Lower ANC distribution APR

Mechanism
1

For those who are investing on $ANC token for long - term (HODLers) should think about this:

Anchor Protocol Tokenomics we’re made to incentive/encourage borrowing demand. By giving 8.22% $ANCs, even if the borrow APR is 12.28%, the loan cost is only 4.05% APR.

This strategy is good when the project is unknown and there are other Protocols (like AAVE) whom are leaders and better positioned. But right now, Anchor Protocol leads, and in short term, people who needs loan will migrate to us.

There are about 4.5 Billions in loans on stablecoins only in AAVE, so lending & borrowing Market is much bigger.

The bad news is that we can assure most of them sell the free $ANCs and don’t see them as an investment to hold, and that creates sell pressure exponencially as more loans are asked for.

My proposal is to reduce drastically the ANC distribution APR. People who ask for loans and lends UST take a closet look at $ANC price and if they see a strong token, they trust. But when they see price going down or just lateral movement, fear and uncertainty takes place and I assure you they Will retire their funds and ask for loans in other place.

Please comment. Thanks :+1:

2

If you reduce the ANC distribution, the collateral will go elsewhere where loans are cheaper

2 Likes
3

And if they see $ANC at $1.25 again, and then $1.00 and so on, would they still want those $ANCs ? Would they still be attractive?

5

Sorry, didn’t understand your responde.

Yes, they will want a token that price is going lower and lower or yes, we should lower ANC Distribution APR for borrowers?

Thanks.

7

At the exception of the January period were all crypto were down, ANC has been fluctuating steadily between 2.4 to 3.5 UST in average. It was never really under 2.4 and reached peak of 6 UST in March. The veAnc poll coming soon will also help increasing demands for ANC and is expected to increase its average price. I believe bitn8, who is one of the Protocol Researcher, mentioned this poll was coming soon after #24

1 Like
9

Oh, you mean the combined proposal which the only one left is whitelisting wBTC as Collateral.

I’m looking forward too for that one. :ok_hand:

10

Im refering to this reply from Bitn8 here:

Im just guessing it could be today since the current poll is ending in 14hrs at the time of this post.

1 Like