Potential Protocol: Achieving Long Term Anchor Stability

I am still in the beginning stages of formulating the exact structure and details of the protocol I have in mind, but I wanted to see what feedback I could get to get a sense of the interest in this and overall direction I should pursue. Later on, I will provide a more formal update on my progress with perhaps a lite lite paper with diagrams and other information. From there, I should be set to start planning out the technical frontend/backend details on my own. Note, I’m not looking for community funds or anything like that, only feedback. If I end up getting to the point where I need an audit, I’ll consider paying for it entirely on my own.

For now, let’s go with a protocol name of Razor’s Edge with the governance token REZ for clarity. I’m undecided on the name, but it doesn’t really matter much at this stage of the idea. The name comes from the idea that this protocol attempts to optimize an outside protocol’s functionality, balancing on a “razor’s edge”.

Initially, this protocol would build off of Anchor (with the potential to expand to other protocols that could use a “stabilizer” of sorts). Its overall goal would be a sort of grand balancer and by balancer, I mean pooling everyone’s deposits (not settled on if UST only deposits or other assets like bLUNA or LUNA) as basically one address to spread risk and depending on Anchor analytics/dashboard numbers, either dump lots of these deposits into Earn or lots into Borrow. This is similar to a yield maximizer, but with the important difference that the goal is not to maximize the user’s yields primarily, but to maximize the sustainability of the Anchor Protocol. If not enough is in Anchor Earn, Razor’s Edge users’ deposits would move en masse until an optimal level is reached, and vice versa for borrowing. By giving up maximized yields, the user would be rewarded REZ tokens for their participation. These tokens would be similar to ANC in that it will capture the yield in one contained token vs returning various rewards (aUST, ANC, etc). Thinking of rewarding depositors more who lock UST for longer more (e.g. x% for 1 week lock, 3x% for 3 week lock). I think the deposit would be represented similar to how a LP token or aUST works (e.g. rUST).

So Anchor would potentially have a giant pool of money sloshing back and forth to keep Anchor more stable than it already is even with multiple different collateral types (bSOL, bETH, etc) being added in the near future.

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Interesting concept. I think creating an actual yield curve (ie different yields for different tenors 1d, 1w, 1m, …) will definitely add an additional layer of stability. People willing to expose themselves to longer duration risk should receive a larger reward. I like the idea, not sure how much traction it’ll get yet but will follow closely. Great idea!

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Yeah, it seems that I could achieve the same goal of stability if I focus on rewarding those who stay locked in longer. Another user pointed out to me that participants would be potentially taking unneeded risk by using earn or borrow at the times they shouldn’t (i.e. higher liquidation risk if piling into borrow during a downturn). I do think there is chance I could work in the details in such a way as to reduce this risk (holding bAssets on the side, not doing 100% borrow to help pay off debts), but it is starting to look like it’ll be a simpler sell and implementation if I focused on “locking UST” and rewarding those that lock for longer.