Anchor’s deposits right now are currently constrained by bLuna. Anchor can only support UST deposits up to half the value of the collateral on the network. Currently with roughly 19m bLuna deposited on Anchor this allows us to have 19m x $18 = $342m * .5(LTV) = $171m in deposits. Unless we add more bLuna to collateral then Anchor can not scale. I assume a large part of the ~20m Luna being unstaked this week: https://www.lunawhale.com/ will go towards bLuna as the APR is much higher with the anchor rewards then the current Luna staking APR. But even then with 40m bLuna, Anchor could at max support 40m x $18 = $720m x .5(LTV) = $360m UST of deposits. Furthermore even if we used roughly half of the current staked Luna, 150m Luna, 150m x $18 = $2.7b * .5(LTV) = $1.35b in deposits.
If we want Anchor to compete against money markets like Compound we need to add more liquid staking derivatives to let Anchor & UST demand scale. Adding something like stETH which is a product from Lido finance (the people who helped terra with bLuna) could open up a huge new market, since ETH’s market cap is 200b this would allow us to scale the Anchor protocol & UST demand. I am suggesting stETH because it is 1) a working product, 2) the Lido community has worked with terra before and 3) it allows massive amounts of deposits on Anchor due to ETH’s market cap (200b).
I am for adding other liquid staking derivatives to Anchor but I think stETH is a working product that could have relatively quick integration and allow Anchor to scale.
*Consideration → All PoS blockchains have different staking APR’s and Luna’s is fairly high, so I doubt we would be able to retain the 20% APR but still we could provide something like 10-15% APR and actually scale!
This would drive demand for UST deposits and benefit the Terra ecosystem as a whole.