Dynamic Anchor Earn Rate

We are building an interest earning perpetual swap using aUST as collateral. I know there are several teams planning to do that as well.

It is nice to have your money being saved. What is even nicer is you can actually invest with these saved money. In TradiFi that is hard to do for average people. But in Defi it is frictionless as you will have you yield bearing token (aUST), and can do other financial activities with it.

One doesn’t have to be degen to invest with saved money. You mentioned Mirror, but there are plenty of other interesting protocols in the making.


Thanks for working behind this proposal, finally a concrete way to make YR sustainable only by the protocol.

Will follow the conv.

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There are many strategies and possible improvements that have been discussed for AnchorV2 within the pages of this forum. I think that most of them would represent an improvement for the protocol.

We all have a focus to increase the yield reserve/limit its usage. The strategy above is a step forward but I think it should be combined with others. IMO this idea is not enough to make the protocol sustainable. I think it should be combined with other strategies (e.g. thresholds for ANC stakers, lock-up periods etc)


Sharing my thoughts:

  1. It would be like 20% - 1.5% = 18.5%, but imo either mechanisms pose no major differences with each other. The 1.5% would need to be a governance-controlled parameter for flexibility.

  2. Good point. A logic to prematurely update rates would be needed to cover this case. Rates being lowered if a drastic change in yield reserve is observed.

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I think implementation difficulties won’t be extreme - just requires logic to a) keep track of yield reserve changes and b) update deposit yield when conditions are met

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a. Increase in collected borrow interest decreases expenses from the yield reserve, thus having a positive impact in the YR balance.
b. Increases in staking rewards directly have a positive impact on YR


While i think this is a valid concern - there exists an implementation dilemma between a) retaining aUST fungibility (which enables those yield leveragings) and b) disallowing yield leveragings.

Imo would be worthwhile if thoughts could be put into the solution for above


We are hoping to remain patient as well so we don’t overshoot since we need to see
how the cross-chain borrow efforts also buffer the yield reserve. These new changes will all be governance parameters that can be adjusted over time if they are not having the intended inputs.

This is something that is the community is talking about and has been brought up on the last two recent AMAs, The general idea is to wait to see how the results play out on the borrow side.

Naaah I want 19.5 as long as possible.

Sorry, It’s not in my best interest to voluntarily vote for yield reduction.

It’s not my place nor job to worry about long term well being of Anchor. The people responsible for that endorse parasite degen boxes, if they don’t care about the long term well being of Anchor, why should I?


I agree with the dynamic rate. However, I think we should try to keep the 19.5% APY for as long as possible this way we can overtake the biggest centralized stablecoins and solidify the Terra ecosystem’s position in DeFi.

Considering that ANC incentives will be over in 3 more years I think it makes sense that we try to keep the high yield for at least 3 more years. The Luna demoninated community funds will appreciate due to high UST demand anyway so topping off the yield reserve periodically when necessary for 3 more years won’t become ever more difficult.

After those 3 years then we can implement the dynamic stable rate and move towards complete sustainability.


I know and I believe this is the best solution right now, to see how we can stimulate borrowing given the new collateral and strategies in pipeline.

IMO some strategies for the ANC token price and for the earn side should be centralized in order to have a better overview (Notion form probably, I can volunteer to keep it!) and implemented some of them. I think that an Agile continuous development of the product is better as it reduces the risk of rejecting large/difficult proposals through governance and it reduces implementation effort. To make the long post short, we could start centralizing outside this forum some of the strategies, vote and then implement some small ones in order to see how they affect the protocol.


I have been thinking about the anchor sustainability issue in regards to it’s APY and I think I have come up with a very elegant and simple solution.

Simple and elegant, this method requires NO

  • No lock up periods involved
  • No need to sacrifice aUST fungibility
  • No need for complex code that could put the protocol at risk or make it difficult to implement.

Anchor deposits would be split into two different tokens. For example, aUST and a2UST.

One token a2UST would be 100% non transferable and only be allowed to interact directly with the deposit/withdraw smart contract. This token would also be able to qualify for the highest APY 19.5%.

On the other hand aUST could be repurposed to offer a much lower APY, maybe slightly variable. But it could also be used in other DeFi applications such and borrowing, lending, and leveraging.

This would help prevent other protocols from parasiting and emptying the reserve, while at the same time allowing them to be leveraged or used in other scenarios.

I think it’s a very simple solution and one that could be very easily implemented as it would only require adding 1 token and repurposing the other.

Also I think this could be implemented on top of any other proposals already being considered without making them more difficult to implement.

What do you people think?


I like the idea. I think something like a 50% rate discount against the 19.5% APY.

This will make people think a bit more carefully before fomo’ing into the latest and greatest UST Earn looped leverage ponzi.

However, it will still allow people to earn interest on their collateral while pursuing leverage/borrowing outside of the protocol in places like MARS/Edge/Mirror/Kinetic.


Of all proposals on this forum, this one makes the most sense.

It’s always important to consider upsides and downsides of every proposal, and in this case it seems the upside is greatly improved sustainability while not limiting existing users.

The only downside is for looped degens. Limiting those is long time overdue, let’s see how Do Kwon’s scammy friend Sesta likes it


Looking at the MIM-UST curve pool it seems that partnership is well and truly over.

This suggestion gives TFL a clean break from those guys without needing to engage in an act of defi war. All thanks to a community idea and decision.

Sounds like a plan. Will save the protocol about $410,000 per day in pointless degen interest.

@bitn8 what do you think?

It’s a solid idea but I think more solidarity is forming around getting the dynamic rate done first, then looking at something like you laid out, ideally based on ve-ANC.

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The proposal from mariano is truly the best of all and manages to strike just the right balance. IMO it should be implemented ASAP, before anything else and certainly months before any changes to the APY (variable or other). Than sooner it’s in place, the longer the yield reserve will last, giving more time to ramp up lending and work on a more sustainable APY long term. It’ll make Anchor cleaner and stop the yield drain, with no real impact on usability. Simply put, it’s what Anchor needs right now, from multiple perspectives.


Here’s how the team can play it.

  1. Communicate via all channels that aUST is going to retain composability and the APY is going to change to 10% in 30 days time. no other changes.

  2. Release a2UST at 19.5% (locked and none composable). Perhaps launch the 0.5% withdrawal fee for this higher yield product for the purpose of ANC token buybacks.

This would have an immediate positive impact on the yield reserve decline as it will take time for people / protocols to migrate over should they wish to.


I personally like the idea.

Perhaps a2UST could be created by staking aUST to a specific contract, thereby making it immovable, but with higher yield. I do think for a2UST there needs to be some form of capital controls (lockup periods, etc.), otherwise this can be easily circumvented by a different protocol minting a wrapped, transferable version of a2UST.

This could fit the demand for the 2 user types of Anchor, aUST positioned towards DeFi applications with composability in mind and a2UST facing towards regular depositors such as third-party applications (which they don’t need composability)

aUST yield would still need a degree of yield flexibility, for Anchor to fluidly react to long-term market changes. This can go hand-to-hand with the dynamic Anchor rate.