- Propose updating the
threshold_deposit_ratein the Overseer Contract from 19.5% to 20%.
- Improve and clarify documentation in Anchor Docs on
Since genesis, Anchor protocol has advertised ~20% APY deposit rate. This 20% APY was true up until the May crash which had the protocol using the
threshold_deposit_rate rather than the
target_deposit_rate which 18% at the time. Currently, the protocol deposit rate has been pegged to 19.5% (the current
threshold_deposit_rate) and yet those in the community are still advertising a “stable 20% APY”.
Some could argue that 19.5% is close enough to 20% and I would agree. However, the Anchor yield reserve is up 3.4% in the last 7 days and with ~1 million UST being added every 3 days due to increase
bLuna staking yields. Why have a 19.5% APY rate when we can have the true advertised of 20% APY deposit rate?
In Anchor Gov Poll #2 ,
target_deposit_rate were adjusted to 19.5% & 20.5% respectively " to maintain a tighter peg around 20%". Although this improved the deposit rate from 18% at the time (genesis threshold deposit rate) to 19.5%, this fell short of holding a tight peg around 20%. Ever since, the Anchor deposit rate has held a tight peg around 19.5% instead of the advertised 20% APY.
Thus, I propose updating
threshold_deposit_rate to 20%:
blocks_per_year = 4,656,810
annual_threshold_deposit_rate = 20%
threshold_deposit_rate = 0.000000036686454933
threshold_deposit_rate = annual_threshold_deposit_rate / blocks_per_year = 0.000004294785486
The Anchor documentation gives the following definitions for
Target Deposit Rate, known as the Anchor Rate adjusts Anchor’s target deposit APY, which the protocol attempts to achieve by constantly controlling the ANC emission rate as borrower incentives
Threshold Deposit Ratevalue is the minimum deposit APY that Anchor tries to ensure by making direct deposit rate subsidizations from the yield reserve if the current deposit rate is observed to be below this value.
It seems like since Anchor Gov Poll #2 the
target_deposit_rate (20.5%) is unused and the protocol targets the
threshold_deposit_rate (19.5%) instead. The documentation needs to clarify when
target_deposit_rate is used. The docs state
threshold_deposit_rate defines a lower bound on the deposit rate but doesn’t state what happens the reserve is in excess (like it is currently). One would assume that Anchor would target the
target_deposit_rate when the yield reserve was increasing, but that is not the case today or else the yield would be 20.5%.
I suggest either the
target_deposit_rate definition needs to be updated to reflect when it is used, or it needs to be removed since the current parameter is unused.
Open to feedback on these two issues.