As Bitcoin is the mother of all crypto and considered digital gold.
If it were available as collateral on Anchor, I would certainly put a good portion of mine, as I think many others would like to be exposed to Bitcoin’s price while still gaining good returns on Anchor.
I know it must be a pain in the @ss to create this type of wormhole, so I suggest a different strategy.
Why not use mAssets as collateral? mBitcoin and others, while not reflecting the true price of the underlying, would certainly equalize with oracle prices if more money were put on them as they would be seen as actual arbitrage opportunities.
This mBitcoin collateral could be only temporary too, as the team would eventually figure out a way to use real BTC as collateral.
The more collateral, can only be better for the ecosystem; more fees, more volume, less inefficiency.
Still, what’s stopping us from creating a non yielding asset on anchor? It would deepen the ecosystem and add utility to mAssets. They could have a different borrow rate too. I know this would complexify the system, but that might be one path to improve it’s sustainability.
The borrow rate has to be differentiated for various assets. Non yielding ones like btc simply pay higher rate. Or put btc in a protocol or venue where it generates yield (but that does add risk). And yielding ones borrow rate can’t be same for all, has to use the same formula and consider the yield and when it’s earned (if avax has no yield, higher borrow rate, and if there is yield at cash out, then give a borrow rate rebate at loan close).
With the new V2 borrowing, adding a wrapped version like wBTC could likely makes sense given the deeper relationship with BTC for the reserve pool. Increasing the assets available to use as collateral will help make the protocol more sustainable and useful.
100% agree it’s time to move forward with this. With the growing relationship between UST and BTC given the reserve pool used to defend the peg, there have been calls to add wBTC as a collateral type on Anchor. While BTC is not a POS coin, an exception to the current Anchor POS strategy can be made because it has such a tremendous market cap and growing importance in the Terra ecosystem.
As soon as the reserve pool is live, it will be followed by a listing on Astroport.
A max LTV of 65% to monitor the risks for 3 months is recommended. During this time, more wBTC liquidity will be onboarded to the ecosystem, which would allow for a higher LTV.
By owning a rune in a protocol or foundation
, what do you think about converting Btc deposited by users to Btc - Rune lp to earn 20-30% apr through the Btc deposited?
(Rune lp compensates IL for long-term deposits. Before that, you can secure a reserve for wBTC or set a lockup period to ensure stability against losses due to short-term deposits and withdrawals.)
BTC is a great asset, but it can also be detrimental to anchors if it doesn’t make a profit. Sustainable deposit methods should be discussed.
100% on favor on this one. Even if BTC doesnt add yield for Staking, it Will add income by borrowing interest. Thats 13% additional interest at minimum. We could increase that interest for being a non yield generating asset. As simple as that.
We are drowning by paying the 20% to UST lenders. And, ETH borrowers are bot increasing as we would want.
you haven’t included APY of underlaying asset, around 10%, so distribution APR is 7.5, and borrow APR is 13%, so 6% of the profit on loan but you haven’t included profit of collateral which is 10%.
I think the focus with xanchor is to operate like a traditional money market and offer 0% rates by offsetting the increase in collateral value (for assets like stavax, bluna after upgrades are complete, steth)
This allows anchor to offer a variety of assets as collateral not just yield bearing but IV increasing. It’s what the entire market is trending towards. Bitcoin has a unique characteristic as a reserve currency like gold or dollars so it would only make sense to offer loans for it.
Eventually it won’t be profitable to borrow UST on anchor and deposit for aust as anchor moves towards a more sustainable model. The new idea is to accrue anchor which would capture sustainable value through features like vote eschrow and rev sharing.
But the point of Anchor is not to be a traditional money market, it’s the point is to give a stable high yield to attract new users. The money market allows any collateral being able to be used for borrowing like on edge and mars.
If we added LP pairs for the collateral it would help hugely, change more to abracadabra money, if we used LP pairs that give rewards like from MIR, we would generate way more profit, and since the price of LP pairs is more stable, people would be able to make better loans.
Then after we get profitable, we add non-yeilding collaterals.
