Dynamic Anchor Earn Rate

Banks do make such high profits, giving only 0.25~4% back to depositors . As DEFI replace banks system, the APY is fully giving back, I think there must be a way to be sustainable other than changing what makes Anchor so special and different from other curve lending platforms.
Could the deposited UST which is not used by the borrower be used for extra safe investment/farming?
What about dynamically limiting the Earn deposit amount ? based on a sustainable lend/borrow ratio, where the ANC coin could play a role. I am no expert.

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I’m inclined to leave the rate as is. It’s a great marketing tool and it’s working. Has calcs/analysis been done to see value benefits are outweighing the spend form yield reserve? I feel a lot of people are too focussed on fiddling with the rate rather than find ways to build / expand protocol and ecosystem to bring protocol revenue into the positive. 20% is the goal, don’t move the goal posts because it’s easier.


the rate the vote is going it probably won’t reach quorum.

The rate of depleting the yield reserve depends on other factors, such as the utilisation ratio. Would it be cleaner to adjust the earn rate based on protocol utilisation, instead of the yield reserve which could be a lagging indicator? If utilisation ratio is low (borrow activity is low), this could be an indication to reduce the earn rate in order to reduce deposits and the amount drawn from reserves.

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Really well thought through proposal. Obviously the rate will have to drop at some point, so it’s nice that this proposal would help ease into that drop in a somewhat predictable way. Nobody wants to be in a situation where the rate has to be dramatically dropped in one fell swoop…

I am a fan of this proposal, but not right now. There are a number of other things that need addressing before rolling out the auto rate adjustment (which is of course going to be continuously lower).

Why is the proposal below being overlooked by Anchor team?

This is the lowest hanging fruit for addressing the yield reserve decline, by a country mile. And it is specifically vital to address it head of the AVAX Anchor release.


Building and expanding the protocol/ecosystem in the meaningful way that we all intend it is to create billions of dollars in normie UST transactions outside of Terra DeFi that create a use case moat to defend the peg. Sort of like a giant bloated slow moving ball of UST unaffected by Luna price. This is simply years and years away in my opinion. We are all in a crypto native information bubble and falsely assume that the type of adoption we need relative to the type of current use cases of UST (Anchor 20%) is going to be easy or fast to achieve. Alice, Kato, etc are mostly pipe dreams - they are the correct steps, but in practice they are very slow moving steps. Anchor Earn APR absolutely must be lowered through this proposal asap. Forcing the goal posts to stay in the same place is to accelerate towards a cliff with no regard for the peg. If the peg breaks from UST outflows, Anchor is done, Terra is done. That is not a gamble worth making in my opinion. Vote sustainability over short-term greed - Vote Yes on #20

This is not the subject of this proposal. You are beating a dead horse.

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The APR doesn’t need to be lowered ASAP. The leveraged looping needs to cease then we can get a clearer picture of how sustainable this rate is.

Does anyone know how much looped recursive leverage is coming into Earn right now?

We do know there’s around $750M coming in from Degenbox, I would guess there’s at least another $500M from other sources. Let’s nip it in the bud right now and we’ll find out.


The topic of this proposal is achieving a sustainable yield. There can be other proposals. You are beating a dead horse.

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Nope. This proposal is about serving up a dynamic rate which is obviously going to be lower (as of now), ahead of the pile of other proposals that actually aim to achieve a sustainable yield.

It is shameful we’re at this stage given all the proposals that aim to fix the problem have been swept under the carpet.

It seems TFL/LFG and the Anchor team are on totally different wavelengths.

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Sure, can definitely appreciate it’s years away and its something TFL/LFG recognise already which I’m certain was mentioned when they reloaded the reserve with 450m. I would disagree this is short term greed issue and focussing on the apr is actually short sighted in the grand scheme of things. Yes anchor is the biggest money market on Terra but people conveniently forget the strides being made in UST adoption on other chains and their growing demand/appetite for UST. LFG have pointed out that they have 2 years of runway for supporting the 20% until it’s to be adjusted. A lot can happen in 2 years (especially in crypto), Anchor will continue to add more collateral assets, UST supply/cap will continued to grow not just within terra but on eth/sol/avax etc and we may even see a few protocols/markets on terra grow to similar size to anchor. The 20% is a great marketing tool and at the same time an unnecessary distraction. Nothing against you, but I’m not voting yes.

I know for an absolute fact that lowering the APR will achieve more runway. At the rate of YR depletion, we need this proposal like now. We can still work on the rest, but speeding towards a cliff gambling on other sustainability solutions isnt the right choice. We can always revert this proposal later if need be. And besides, it works both ways. APR can rise as well.

I think you mean you’re voting No. But anyways what is your source for this? Because if its Remi tweets…that was pretty hollow. I haven’t seen anyone else endorse that. Also when the 450 was added, the project runway was 9mos → 1yr. That has been obliterated and we likely have about 10 weeks left. So the runway projections are largely BS IMO.

The proposal is aimed at stabilizing by continuously lowering interest rates. The assumption that interest may rise should be completely excluded.

Currently, anchor protocol do not have a profit model to fill the yield reserve.

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Yes that’s what I meant when I said " I’m not voting yes" haha. And you are correct, there is no official source for the 2 year runway except the tweet by Remi and I doubt that him being on the LFG council that he’s just spouting nonsense…Had he said 5 years, I’d be inclined to agree with you but having 2 years of money ready to deploy, I’d say that’s reasonable.

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This offer isn’t about lowering fast rates.

A change to a dynamic rate is necessary.
And it’s not a quick offer either.
I don’t understand why you’re expressing a different opinion on this post.
It supports dynamic interest rates that allow for the fastest implementation.

I dont know if anyones mentioned it since im still catching up on all the comments but this does not make sense mechanically. There is no way to make a token untransferable and prevent other contracts from interacting with it without a blacklist that would have to be maintained. If you do want to go with a implementation similar to this though you can have a deposit function that gives you aUST that increases by 50/75% or whatever you want and a another deposit option that gives you no token that way only the depositing address can interact with it and cant be sent around. Not everything requires a token the contract will just have to take into account how much the wallet has access to. This will also let contracts that do not do any leveraging work like normal thiugh mirror and kajira would have to be reprogrammed accept UST instead of aUST so they can deposit it from the smart contract side. This also doesnt stop a project like stader with their lunax from coming up that tokenizes anchors 20% again without any limits. Theres no real way to prevent the 20% from certain types of activities as long as its offered.


oh boy do the forums need an overhaul, we need something more reddit-esque with a voting and trending and pinning features it’s getting hard to keep track of peoples thoughts and collections.

I am voting yes to this proposal. It’s the inevitable anyways and this would actually extend the runway significantly. The capital in the yield reserve could be deployed far more effectively and diversely.

I want to help shed some light into why some underlying risks might not be so much risks.

I don’t believe UST will ever depeg, if that is the case then the US dollar is at a far higher risk of ‘depeg’ than UST and perhaps thats actually the effect we are seeing anyways. But its a mute point for better.
Just know that your UST is now backed by bitcoin, so take some comfort there.

xAnchor will be a major driver for borrower demand cannot wait to see it.
This proposal benefits the Anchor community in the longer term. Anchor does not need to support above market rates to be competetive it offers its own unique sets of advantages versus other lending protocols.

We need to focus on getting yield bearing stable assets up as collaterals that will drive yield. This proposal helps buy us time towards that goal.