I think this is just a difference in semantics for us. I’m viewing the “net interest rate” for borrowing as having 3 components:
- staking yield from collateral deposited
- explicit interest rate - UST that you are paying to service your loan
- Anchor emissions - ANC rewards you receive for borrowing
I understand utilizing the community pool from Terra for the purpose of shoring up Anchor’s yield reserve may seem extreme. This is a strategic option available to Anchor that the other major blockchain lending protocols do not have. By not utilizing this advantage, Anchor’s growth will be stunted and we will continue growing by adding typical small defi investors. I want the Anchor community to be aiming for a different clientele than what we have seen in the past. We want Coinbase to facilitate deposits onto Anchor. We want major banks to facilitate deposits onto Anchor. We want billionaires parking idle capital into Anchor. None of that will happen anytime soon without some major changes to the Anchor yield reserve.
There’s a reason that investors are accepting lower interest rates on stablecoins in Aave, Compound, Yearn, Kucoin and the list goes on. Maybe part of it is that Terra and Anchor need to do marketing. The bigger issue in my mind is risk. Anchor’s yield reserve is tiny and that is an unacceptable risk for many investors.