Establishing Parameters for the Yield Reserve account should be a top priority of the community as it directly effects staking rewards and can increase them in a major way. As of right now, 90% of the incoming yield from deposited bLuna and protocol fees are going to the Yield reserve wallet, which has approx $560,000 UST and can be seen here: terra1tmnqgvg567ypvsvk6rwsga3srp7e3lg6u0elp8 and 10% are used to purchase ANC and distribute as staking rewards.
As a community, we need to agree on a threshold and metric for the Yield Reserve account and what is to be done with the surplus funds once the threshold is met. The purpose of this post is to start that discussion.
I propose we set the Yield Reserve threshold at 30 days of yield payout. In simplest terms possible, this means that the Reserve wallet could cover the Yield payments on all deposits for 30 days if the inflow was zero. So, currently there is $168m UST on deposit, at 20.22% means $33,969,600 per year in payouts, which comes out to $93,067 daily and about $2,800,000 for 30 days.
Once the Yield Reserve wallet meets this threshold, so it has a balance $2,800,000, then 100% of the surplus is used to buyback ANC and distribute as staking rewards. By my math, at current deposit and borrow levels we should reach this threshold in a little less than 30 days. After the threshold is reached, instead of 10% of inflows getting paid out as staking rewards, we are talking about 100%, so it is a very simple and handsome 10x of staking rewards. Not to mention it will generate an additional $100,000 worth of buying pressure on ANC daily.
As deposits increase, so does the Yield reserve threshold balance, as it will require more UST for 30 days of payout.
Thoughts? Feedback? Ideas?