yeah, i do agree with you that the steep drop will lead to a heroine withdrawl and a bunch of depositors crying for government to impose restrictive laws on their freedoms. Seen it enough already to believe it.
With respect to that we should probably adjust the drop off rate. Maybe a bit steeper (2.5% / month vs 1.5% / month), announce the rate like the federal reserve (“Anchor protocol is preparing for a 1.5% drop next month”), I think we definitely have the potential to sustain 12-15% given de-fi yields (eth2 is expected 10-15% yields). And xAnchor will have cross-chain competetiveness it’s just about onboarding a bunch of new collaterals.
luckily the drop off is something we can adjust as needed. Prop just came out so lets see what the first drip causes and react accordingly.
Wrong. They are currently symbiotic. At this stage UST very much depends on Anchor until there are more diverse uses for UST. It won’t be that way forever but right now, it is.
I for one think that LFG has no option but to backstop again, because of this exact issue and, well, math…
This is like a “crack dealer model”. This is not new. Get people hooked on the free crack (high yield) and then start to charge them for it. This is done over and over again in VC land. It’s smart. But the timing and expectations need to be managed properly otherwise people go through withdrawal. Which, in this case, means moving from UST to something else rapidly, resulting in a big de-peg.
@bitn8 I missed it in the PR. Do you know if these min/max’s got implemented? That’s what I was hinting at with my comments on the PR. If so, that’s a good move.
From my understanding this is how it works. Once the yield reserve depletes it reverts to the un-subsidized yield rate. @bitn8 can you confirm? (otherwise I’ll go spelunk the code)
Also, everyone here needs to stop debating the value of this. I do agree with this sentiment:
This is both a blessing and a curse. If too decentralized from day one there is utter stagnation.
But this prop is over. It passed. If you don’t like it, stop using Terra or buy more ANC/LUNA to influence votes or bang the drum louder ahead of time.
We need to move on and look at how we support a more sustainable deposit & borrowing structure to slowly ween people off the unsustainable “free crack” rate. Terra is by far the best positioned to succeed on decentralized money. It’s worth fighting for. Let’s focus on other proposals now:
That’s a great point, and is another big reason for LFG (or even TFL) to top off the YR. The one thing they don’t want - and frankly I think most users also don’t want (as long as things work) - is for Terra/Luna/UST to be regulated into oblivion. The best way to stay out of regulators cross-hairs is to keep your user base happy and don’t do a big surprise 3x+ rate drop overnight. (Realistically, become still 10x+ bigger. By then, Terra and UST will be too big to be regulated out of existence. Governments won’t regulate something in a way that’ll cause direct harm to too many constituents.)
Yes, but not in time to make a difference to the trajectory things are now, where we are entering terminal velocity.
15%-20% range makes sense from a marketing perspective, but it implies LFG backing, at least in the short to mid term.
I would have went for 10-25% range, with up to 2.5% once per month change allowed, and a commitment that LFG will back the YR until the APR reaches an equilibrium and has at least 2% of the TVL in the YR. When so, that’s the end of subsidies and the training wheels come off. Such more flexibility and the peace of mind that it’ll be subsidized until the many great initiatives under way are implemented and have time to make a difference would give depositors, borrowers, and app developers so much more confidence and peace of mind. It’d be also a certain path to self-sustainability by year end. IMO at least…
And you’re right. The fact that Terra and Anchor are still controlled by LFG is…a necessary ‘evil’. Nothing wrong with it. Without it, Terra and Anchor would not have a sense of direction (for one, who would employ the developers?). At this stage clear direction and focus is much needed. In another year or two and when Anchor is fully self sustainable, then it’s a different situation and by then it should become truly decentralized (and TFL probably wants it that way, if for no other reason than to stay out of the regulators cross-hairs).
…unless borrowing, even with all the new initiatives, just doesn’t pick it up. If so and a human-managed element to managing the idle UST is needed in order to get to a decent yield, well, then that would be a different path. May be even a fork of Anchor: one truly DeFi, other higher yield but with an actively managed component to preserve capital while earning yield on the otherwise idle funds.
Propose to have the liquidity pool of atom/batom/statom/UST
I am not the engineering, i am a fans of terra
Why make the pairs one2one but nit more complexity like my liquidity suggestions.
Also, i am the one suggested to increse the lending ratio of anckor . Please do not concern the cost to deliver more reward to lender. The most important is to have more collateral and higher the lending ratio to increase the UST liquidity and market .
