Yes, the liquidation protection idea is on the table. I think the discussion of flashloans is something we need to discuss more as this can help generate yield for idle UST on the earn side but also allow for a liquidation protection mechanism to be built in. The projection mechanism could be a community grant once flashloans are live.
It’s not such a problem if ANC were not volatile. But right now other than governance ANC is basically just a throw away coin that immediately gets dumped for UST.
If ANC both gets more yield and gets a steadily increasing demand and hence price accrual people will not have a problem holding it for bonus yield, higher deposit limits, or borrowing discounts etc. Personally I think if maximum deposit was 10x ANC staking or 10% ANC staking got you a 5% increase in rate it would create a large and steadily increasing demand for ANC so the price goes up and those who staking it for the duration of their deposit / loan will be winners in addition to the EARN savings interest.
Is using ANC the best way to increase borrowing? IDK. Probably for me long term fixed rate close to 0% or below inflation plus some kind of reasonable delay before liquidation or very robust automated system to preempt it is necessary.