There’s been discussion about dynamic anchor rate - decreasing or increasing at the rate of 1.5% per month depending on the anchor reserve conditions. And from the looks of current crypto & stock markets, it appears the current market trend is still down - meaning, the anchor reserve will continue to decline as there are more depositors vs. borrowers.
Based on this premise, isn’t it better for Terra Form labs (i.e. Do Kwon) to fill the reserve again once the current reserve depletes below 25M? This will keep the current Anchor investors in place & also attract additional investors who want to invest in Anchor Protocol - to allow for purchase of UST & to burn Luna in order to maintain current Terra Luna market cap price around 30 Billion range.
My concern is if the dynamic anchor rate is implemented, there will be meaningful bleeding of Anchor investors, who will sell UST & thus minting Luna, causing the Terra Luna price to fall / destabilize- much more. So, until the market condition improves, wouldn’t it be better to keep filling the reserve – in order to stabilize the Terra Luna platform? I realize this isn’t ideal but we’re currently in a crypto winter. Another option to maintain reserve was to incentivize borrowing but are who we kidding? I mean who is going to borrow in current declining crypto market? Most investors are currently in risk off mode so I doubt there will be many borrowers.