I am just wondering as the rewards for borrowing money in Anchor keeps dropping to the negative, will 19%+ on EARN be sustainable when more deposits get dumped into EARN via the Abracadabra.Money’s Degenbox leverage function. As there needs to be more Borrowing in order to sustain a high 19+% APY on EARN, the Degenbox will greatly increase deposits on EARN and as the rewards in Borrow gets to the -ve, few would want to Borrow on their collaterals and consequently the EARN APY would drop. What do you think?
Anchor will always be reliant on this dance between earners and borrowers, borrowing demand is there right now because we’re on a bull phase of the market, people want to free up capital without selling, the negative rewards and the high price of borrowing make borrowers pause and think.
The degenbox strat has been a blessing, the increasing deposits have been matched with borrowing so far, the borrow apr has maintained a good balance between -2% and 2%, I don’t see this changing anytime soon as long as the collateral prices keep increasing… once we go into a bear phase of the market and collateral value decreases we might have a different conversation but I imagine that will only attract new collateral, specially with protocols like Nexus making it easier and safer to use.
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