I like that there is discussion here.
I was thinking a formula something like:
Net APR = (bAssetBlockRewardRate * ProvidedCollateralAmount * 0.75) - (UtilizationRatio * LTV * BorrowedAmount)
w/ Liquidation @ 80% LTV.
*Before accounting for the early ANC Distribution to incentivize borrowing.
This way, for the borrower: some of the collateral rewards still go to the collateral provider; the interest rate increases as LTV increases to compensate for loans at high LTV; and there is still possibility of liquidation in cases of high risk loans, just much better than 50%. Anchor could start to see loans at a whole spectrum of LTV%s, and also much more collateral and borrowing.
To illustrate some scenarios, without accounting for the early ANC distribution to incentivize borrowing:
-A user who provides collateral but doesn’t borrow anything gets some of the rewards from their collateral–positive APR.
-A user borrowing at maybe 20% sees ~0% net APR, with collateral rewards and interest cancelling each other out.
-A user borrowing at 70% LTV has very high interest rate–negative APR.
Again, this is before adding the early ANC distribution, so for the next while, the Net Borrow APR would still be much more favourable to the borrower.
So users could borrow at 10% LTV, be earning rewards based on their collateral amount (instead of their borrow amount), and be earning revenue for Anchor all at the same time–it’s a win-win. Whereas, currently, a 10% LTV loan w/ Anchor is basically a loss for the borrower considering the opportunity cost of otherwise staking their assets.
I see this making users more likely to be willing to provide their bLuna as collateral, and be more likely to borrow.