Borrow APR higher than Earn

I understand that Anchoor was bleeding money during the downturn, but these interest rates are starting to take the piss. 20.5% Borrow APR against 19.5% Earn.

I have repaid my loans and removed my collateral as it makes very little sense to keep it there for 26% distribution APR, when you can make more in other places.

Could someone explain why this squeeze? I can imagine that more people will remove their liqudity if this trend continues.

Anchor distributes $ANC token to borrowers to incentivize a certain level of borrowing that will insure that the Anchor Earn rate is accounted for from the collateralized yield (the bonded staking assets like bLUNA/bETH/etc). The reason this Net Borrow APR is decreasing is because that level of borrowing required is closer to being reached. People removing their liquidity is not an issue here, because the new assets being added are creating more demand for loans. If the borrow levels are not high enough, then the Net APR would increase to incentivize more borrowing. The goal is not to earn more from borrowing than can be earned from Anchor Earn. The main benefit of the loans is not the Net APR either (that’s just a perk), but it is the ability to borrow funds on assets that you otherwise would just be holding and not selling. You can continue to hold X amount of Luna/ETH/etc by bonding it instead, and then have access to more UST to use elsewhere. Feel free to pop into the Discord if you have more questions! :slightly_smiling_face: