The more I think about it the more I like this going forward combined with some solid value capture to ANC to incentivise borrowing on the other end. I think the dynamic rate, combined with a toned down version of the veAnc model and the terralytics proposal could work very well together.
Can’t wait to see where anchor goes next regardless!
@narco78 Forcing ANC tokens on depositors is just putting a barrier on adoption with no tangible benefits to show for it.
The ANC tokens on depositors must be used by the protocol the same way that other asset like bLuna, bEth are used, which is to generate staking incomes for the ANChor protocol. The protocol needs more asset and this is a way to make sure there is always one asset that grows at the same speed as the deposit. The adoption is already lightning fast, so fast that even the new yield reserve that was supposed to last 1 year is now expected to run out by August. Sure Terra said they will replenish it to keep it going for 2 years but the community has to come together with a solution that will make that Anchor protocol sustainable. Even if it was to slow down a bit the adoption of UST, it will be a good thing for Anchor and allows to have more time to implement a solution.
We have to come to it with all we got, more asset borrowing, small withdrawal fee, very small %anc to ust deposited.
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That’s the definition of deposits. You make a deposit in currency and get the compounded yield with it. It’s unheard of (outside of fringe crypto cases) to mix something other than your deposit currency along to get the yield.
That’s the beauty of Anchor, it’s simple and easy to use.
Remove that and try to remake it into something convoluted (to the average depositor) like an LP and you lose the majority of deposits and use cases.
KISS (Keep It Simple Stupid). So far that’s been the case with Anchor and that is why it is so successful.
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1-1 Use of automation mechanisms. Simply deposit UST automatically proceeds.
1-2 It can be solved by paying the fee when withdrawing money.
There is no process of being added or converted. Everything is done when the user deposits or withdraws UST.
so it does not interfere with mass adoption.
Reference
1-1 : [Proposal] Terralytics - Increase Borrow Demand via ANC Value Capture from Deposit Growth
1-2 : [IDEA] Increase Anchor Protocol transaction fees to support $ANC profit sharing - #22 by dojakron
It’s not a complete proposal, but it’s simple and interesting, and it doesn’t seriously violate interest rates, it’s an idea that can make $ANC a meaningful token.
2. And as many people seem to forget, the additional 450M yield reserves are not only to guarantee interest, but also to change the tokenomics of $ANC to be competitive.
reference: Capitalising Anchor’s Reserve with $450m - Governance - Terra Research Forum
In conclusion, it is very funny that there seems to be no correlation between the UST deposit and the price of $ANC. Even using only 1% interest can help secure liquidity due to rising prices of $ANC and increase borrowers due to increased borrowing compensation, laying the foundation for the platform to grow. Most of UST depositor want to earn 20% interest that is distributed free of charge rather than the growth of the platform.
Burn LUNA, refill UST, sprinkle UST, lower interest when money runs out… stop this meaningless vicious cycle.
Borrowers, and those who stake out $ANC to participate in governance or provide liquidity, should of course be rewarded. For now, they are more valuable than the overflowing UST depositors.
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already vote started.
I like the methodological approach, but it’s not as ‘clean’ as a static rate set by governance. It will require some advanced dashboard visualizations to make the effects and operations of this mechanism transparent and understandable by the public.
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Our friends from Prop 18 should best be alerted to this second round to make profit!
Have noticed Maker has changed their voting lock in to 21 days and if such a proposal hits anchor it’s game over for their strat. Better do it quickly before you can’t anymore boys!
Agreed, would like to see simulation results with the chosen dyn_rate_threshold & dyn_rate_maxchange given in that pull request and the proposal forum example formulas.
Ok, so the poll is up. What’s the timeline for the rollout?
I think we need to be very careful not to slam this change through without a comprehensive communication and rollout plan (if it is voted in).
Have we conducted a risk assessment in the inevitable event yields start to decline?
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I agree, I think we need to incorporate the ANC token into the system more to create more buy side demand for the borrowers that are selling. And this would help to solve the underlying fundamental issue of the Earn being higher than the Earn.
not a big fan of this, more borrowers will solve the problem…
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This proposal is definitely something more sustainable for the long-term viability of anchor earn.
What we need to address is the marketing aspect of it: Anchor EARN is interesting to a wide audience across chains bc of its enormous stablecoin yield. This yield is very high by any standard and would achieve the same effect if it was lowered to 15% APY but that would be the minimum in my mind. What we should do is deploy a voting mechanism in order to determine this minimum APY.
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I think a simple way to implement the “capital controls” would be to only allow non-contract addresses to mint locked-aUST.
We could also create a governance-controlled whitelist of contracts that are allowed to mint locked-aUST, like Angel protocol and other protocols that add value to the ecosystem.
I agree, but sadly there are a number of soy eaters out there who will call this a centralized intervention.
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People are free discuss the merits and faults of each proposal, that’s what we are all here to do. In the end it’s the voters of the Anchor DAO that will judge if it’s a good idea or not.
I have two main questions about this topic:
1 - As we saw in previous polls (18) people split & vote, that’s an issue we need to address ASAP, because this topic seems to be too debatable. Is there any way we can trust the voting system?..
2 - We need to consider all non-voting users as we vote and change this protocol, which means that changes have to be simple! I couldn’t understand a thing before reading the comments…
A non-voting user is the everyday granny that we love to bring forth so much to example the simple user.
Dear granny, you will recieve X = min( abs(1.5%, (5% - 3%))) = min(1.5%, 2%) = 1.5% dollars APY! How does that sound? Me neither…
Can we please rewrite the suggestion to simply say what it does? And if not, do we and need to inform non-voting users? And how?
This protocol has a future. Let’s make it a simple one.
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It’s been observed that Prop 20 is dead in the water and i’ll call out my own observations on why.
should it be passed
- only $luna holders benefit from the increased sustainability of anchor protocol
- the earn side degens will simply leverage to compensate, using the usual methods
- the $anc holders do not benefit at all why should they bother to vote
please convince me that i am wrong.
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I agree with you very much.
$ANC holders, liquidity providers, and governance participants are invaluable compared to the overflowing UST depositors, but the benefits for $ANC are not taken into account at all.
It seems to be sacrificing for $LUNA.
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in 1 month anchor reserves dropped by 16% (507m down to 425m)
and this will only continue to drop.
if this proposal passes. thanks to the min(1.5%) slowing down the decrease of Earn rate
we can see the anchor rate drop from
month0: 19.52%
month1: 18.02%
month2: 16.5%
month3: 15.02% (deficit also decreases as risk premium not worth to deposit UST)
month4: 13.52%
month5: 12.02% (not worth UST depeg risk to keep UST)
month6: 10.52%
month7: 9.02%
month8: 7.52% (absolutely not worth UST depeg risk to hold any UST)
month9: 6.02% (deposit demand on anchor becomes zero as we can get this rate for USDC/USDT/DAI elsewhere)
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That’s right. This is actually the proposal to keep interest rates down.