses Anchor to cash out hundreds of millions of UST using MIM as a intermediary and given that Project Dawn keeps continuing releasing tokens I would guess they will continue to go on like this.
They have to keep this going for as long as possible and without knowing whats going on in the background I am sure all the parties involved here are aware of this.

Please let me know if I interpret something wrong, but the on-chain data is pretty clear in its purpose.


That makes a lot of sense. I was wondering how so much UST was finding itself over in the UST-MIM curve pool. No wonder TFL have been so passive and silent on this issue.

Sadly those being encouraged to take on the leverage are going to be the sacrificial lambs in the next flash crash.


TFL could also just deposit a bunch of bLUNA into the protocol. This is has better optics and would help the reserve. Not that this is for us to decide, but clearly TFL has large incentive to keep the party going.

At this point, we are seeing -$1m from the YR daily. I suggest (as we are all working out the solution) to limit earn deposits >90% collateral ratio. If Luna flash crashes before we have some reasonable limits, it may be catastrophic and result in TFL funding the YR again.

I would also suggest raising borrow APY higher than earn ASAP so that it’s not a free money loop.


To be honest, I don’t think we should do anything.

Let the yield reserve burn to zero until TFL come out and explain their master plan of trashing Anchor yields themselves…