I read this comment back when you posted it, and it’s been weighing on my mind for a while.
I don’t think this is a very realistic vision. The separation/unequal treatment you talk about that people come to crypto to escape is somewhat reasonable, but it’s not like crypto is some perfectly equitable environment that anchor has a moral duty to uphold.
Protocols need to protect themselves from exploitation. Protocols also have many facets to provide preferential treatment to some. After all, you likely wouldn’t call staking bonuses or voting with your ANC balance separation, though it definitely is, since only people who can afford to buy their voice can vote. So from that front, I don’t think ‘separation’ is anything new. Giving separate treatment different users with different intentions is simply how software, business, and crypto work.
Another thing, even if we think Anchor does have a moral duty to uphold the open and permissionless nature of the protocol in the name of fairness…what exactly is fair about the degenbox?
It’s on the Ethereum network, meaning even getting money in it is prohibitively expensive for small investors or ‘real people’ as you say. It would cost most people a significant percentage of their portfolio to even get into the box because of the ridiculous gas fees on the network. This prices out the people who would benefit from the stable yield the most, leaving only the already-rich to get even richer since they can afford to transact on the network. And that’s assuming you can even get in.
In reality, the MIM available to borrow sits at zero all the time, because it’s bots who are able to snipe any available MIM with their balance. This again tears apart the ‘open, equitable, fair’ vision you want to achieve, because what investor is going to feel like they lost their position in a fair manner because bots fought each other for 10 milliseconds to snipe MIM?
The blockchain has open, immutable, and honest data for anyone or any program to access. That is the fair and open vision that it promotes. Anchor protocol can see that data and so can the degenbox. But to say that Anchor is free and open to view that data (which says a billion dollars are being looped to exploit it), but should for some reason be disallowed to act on it, who’s the one that isn’t really free?
To summarize, the only people that can get into this Degenbox are the ones rich enough to transact on the Eth network, and those with the skills to create and use bots to snipe MIM fast enough. Not very fair nor equitable, and certainly does not ‘work for all’ as you say.
Speaking on that line, “Any solution that is worked on should be for everyone, or no one at all.”
The solution that works for everyone is getting rid of the degenbox. 19.5% yield does work for everyone. Anchor was seeing its yield reserve increase for a long time before we saw people leveraging into 110% APY.
A lot of people in here are saying ‘we need to make borrowing more attractive’, but how is that a solution?
We need to incentivize more borrowers for sure. That I am not arguing, as they are necessary for the protocol to function at all. What I am saying is that more borrowers is not a solution for the declining yield reserve due partially to the degenbox strategy.
What amount of borrowers do we need to make (and siphon 25% yield from), in order to sustain already-rich eth investors that get 110% APY? It’s not recognizing the real problem to say we need to increase borrowing and not touch the degenbox, because Anchor has set a rate of 19.5%, and any attempts to increase that rate for yourself through leverage is exploiting the protocol. If we want to support such a thing, what’s the point in even setting the rate at 19.5%? Why not save the degenbox some effort and just give them 110% APY to begin with? There is 0 sustainability potential at 110%, and to say we need to incentivize borrowers so we can steal their yield and provide it to rich eth investors at 5x the rate is just kicking the can down the road and giving more wealth to the people who need it the least.
